General information is provided on areas of interest to investors including methods of establishing a business in Guyana, taxation issues, employment issues, investment protection, local content and environmental considerations, among others.
I: Forms of Business
There are several options for establishing a business in Guyana including incorporating a new company, registering an established foreign company in Guyana, establishing a partnership or operating as a sole proprietorship.
Incorporating a New Company
Under the Companies Act, a company can be registered with submission of an application to the Registrar containing the following:
Registering a Foreign Company
A foreign company established under the laws of a country other than Guyana can register to carry on business in Guyana as an external company under the Companies Act. To register, the following documents should be submitted to the Registrar:
Registering Sole Proprietorship or a Partnership
Under the Business Names (Registration) Act, a sole proprietorship or a partnership carrying on business under a business name other than the true surname of the proprietor (or names of partners), is required to be registered. The Partnership Act governs the workings of partnerships in Guyana.
Registration of a business name requires submission of an application to the Registrar containing the following details:
II: Tax Regime
Corporation Tax
Corporation tax is charged at a rate of 40% for commercial activity (except telephone companies) and at a rate of 25% in the case of any other activity. Telephone companies pay corporation tax at a rate of 45%.
Commercial activity means an activity carried out by a company trading in goods not manufactured by it, and includes an activity of a commission agency, a telecommunications company, a bank and an insurance company (other than a long-term insurance company). Where companies are engaged in both commercial and non-commercial activities, the commercial activity is taxed at 40% and the non-commercial activity is taxed at 25%.
Where the actual corporation tax liability of a commercial company as computed at 40% or 45% is less than 2% of the turnover of the company, the Corporation Tax Act provides for the payment of corporation tax at the rate of 2% of turnover – referred to as minimum tax. Insurance companies and any company exempt from corporation tax are exempt from minimum tax. Minimum tax paid in excess of the actual corporation tax liability is recoverable once proven to the satisfaction of the Commissioner-General and on the raising of an assessment.
Tax returns must be filed by April 30 of the year following the accounting year-end. Accounting year-ends that do not coincide with the calendar year-end must be approved by the tax authority. Tax returns are required to be submitted with audited financial statements.
Corporate bodies are required to pay corporation tax in quarterly installments on March 15, June 15, September 15, and December 15 of the year of income. Any shortfall of taxes after accounting for quarterly installments should be met by April 30 following the year of income.
Branch Profit
The corporation tax rates on branch profit are the same as for companies. Branch profit net of corporation tax is subject to withholding tax at 20%.
Tax Losses
Losses may be carried forward indefinitely to be set off against future profits. Brought forward tax losses cannot be used to reduce the tax payable of any year by more than 50%. Loss carrybacks are not permitted.
Payments to Foreign Affiliates
A company may claim a deduction for charges paid to foreign affiliates, provided such amounts are reasonable and necessary, having regard to the requirements of the trade. Deduction for head office expenses is restricted to the lesser of the charge and 1% of gross income of the company. Head office expenses include charges from a non-resident parent company, or a non-resident associate company of a company resident in Guyana, or a non-resident associate or subsidiary company of a non-resident company in respect of a branch or agency owned by the non-resident company in Guyana, or the head office of a non-resident company in respect of a branch or agency in Guyana, for any administrative, technical, professional or other like service of an essentially managerial nature.
Group Taxation
There are no group taxation provisions.
Income Tax
Income is taxable when it accrues in or is derived from Guyana, whether or not the individual is resident in Guyana, and whether or not the income is received in Guyana.
Employment compensation includes all benefits and allowances derived from employment, except allowances for medical or dental expenses or for any passage to or from Guyana and allowances for subsistence, travel, vacation (limited to one month’s gross salary), entertainment, or expenses if proven to the satisfaction of the tax authority.
