Guyana Individual Tax Guide

Guyana

Georgetown GMT -4

EY

Pegasus Hotel, Suite 100 Seawall Road, Kingston Georgetown Guyana

Executive and immigration contacts

Gregory Hannays

Alicia Pereira

+1 (868) 622-1364

Fax: +1 (868) 622-0918 Email: gregory.hannays@tt.ey.com

+1 (868) 822-6163

Fax: +1 (868) 622-0918 Email: alicia.pereira@tt.ey.com

Gail Marks +592 225-2835

Mobile: +1 (592) 601-7071 Email: gail.marks@tt.ey.com

Amrita Prashad +592-225-2835 Email: amrita.prashad@tt.ey.com

A. Income tax

Who is liable

Territoriality. Individuals who are ordinarily resident or domi ciled in Guyana are subject to tax on their worldwide income. Individuals who are not ordinarily resident or domiciled in Guyana are taxable on income accruing in or derived from Guyana, including income from any employment exercised in Guyana, regardless of whether the income is received in Guyana.

In addition, earned income (including employment income) that arises outside Guyana or income that arises to a person not ordi narily resident or domiciled in Guyana is taxable only when it is received in Guyana.

Definition of resident. Individuals are considered resident in Guyana if they reside in Guyana for a period of more than 183 days in the tax year or if they reside or intend to perma nently reside in Guyana. The concept of ordinary residence is understood as is applied under common law jurisprudence and examines various factors that determine the individual’s habitual place of abode. Domicile is not defined under the Income Tax Act but generally refers to the jurisdiction that the individual regards as his or her permanent home.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Taxable income from employment includes salaries, bonuses and any other allowances granted with respect to employment after allowing for appropriate deductions and exemptions. Taxable income includes the value of employerprovided benefits, including accommodation and transportation.

Emoluments deposited on behalf of an employee into an approved Savings Scheme may be exempt from tax.

Self-employment income. Taxable profits generally consist of business profits as disclosed in the business operation’s financial statements, subject to various tax adjustments. Income tax is imposed on net business income.

Investment income. Dividends received by residents of Guyana from Guyana resident companies are not subject to tax. Interest, rental income, dividend income from nonresident companies and royalties or other income arising from property are aggregated with other income and taxed accordingly.

Interest that accrues to an individual during any year on the amount credited to him or her in an approved Savings Scheme established under the Savings Scheme Act is exempt from tax. Also, dividends paid by an approved mortgage finance company are exempt from tax in Guyana.

An individual resident in Guyana is exempt from income tax on interest earned on savings accounts if he or she satisfies both of the following conditions:

• He or she is 60 years or older at the start of the tax year or is incapacitated by illness or infirmity.

• He or she does not earn income exceeding GYD780,000 per year. If the income of the person exceeds GYD780,000, such person is taxed on interest earned on savings accounts.

A final withholding tax at a rate of 20% is imposed on dividends, interest, royalties and management fees paid to nonresident individuals.

Taxation of employer-provided stock options and profit-sharing schemes. No specific provisions in Guyana regulate the taxation of employer-provided stock options. Consequently, the tax treat ment is based on general principles and case law. Ordinarily, an option is taxed on the difference between the market value of the shares and the price at which the option is granted at the time when the employee receives an irrevocable right to acquire shares. In general, gains derived from the subsequent sale of the shares acquired under the option may be subject to capital gains tax if the shares are held in excess of 12 months. If the shares are sold within 12 months of acquisition, the gains are subject to income tax. If a vesting period must elapse before the employee obtains an irrevocable right to acquire shares, the taxing date is the date of vesting.

Capital gains. Capital gains tax is payable at a rate of 20% on the change of ownership of property in Guyana as well as in other specific cases if the net taxable capital gain for the tax year is in excess of GYD500,000. Capital gains accruing outside Guyana accruing to a person not ordinarily resident or domiciled in Guyana are taxable in Guyana only if received in Guyana.

A net taxable gain realized on the disposition of certain assets within 12 months after acquisition is subject to income tax as ordinary income.

No capital gains tax is payable on the gains arising from the dis posal of the shares or stock of public companies or on the gains

arising from the sale of property used as a private residence, if the proceeds of the sale are used for the purchase of a property of equal or greater value within 60 days after the end of the year in which the property is sold.

