Employment

 

Any employment income accruing in or derived from Guyana is subject to income tax regardless of where the payment is received. Individuals who are not ordinarily resident or not domiciled in Guyana and have earned income arising outside Guyana are subject to tax on that income only if it is received in Guyana.
 

The term "ordinary resident in Guyana" when applied to an individual means an individual who is resident in Guyana in the course of his or her customary way of life.

An individual also may be deemed to be resident any one year in which he or she resides in Guyana for more than 183 days. Deemed residence must be distinguished from ordinary residence since it is unlikely that an individual who is deemed to be resident under the 183 day rule will be considered ordinarily resident for the purpose of taxing of his overseas income.
 

Income Tax Rates

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Taxable Income
Taxable income includes all salaries, wages, overtime pay, leave pay, sick bonuses, stipends, commissions, or other payments of any kind from services, directors' fees, retiring allowance, compensation for termination of any contract of employment service and any allowance, including the annual value of any residence, quarters, board and lodging whether paid in money or otherwise, arising or occurring in or derived from or received in Guyana in respect of employment.

 

Deductible Expenses
No expenses are deductible against employment income.

 

Non taxable allowances
Allowances paid to cover expenses incurred in the execution of employment duties are non taxable. These include:
    Travelling allowances (as opposed to transportation allowances)
    Station allowance
    Entertainment allowance
    Subsistence allowance
    Meal allowance
    Security and telephone allowance
    Medical and dental expenses
    Gratuity (Taxable in all Non-Government Agencies)
    Leave entitlement (vacation)
    Severance pay
    Hardline
 

Taxable allowances
    Duty allowance
    Uniform allowance
    Acting allowance
    Overtime allowance
    Housing allowance
    Saving scheme
    Gratuity
    Leave entitlement
    Laundry

 

Self employed persons

If you work for yourself and if you are responsible for setting the charges for the goods or services you provide, you are a self-employed person. Examples of self-employed persons include:
    Professional in private practice (doctors, lawyers, accountants, engineers etc.)
    Minibus owners
    Contractors / sub contractors
    Wholesalers / retailers
    Shop owners / stall holders
    Farmers
    Real estate agents
    Vendors
    Barbers

 

Deductible expenses
All expenses wholly and exclusively incurred for the production of income during the year immediately preceding the year of assessment may be deducted. These include:
    Salaries and wages paid
    N.I.S paid on behalf of employees
    Bank interest and charges
    Stationery, postage and stamps
    Rent, rates and taxes
    Motor vehicle operating expenses
    Repairs
    Electricity and telephone
    Maintenance of plant, machinery and equipment

The Commissioner of Inland Revenue may disallow expenses in excess of the amount he or she considers reasonable and necessary for the requirements of the trade and business. The Commissioner is likely to exercise this authority only if the payment is made in a relationship that is not entirely commercial or at arm's length.

 

Non - deductible expenses
Certain expenses are not allowed as a deduction from the income earned, these include:
    Domestic and private expenses e.g school children fees, electricity charges for residential purposes
    Any disbursement or expenses not being money wholly and exclusively expended or lay out for the purpose of acquiring the income
    Any capital employed in improvements, except lad development expenditure incurred for agricultural purposes and allowed to be expressed against income over a period of ten (10) years.
    Any capital withdrawn or any sum employed or intended to be employed as capital
    Any sum recoverable under an insurance or contract of indemnity
    Rent of, or cost of repairs to any premises or part of premises not paid or incurred for the purpose of producing the income
    All income, property and capital gains taxes.

 

Individual tax loss

Losses incurred in one year from any trade, business, profession or vocation carried on by any person, either solely or in partnership, or any from the letting of property by any person either solely or in partnership, may be carried forward indefinitely and offset against what would otherwise have been taxable income in the year or years following, until the losses have been completely recouped. 

 

Advance income tax

The due dates for advance income tax are as follows:
1 April
1 July
1 October
31 December
Self-employed person are required to pay your advanced taxes in quarterly installments, annually. This quarterly installment is calculated based on the previous year's income. If this is first year in business, it is calculated based on your anticipated income for this year. 

 

Filing of tax returns

Individual tax returns must be filed by 30 April of the tax year. The tax year is the calendar year and tax is assessed on the income earned in the financial year proceeding the tax year.

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Penalties - late filing

Where tax returns are filed after the due date there is a penalty of 2% of the liability for the year. Where the Commissioner General issues a notice of demand for the submission of tax returns, the penalty is 5 % of tax liability for the year. 

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The Pay As You Earn (PAYE) System

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Deduction and Remittance of P.A.Y.E

Section 93 (1) of the Income Tax Act, Chapter 81:01 provides that "any remuneration paid to, earned or arising in or deriving from or received in Guyana by any employee shall be subject to tax. Further, the employer or the person making the payment shall deduct and withhold income tax in accordance with regulations made under Section 117 of the Act.

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By virtue of the above, employers must deduct or withhold Income Tax from persons who are employed by them and pay the tax to the Commissioner General "within fourteen (14) days of the end of every calendar month".

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Further, every employer must record on a "Return of Deductions of Tax by an Employer" (Form 5 statement), particulars regarding the employer's name, address, nature of the business, the name and TIN of each employee, the total gross income earned for the period of each employee and the total amount of tax deducted.

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Even where an employee's gross income is below the weekly, fortnightly or monthly Income Tax threshold, the employer must also include the names of those employees when completing the Form 5 for submission to the GRA.

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All amounts deducted or withheld by an employer shall be deemed to be held in trust for the states and shall not be part of any debt or liability of the employer. In the event of any liquidation, assignment, or bankruptcy, those amounts shall not form any part of the estate in liquidation, assignment or bankruptcy but shall be paid in full to the Commissioner General before any distributions of the property is made.

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Moreover, a person shall be guilty of an offence if he or she fails to deduct, withhold, remit or pay any amount required to be deducted, withheld, remitted or paid, as the case may be to the Commissioner-General and will be subject to a penalty of ten percent (10%) interest on the amount owed. Moreover, Employers must ensure that deductions are correctly calculated before remitting P.A.Y.E.

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Persons with Multiple Employers:

Section 20 of the Act allows each person, a monthly free pay deduction for each month before Income tax is deducted. Further, this deduction is granted on an individual basis and not on the grounds of each source of income. As such, a person with more than one sources of income cannot be allowed a deduction in excess of the monthly allowance .

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As a result, employers are urged to enquire from employees whether they are employed elsewhere. In cases where a person had multiple employers, the main employer should allow the statutory monthly allowance before deducting Income Tax.

 

The other employers cannot give that employee a second monthly allowance but must deduct income tax at the rate of 33 1/3%.

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Forms 5 statements are consolidated at the end of the year and allows for proper accountability, since the information contained therein is used to complete and submit Employers Return (Form 2), 7A or 7B slips of employees and to determine whether the correct taxes have been deducted from a particular employee. Where persons were allowed more than one statutory allowance, they will have significant tax liability at the end of the year.

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