There is a personal allowance equivalent to the higher of G$85,000 per month or one-third of the employee’s salary. Also, the employee’s national insurance contributions are allowed as a deduction in determining taxable income. Premiums paid for life and medical insurance are a deductible expense for individuals, up to a maximum of the lower of 10 percent of their income or G$30,000 per month. The rate of income tax is 28% on taxable income up to G$170,000 per month and 40% on earnings beyond this level.
Self-employed persons make income tax payments in quarterly installments with any shortfall of taxes being made by 30 April following the year of income. Employed persons have income taxes withheld under the pay-as-you-earn (PAYE) system. PAYE returns and payments are due by the fourteenth day of the next month.
Tax returns must be filed by April 30 of the year following the year of income.
National Insurance Scheme
National insurance contributions are required at a rate 14% of earnings, with 5.6% being deducted from employees’ salaries and 8.4% being contributed by employers. Self-employed persons contribute 12.5% of earnings. There is a monthly earnings ceiling of G$280,000. NIS returns and payments are due by the fifteenth day of the next month.
Withholding Taxes
Withholding tax at 20% is deducted at source on gross distributions and other specified payments (e.g. royalties, management fees, rent) made to non-residents. Payments to non-resident companies on account of any contract undertakings are subject to withholding tax at 10%. These withholding taxes on contracts are a form of advance tax to be set-off against final tax liabilities. Withholding tax returns and payments are due by the fourteenth day of the next month.
Property Tax
Property tax is payable on net property of companies and individuals at the end of year of income. The first G$40 million of net property is exempt, the next G$20 million is taxed at 0.5% and thereafter a rate of 0.75% applies.
Capital Gains Tax
Gains arising from disposal of capital assets held for between 1 and 25 years are subject to capital gains tax at a rate of 20%. Capital assets held for more than 25 years are not subject to capital gains tax upon subsequent disposal. Gains arising upon the disposal of capital assets within 12 months of acquisition are subject to corporation or income tax as appropriate. Capital losses are allowed as an offset to capital gains and may be carried forward for a period of 24 years.
Stamp Duty
Stamp duties are charged on various types of instruments, except retail transactions. The rate applicable varies by type of instrument.
Custom Duties
Customs duty is charged on the importation of goods into Guyana. The rate applicable varies by type of good.
Excise Tax
Excise tax is charged on the importation or domestic manufacture of motor vehicles, petroleum products, tobacco products and alcoholic beverages.
Value-added Tax
Value-added Tax at a rate of 14% is charged on taxable supplies of goods and services. There are certain categories of supplies which are zero-rated or exempt. VAT returns and payments are due by the twenty-first day of the next month.
Corporation Tax Holiday
Under the Income Tax (In Aid of Industry) Act, the Minister of Finance may grant an exemption from corporation tax with respect to new economic activity of a developmental and risk-bearing nature in one of the following fields:
New economic activity in one of the following administrative regions of Guyana may also qualify for exemption from corporation tax:
Exemption is granted for a period of up to 5 years but may be extended up to 10 years if the activity is in one of the specified economic fields. In the case of infrastructural development, the exemption may extend beyond 10 years.
In addition to the above provisions, the Minister may grant an exemption from corporation tax with respect to income from the following activities:
Exemption for corporation tax for these activities shall be for a period not exceeding 2 years.
A tax credit equalling 75% of income and corporate taxes on profits can be granted on the provision of tourism activities in regions 1, 7, 8, 9 and 10.
Export Allowances
Companies that export sales of manufactured, processed or agricultural products are entitled to export allowances as a deduction from chargeable profits. The quantum of the allowance is dependent on the percentage of export sales to total sales. Products that do not qualify for this allowance are bauxite, gold, diamonds, petroleum, sugar, rum, molasses, rice, timber, lumber, and shrimp.
Double Tax Treaties
Guyana has effective double taxation treaties with Canada, the United Kingdom and CARICOM Member States that have ratified the CARICOM Double Tax Treaty.