The following deductions are allowed in calculating capital gains tax:

• Expenditure (other than the purchase price, if any) incurred solely in connection with the acquisition of that property by the person who is the owner of that property immediately before the change of ownership.

• Expenditure incurred by the owner in making improvements, additions and alterations to the property. This is subject to the condition that if any expenditure was allowed as a capital allowance, such amount is not allowed in computing the capital gain or loss.

• Costs incurred in connection with the transaction that results in the change of ownership, such as legal fees and agent’s fees.

Deductions

Personal deductions and allowances. The following is a list of allowances and deductible expenses allowable with respect to the 2021 tax year:

• Personal allowance, which is the greater of GYD780,000 per year or one-third of the employee’s total income from all sources excluding income subjected to withholding taxes)

• Employee contributions to the National Insurance Scheme (NIS)

• Traveling allowances (deductible only if related to the exercise of employment)

• Station allowance

• Entertainment allowance

• Subsistence allowance

• Meal allowance

• Security and telephone allowance (this is by the current policy of the Guyana Revenue Authority [GRA] and is not provided for in a statute)

• Medical and dental expenses (deductible only for government employees)

• Gratuity (deductible only for government employees)

• Severance pay

• Vacation allowance (up to a maximum of one month’s gross salary)

The traveling, subsistence and entertainment allowances are deductible only if it is proven that the allowances were expended for the purposes for which the allowances were granted.

Business deductions. Any expenses incurred wholly and exclu sively for the purpose of producing income are deductible.

Reserves or provisions of a general nature are not allowable. Write-offs of specific amounts or balances generally are allowed if the Commissioner General of the GRA is satisfied that they are not recoverable.

In computing taxable profits, depreciation and amortization for financial statement purposes are replaced by capital allowances for tax purposes. Annual allowances at rates ranging generally

from 2% to 50% are available. These allowances may be calcu lated on a straight-line or reducing-balance basis. If calculated on a straight-line basis, allowances are limited to 90% of the cost of the asset.

Rates

Income tax. Personal income tax is imposed at the following rates.

Taxable income Tax rate (%)

Up to GYD1,560,000 28 Over GYD1,560,000 40

If an individual qualifies as having a small business that is regis tered with the Small Business Bureau and that is engaged in manufacturing and construction services, income tax is imposed at a rate of 25% on the chargeable income derived from manufac turing and construction services.

Other taxes on income. Payments to resident individual contrac tors in excess of GYD500,000 are subject to resident individual contractor tax. This tax is imposed as a withholding tax at a rate of 2% on each payment. This tax applies with respect to contracts for providing or supplying independent personal services for reward and includes the supply of labor and the hiring of equipment. Contractor tax must be paid to the Guyana Revenue Authority (GRA) within 30 days after the payment. This is a prepayment of the resident individual’s taxes, which is creditable against his or her ultimate tax liability.

The tributor’s tax is imposed at a rate of 10% on persons engaged in the gold and diamond mining industry, such as drivers, cooks and sailors, who are rewarded for their labor under the tribute system. This tax is a prepayment of tax, which is creditable against the individual’s ultimate tax liability. The employer must deduct and remit the tax to the GRA on or before 1 April, 1 July, 1 October and 31 December in each year of income, and for the purpose of calculating the amount of tax to be withheld, there shall be allowed a deduction of GYD720,000 per year appor tioned according to the individual’s earning period.

The diamond withholding tax is imposed at a rate of 2% on the value placed by the Guyana Geology and Mines Commission on the amount of diamond declared by an individual. This is a pre payment of tax, which is creditable against the individual’s ulti mate tax liability.

The gold withholding tax is imposed, on the amount of gold declared by an individual to the Guyana Gold Board, according to a sliding scale which is based on the price of gold. The follow ing is the scale.

Price of gold (per ounce)

Under USD1,100

At least USD1,100 but not more than USD1,300

Over USD1,300 but not more than USD1,600

Over USD1,600

Income tax payable

2% of gross proceeds

2.5% of gross proceeds

3% of gross proceeds

3.5% of gross proceeds

The gold withholding tax is a final tax and not a prepayment of tax by such individuals. The tax is a final tax with respect to income from gold mining that is declared to the Guyana Gold Board. If gold withholding tax is applied with respect to gold mining income that is not declared to the Guyana Gold Board, the withholding tax represents a prepayment of tax only.

