VAT for small shops in Guyana: 14%, the G$15 million line and zero-rated goods

Value Added Tax is charged on the taxable supply of goods and services. A VAT-registered shop adds it to the price of taxable goods, subtracts the VAT it paid on its own business purchases, and pays the difference to the Guyana Revenue Authority. PwC's Worldwide Tax Summaries records the rates as 14% or 0% on taxable supplies by a registered person. The 14% rate has applied since the 2017 reduction from 16%, as reported in the Invest Guyana 2017 publication.

The tax belongs to the GRA, not to the shop. It passes through your till on the way to them. The two things that decide how it affects you are whether you must register, and which of your products are taxed at 14% and which at 0%.

The GRA's guidance on VAT registration says a business must register when its taxable activity equals or exceeds G$15,000,000 at the end of twelve months, or exceeds that in less than twelve months, or is expected to exceed it in any period during the next twelve months. G$15 million a year averages G$1.25 million a month.

Below the threshold you may apply for voluntary registration. The GRA says you must show an identifiable business and location, the ability to keep records under the VAT Act, and an intention to make taxable supplies. A shop that sells mostly to households rarely benefits much, but one selling to registered businesses may.

Do not treat the line as something you notice after the fact. The test includes what you expect to sell, so you should register when your sales are clearly heading over it. The GRA says a business that fails to register is liable to a penalty equal to double the output tax payable from the date registration was required until it applies. A shop's sales can look comfortable for months and then jump in a good season.

One more point. The GRA's Policy 33 describes zero-rated supplies as taxable, but at 0%. That suggests your zero-rated sales may count toward the turnover test, even though no VAT is added to them. Ask the GRA how they apply it to your shop, because for a grocery with mostly zero-rated goods this decides when you must register.

This is where Guyana looks different from its neighbours. The GRA's published schedule of zero-rated supplies, Schedule I of the VAT Act, lists a long run of everyday shop goods. Under food items, it includes:

• Bread, including sliced bread, plait bread and tennis rolls, but not French bread, Swiss bread or sweet breads.
• Raw white, brown and parboiled rice, cooking oil, vinegar, sugar cane and raw brown sugar.
• Cow's milk, milk powder, evaporated milk and UHT milk, but not flavoured milk. Baby formula and baby cereal.
• Fresh fruit, but not apples, grapes, dates, prunes, peaches, plums or berries. Fresh vegetables including onions, garlic and potatoes, but not radishes, broccoli or cauliflower.
• Wheaten, self-rising, barley and plantain flour, roti mix, oats, margarine, lard, shortening, baking powder and cooking salt.
• Cheddar cheese, but not grated, powdered or single-sliced. Uncooked eggs.
• Fresh, chilled or frozen chicken, pork, beef, shrimp, mutton, duck and fish, and salted fish, but not canned products. Dried peas and beans, but not the canned versions.

Household necessities are also zero-rated, including nappies, sanitary napkins, toilet tissue, paper towels, bleach, disinfectants, laundry and hand soap, dishwashing detergent, toothpaste and toothbrushes, mouthwash, matches, mosquito nets and hand sanitiser. School supplies, printed books and over-the-counter medicines are on the list too.

Notice how many entries carry a qualification. Plain sliced bread is 0% and sweet bread is 14%. Fresh chicken is 0% and a tin of the same is not. These qualifications are exactly where shop owners get caught, so keep a short list of your own products with the treatment for each, checked against the GRA schedule.

Exempt goods are different

The GRA's Schedule II lists exempt supplies, which carry no VAT and no claim for the VAT behind them. Among them are kerosene, liquid propane gas, gasoline and diesel, mobile phones and essential accessories such as chargers, cables and headphones, bicycles and sports gear, and residential rent. If your shop sells top-up cards, chargers or cooking gas, check how they are treated.

Anything not on either list is generally standard-rated at 14%. In many shops that includes items such as canned goods and processed or flavoured products. Confirm each line rather than assuming.

To reverse it, a G$1,140 shelf price is G$1,000 before VAT, divided by 1.14, with G$140 of VAT. VAT is 14 divided by 114, which is 12.28% of a VAT-inclusive price. If you take 14% off G$1,140 you get G$159.60, which is G$19.60 more VAT than was actually charged. That mistake over-reports your tax on every sale.

Zero-rated products need none of this: their shelf price is the price. Your margin on standard-rated items should always be worked out on the price before VAT, since the VAT is not yours. A G$1,140 item that cost G$700 before VAT earns G$300 on G$1,000, a 30% margin.

Once the GRA registers you it issues a VAT certificate, which must be displayed conspicuously at the place where taxable activity happens. You then charge VAT on taxable sales, and keep records under the VAT Act. You file one return for each calendar month. PwC states that VAT-registered businesses file returns and pay VAT by the 21st day of the month after the end of the period. A secondary guide on the Guyana Directory adds that returns must be filed within 15 official working days after the period ends, even if no VAT is payable, and that accounting records must be kept in Guyana. Confirm the exact deadlines the GRA gives you.

A change of name, address, premises or main activity must be reported in writing within 15 days, according to that same guide. Keep a copy of each return, the payment receipt and the working papers behind it.

Here is an example month for a registered shop. All amounts exclude VAT.

The shop collected G$280,000 on its 14% sales and paid G$182,000 to suppliers on the stock behind them, so it pays G$98,000. Its G$3,000,000 of zero-rated sales adds no tax but still goes on the return, and is why this shop's tax bill looks small beside its turnover. Put the VAT portion of each day's standard-rated takings aside, because the payment falls due after you have spent that month's cash.

• A product list showing each item's VAT treatment: 14%, zero-rated or exempt.
• A daily sales summary split by those three groups.
• Supplier invoices, in order, showing the VAT charged.
• Credit notes, copies of returns and proof of payment.
• Stock taken for personal use, since the VAT Act expects it to be accounted for.
• A note of the date and source of any rule you relied on, for example the GRA schedule version.

Even if you are well below G$15 million, keep these. They show when you are nearing the line, and they make registration quick when you reach it. For pricing, how to price products and gross profit for shop owners go through margin in more detail.

In Shopkeepa you set your currency to GYD and your shop's sales tax as VAT at 14%, then mark each product as taxable or not. That puts the VAT treatment of every product in one list, which is the foundation for the daily split the GRA expects you to keep. It does not calculate or file your VAT return, and it records the payments you take rather than processing them.

Shopkeepa is in development and open to early access shops. See the Guyana page and the VAT calculator.