Friday, July 25, 2008

Bill presented to enable QA11 concessions

Bill presented to enable QA11 concessions

Posted By Stabroek News On July 25, 2008 @ 5:08 am In News | No Comments

The government yesterday tabled a bill to enable tax concessions to two subsidiaries of Queens Atlantic Investments Inc (QA11) at the Sanata Complex and to remedy oversights in the principal legislation.

Two QAII subsidiaries – one to produce textiles and the other engaged in biotechnology – were earmarked tax concessions as pioneering industries when the law did not cater for this. This came to the fore after the launching of the Guyana Times newspaper in June when President Bharrat Jagdeo berated private sector businessman Yesu Persaud for asking that the tax concessions granted to the investors be accorded to others. The President told the June 5 launching that Persaud’s comment had exposed his ignorance of the tax laws. The President went on to say that the concessions were bestowed on the basis of their pioneering industry status.

Chartered accountant Christopher Ram in his Sunday Stabroek Business Page column three days later however pointed out that the President was incorrect as the Income Tax (In Aid of Industry) Act described pioneering industries as non-traditional agro-processing, information and communications technology, petroleum exploration, mineral exploration and tourist hotels but not textiles and biotechnology.

The government via the Ministry of Finance later signalled that the law would be amended to redress oversights in the original legislation including the regions where investors would be eligible for tax concessions and the types of industries that could be described as pioneering.

The bill tabled in Parliament yesterday will also enable the Minister of Finance to remit wholly or in part tax payable by any person or category of persons. This is likely to be seen as a regressive provision as tax legislation has progressively moved away from such ministerial discretion. In 2003, the broad discretion to waive such taxes was reposed in the President and the law was amended to remove this discretion. This new amendment now confers these powers on the Minister of Finance instead.

Clause Two of the bill says that the Income Tax Act would be amended by the insertion of section 105 which says “The Minister may make regulations, subject to negative resolution of the National Assembly, to provide for the remitting wholly or in part of the tax payable by any person or category of persons on such income, in respect of any year of assessment, and in accordance with such conditions as may be specified in the regulations”.

Under Clause Three of the bill, the Income Tax (In Aid of Industry) Act will be altered to grant tax concessions to activities that create new employment in any of the following regions: 1, 7, 8, 9 and 10 and “such other regions as the minister may, by Order, subject to negative resolution of the National Assembly.

The amendment bill says that the activities which can attract concessions are as follows: non-traditional agricultural development and agro-processing, including aquaculture and production of bio-fuels; information and communications technology, not including retail and distribution; petroleum exploration, extraction and refining; tourist facilities; value-added wood processing; textile production; biotechnology; development and manufacturing of new pharmaceutical products, chemical compounds and the processing of raw materials to produce injectables; infrastructural development, including the production of electricity using renewable sources of energy; such other fields as the Minister may, by order subject to negative resolution of the National Assembly specify.

The bill if passed would also enable tax exemptions for a period longer than ten years for “infrastructural development, including the production of electricity using renewable sources of energy”.

The QA11 deal for the Sanata Complex has been mired in several controversies since being announced earlier this year.

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