III: Labour Laws in Guyana
Labour Regime
Guyana has several laws which govern the employment of labour. Some of the significant laws in this regard are as follows:
These laws address matters such as the treatment of wages and salaries, normal hours of work and overtime, leave with pay, safety, health and welfare, accidents and occupational diseases, termination of employment and severance pay, registration and regulation of industrial establishments, collective agreements, employment of young persons and duty of employers to keep records.
The normal work week is legislated as 40 hours over not more than 5 days. Any hours of work beyond normal hours are remunerated as overtime in accordance with applicable law.
The statutory minimum wage in Guyana is G$60,147 per month; however, the public service minimum wage is G$70,000 per month.
Employment of Foreigners
Foreigners require a work permit to be employed in Guyana. Application for work permit requires information on both the employer and the intended non-national employee.
A CARICOM national holding a CSME Skilled National Certificate and his/her spouse are not required to obtain work permits to be employed in Guyana.
IV: Investment Protection
Rights and Guarantees
Under the Investment Act, the Government of Guyana provides various assurances to investors with respect to any investment made in Guyana, including the following:
Transfers of Funds Abroad
The Investment Act also allows investors to transfer funds, subject to payment of applicable taxes, for the following purposes:
Transfers of funds may be prevented however in circumstances of bankruptcy, insolvency, criminal proceedings, court orders or judgements or when necessary for the protection of stockholders or creditors.
Dispute Resolution
The Investment Act provides that in cases where disputes arise among investors or with the Government of Guyana, the following avenues are available if the matter is not amicably settled through consultation or mediation:
V: Other Matters of Interest
Local Content
Holders of licenses issued under the Petroleum (Exploration and Production) Act and parties to Petroleum Agreements with the Government of Guyana, and their sub-contractors, are required to comply with the Local Content Act. The legislation identifies forty sectors with defined targets that are reserved for Guyanese companies and Guyanese nationals.
A Guyanese company is defined as being incorporated under the Companies Act of Guyana and which (a) is beneficially owned by Guyanese nationals who control at least fifty-one percent of voting rights; and (b) that has Guyanese nationals holding at least seventy-five percent of executive and senior management positions and at least ninety percent of non-managerial and other positions.
Environmental Protection
Under the Environmental Protection Act, administered by the Environmental Protection Agency, a developer of any of the following types of project, or any other project that is likely to impact the environment is required to obtain an environmental permit.
Currency Matters
The unit of currency in Guyana is the Guyana Dollar which is freely convertible into other currencies based on prevailing market conditions. All monetary obligations or transactions in Guyana are required to be expressed, recorded and settled in Guyana Dollars unless permission is obtained from the Bank of Guyana which is responsible for the regulation of the financial sector in Guyana.
Under the Investment Act investors may open accounts in Guyana Dollars and in foreign convertible currencies with licensed banks in Guyana.
Declaration of Beneficial Ownership
Companies incorporated or registered under the Companies Act of Guyana are required to declare beneficial interest to the Registrar of Companies. Beneficial interest is defined in AML-CFT legislation as person (or persons) who ultimately exercises individually (or jointly) voting rights of at least 25 percent of the total.
Anti-money Laundering
The Anti-money Laundering and Countering the Financing of Terrorism Act is the primary legislation in this area. The Financial Intelligence Unit, provided for under the Act, is responsible for the handling of suspicious transaction reports and other information relating to money laundering, terrorist financing and the proceeds of crime.
Stock Exchange
The Guyana Association of Securities Companies and Intermediaries Inc. operates the Guyana Stock Exchange. There are presently fifteen companies on the Exchange.
Accounting Standards
The accountancy profession in Guyana is regulated by the Institute of Chartered Accountants of Guyana (ICAG). Accounting standards adopted for application in Guyana are the International Financial Reporting Standards. The ICAG is a member body of the International Federation of Accountants and the Institute of Chartered Accountants of the Caribbean.
Prepared by: Jack A. Alli, Sons & Co., Chartered Accountants