Relief for losses. Losses may be carried forward and offset against future taxable income until it is completely recouped. The losses to be offset in future years may not exceed one half of the amount of the tax payable had the offset not occurred. Losses may not be carried back.

B. Property Tax

Property Tax is payable on net “property” (see below) of every individual as of the end of the fiscal year. The net property of a person is the amount by which the aggregate value of the prop erty of the person exceeds the value of any debts owed by him or her, other than the following:

• A debt incurred without consideration or without full consider ation in money’s worth

• A debt incurred that is not wholly for his or her benefit

• A debt for which a right of reimbursement from any other person exists unless such reimbursement cannot be obtained

• A debt charged or secured by, or incurred in relation to, any property of him or her, which is to be excluded for the purposes of the Property Tax under the Property Tax Act

• Any debt incurred by him or her outside Guyana other than any such debt that is contracted to be paid in Guyana or secured by property in Guyana

The term “property” includes immovable and movable property, rights of any kind and effects of any kind, located in Guyana or elsewhere and the proceeds from the sale of such property and money or investment for the time being representing them (any cash from the sale of property or any property acquired from the exchange of investments). However, “property” does not include the property of a person outside of Guyana if that person is not domiciled in or ordinarily resident in Guyana.

For property acquired before 1 January 2011, the value of prop erty is considered to be the estimated open market price together with the cost of improvements and additions made after that date. The value of property acquired by purchase on or after that date is the cost of purchase and improvements and additions. If acquired other than by purchase, the value is considered to be the open market value. If the property consists of debts, the value is considered to be the nominal value of the debts.

The value of the property is subject to the following deductions:

• If the property is other than debt, wear-and-tear allowances (but not initial allowances) as authorized by the Income Tax Act

• For debts, any deduction from the nominal amount that has been allowed for income tax purposes

The following are the Property Tax rates.

Value of net property Rate of tax (%)

First GYD40,000,000 Nil Next GYD20,000,000 0.50

Remaining in excess of GYD60,000,000 0.75

Property Tax returns must be filed by the following:

• An individual who is resident in Guyana and possessed net property of the value of GYD40 million or more at the end of the tax year

• A nonresident who possessed net property located in Guyana valued at GYD40 million or more at the end of the tax year

• Every body of persons (including a company) registered or car rying on business in Guyana with net property valued at GYD40 million or more at the end of the tax year

Property Tax returns must be filed and tax paid on 30 April of the year following the tax year.

C. Social security

Contributions. Contributions to the NIS must be made at the fol lowing rates on maximum monthly insurable earnings of GYD280,000:

• For employees: 5.6%

• For employers: 8.4%

• For self-employed persons: 12.5% (of their declared income up to GYD280,000)

Totalization agreements. Guyana has entered into social security totalization agreements with the Caribbean Community and Common Market (CARICOM) to provide relief from paying double social security taxes and to assure benefit coverage.

D. Tax filing and payment procedures

The tax year in Guyana is the calendar year. In general, married individuals are taxed separately, not jointly, on all types of income. Every individual receiving income must file an income tax return by 30 April of the year following the tax year. Every individual receiving income from a trade, business, profession or vocation must file an income tax return for the tax year, even if the business operated at a loss.

Employers must deduct tax from employees under the Pay-AsYou-Earn system.

Every self-employed individual receiving income must pay tax in four equal installments on or before 1 April, 1 July, 1 October and 31 December in each tax year. Each installment must equal onequarter of the tax on taxable income for the preceding year. The balance of tax due, if any, must be paid no later than 30 April of the following year.

Nonresidents must file tax returns for any year in which they derive income from Guyana sources. For the filing of returns, nonresidents follow the administrative rules that apply to residents.

The penalty for the late filing of a tax return is 10% of the tax assessed. In addition, a flat fee of GYD50,000 is payable for a failure to file a tax return regardless of whether tax is payable. Further, if the balance of tax due is not paid by the 30 April dead line, a penalty of 2% per month is payable. Failure to pay tax also attracts interest at a rate of 18% per year.

E. Double tax relief and tax treaties

Unilateral relief. A Guyana taxpayer who proves to the satisfaction of the GRA that he or she has paid income tax on foreign income is entitled to claim a credit for such tax paid against Guyana tax chargeable with respect to that income, as determined under specific rules in the Income Tax Act.

