Administration. The tax year is the calendar year. Tax is calculated on the profits for the accounting period that ends during the tax year. For each quarter, a company is required to pay a corporation tax or minimum tax installment, whichever is lesser. The quarterly payments must be made by 15 March, 15 June, 15 September and 15 December in each tax year. Quarterly payments of corporation tax are determined based on the taxable income for the preceding accounting period. Minimum tax installments are based on the actual gross sales or receipts of the company for the relevant quarter. The minimum tax calculation excludes income or receipts that are exempt for corporation tax purposes, such as dividends received from Guyana resident companies.
Annual tax returns must be filed by 30 April in the year following the tax year, and any balance of tax due is payable at that time. In general, audited financial statements must be filed with the annual tax returns. The Commissioner-General may allow a company to file its tax returns with draft financial statements. However, the audited accounts must be filed on or before 31 December of the year in which the returns are due to be recognized as being filed on a timely basis.
Failure to file a tax return attracts a penalty of 10% of the amount of tax assessed, while failure to file a nil tax return or a tax return that discloses a loss attracts a penalty of GYD50,000. If the balance of tax due is not paid by the 30 April deadline, a penalty is payable equal to 2% of the unpaid tax for each month, or part thereof, that tax remains outstanding. Interest is also payable at a rate of 18% per year.
Dividends. Dividends received from nonresident companies are subject to tax. Dividends received by resident companies from other resident companies are exempt from tax.
Dividends paid to nonresident companies and nonresident individuals are generally subject to a withholding tax of 20%.
Double tax relief. Bilateral agreements have been entered into between the Government of Guyana and the governments of certain other countries to provide relief from double taxation (see Section F). Relief from double taxation is achieved by one of the following two methods:
• Exemption or a reduced rate on certain classes of income in one of the two countries concerned.
• Credit if the income is fully or partially taxed in the two countries. The tax in the country in which the income arises is allowed as a credit against the tax on the same income in the country where the recipient is resident. The credit is the lower of the Guyana tax or the foreign tax on the same income.
C. Determination of taxable income
General. The assessment is based on financial statements prepared according to international accounting standards, subject to certain adjustments.
To be deductible, expenses must be incurred wholly and exclusively in the production of income. Deductions for head-office expenses paid by a Guyana branch to a nonresident head office or to a nonresident associate or subsidiary company, or by a Guyana
resident company to a nonresident parent or associate company, may not exceed 1% of the sales or gross income of the payer.
Inventories. Inventory may be valued at cost or market value, whichever is lower. A method of stock valuation, once properly adopted, is binding until permission to change is obtained from the GRA.
Bad debts. Trading debts that have become bad and that are proven to be so to the satisfaction of the GRA may be deducted in determining taxable income. In addition, doubtful debts are deductible to the extent that they have become bad during the year. If these debts are subsequently collected, they are considered to be income subject to tax in the year of recovery.
Tax depreciation (capital allowances). Depreciation is calculated on the depreciated value of fixed assets at the beginning of each accounting year.
Capital expenditure incurred on plant, machinery or equipment or any building housing machinery owned by the taxpayer or incurred with respect to machinery and equipment that the taxpayer has the full burden of wear and tear qualify for capital allowances under the declining-balance method or straight-line method. However, if the latter method is used, a maximum of 90% of the cost of the asset may be depreciated.
The following are the applicable rates for assets acquired on or after 1 January 1992.
For new equipment for industries harnessing alternate energy through wind, solar, water and biomass technologies, capital expenses are written off within two years.
Separate capital allowances are available with respect to the petroleum and mining sectors. Capital allowances may be claimed on petroleum capital expenditure in the petroleum sector at a rate of 20% per year on a straight-line basis. In addition, in the diamond and gold mining sector, capital allowances may be claimed on exploration and development expenditure at a rate of 20% per year on a straight-line basis. Other sectors are also granted specific initial and annual allowances.
Relief for tax losses. Losses carried forward can be written off to the extent of half the taxable income for the tax year. The