Double tax treaties. Guyana has entered into double tax treaties with the CARICOM member states (Antigua and Barbuda, Barbados, Belize, Dominica, Grenada, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago), Canada and the United Kingdom. In general, the credit available may not exceed Guyana tax payable on the under lying foreign-source income.

The treaty with the CARICOM member states provides for reduced withholding tax rates as well as exemption from tax on income received by the recipient, because the treaty is a sourcebased treaty.

F. Entry visas

Only Guyana citizens and their dependents have the right to enter the country freely. Nonresidents are subject to varying entry requirements. Depending on the nationalities of the individuals, visas may not be required for entry into Guyana.

G. Work visas and/or permits

In general, foreign nationals employed by companies in Guyana must obtain both entry visas (subject to certain exceptions mentioned above) and work permits. The Ministry of Home Affairs requires specific and detailed information before granting work permits to foreign nationals. The government requires that employment opportunities first be offered to Guyana nationals and residents before nonresidents.

In general, CARICOM nationals may be given up to six months for employment purposes on entry into Guyana. If a CARICOM national has a Certificate of Recognition of Caribbean Community Skills Qualification by virtue of being a university graduate or meeting other specific criteria, the person may enter Guyana for a period of six months or some other indefinite period and work in Guyana. Similar rights are granted to the spouse and depen dents of the CARICOM national.

Non-CARICOM nationals may be granted up to three months for employment purposes on entry into Guyana. However, the Chief Immigration Officer may extend the initial period granted to two years.

Work permits are non-transferable. If a work permit holder leaves the employer, the work permit is canceled. The employer must inform the authorities that the employee has left the company.

If a foreign national is entering Guyana for the purpose of employment, a landing permit/employment visa must be obtained prior to arrival in Guyana. Subsequent to his or her arrival, a work permit must be obtained.

The following documents with respect to the employee must be submitted to the Ministry of Home Affairs to facilitate the landing permit/employment visa and work permit application pro cesses:

• Landing permit/visa application form

• Work permit application form

• Copy of the applicant’s entire passport, together with the spon sor’s, if applicable (the passport must be valid for at least six months)

• Two passport-size color photographs

• Police clearance

• Medical report

• Credentials for the applicant (for example, certificates of qualifi cations)

In addition to the above, the following documents with respect to the employer must be submitted:

• A letter addressed to the Ministry of Home Affairs requesting landing permission for employment status (the letter must include the expected position within the company, expected date of arrival and duration of stay in Guyana)

• A letter addressed to the Ministry of Home Affairs requesting a work permit

• A letter addressed to the Ministry of Home Affairs providing a brief history on the company and its operations in Guyana

• Employment contract or letter of assignment

• Tax liability statement and National Insurance compliance if applicable

• Certificate of registration or incorporation

• Vacancy advertisement in the newspaper (must be published three months prior to the application)

• Application fee of USD140

Work permits are granted for a two-year period. If a traveling individual requires a visa but is unable to apply at any of Guyana’s missions or consulates, visas may be issued on arrival in Guyana.

H. Residence visas and/or permits

An individual who is legally married to a Guyanese individual or who has been living in Guyana legally for more than five years may apply for residency.

An application must be submitted to the Ministry of Home Affairs to obtain residency. To approve a residency application, the authorities must be satisfied that the applicant can support himself or herself and will not be a burden to the country. The individual’s qualifications and entitlement to residence status on the basis of marriage or similar criteria are also taken into con sideration.

No quota system exists for issuing residence permits. Each appli cation is evaluated on its own merit.

I. Family and personal considerations

Family members. Any family member of a working expatriate who wants to work in Guyana must obtain his or her own work permit to be employed in Guyana or must obtain extensions of stay to reside in Guyana.

Children accompanying work permit holders who are in Guyana for the sole purpose of studying must obtain students visas.

Forced heirship. An individual is allowed to will their property as they wish. In the absence of a will, specific rules govern the distribution of his or her estate. The legislation also provides for family members and dependents to apply for a financial provi sion to be made for them out of the property left by the deceased, if the property left by the will or through intestacy is deemed insufficient.

Driver’s permits. Foreign nationals holding a driver’s license issued in their home country may be able to obtain a driver’s license locally by submitting the following to the GRA:

• Completed application form

• Foreign driver’s license

• Taxpayer Identification Number

• Copy of valid identification (passport or national identification)

• Three passport-size photographs

• Application fee of USD20

No medical, physical or written examination is required.