VZCZCXRO9514
PP RUEHLMC
DE RUEHGE #0108 0261224
ZNR UUUUU ZZH
P 261224Z JAN 07
FM AMEMBASSY GEORGETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 4715
INFO RUEHPH/CDC ATLANTA
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHINGTON DC

UNCLAS GEORGETOWN 000108 
 
SIPDIS 
 
SIPDIS 
 
DS/OFM/TC 
WHA/EX 
WHA/CAR 
STATE FOR TOPEC 
USAID FOR LAC/CAR 
CDC FOR CDC/COGH/OD 
 
E.O. 12958: N/A 
TAGS: AMGT ABLD AFIN EAID EFIN GY
SUBJECT: GUYANA'S NEW VAT AND TAX RECIPROCITY - REQUEST TO CONVOKE 
AMBASSADOR 
 
Ref: Georgetown 27 
 
¶1. Action request para 8 and 9. 
 
¶2. The Government of Guyana (GoG) instituted a 16% VAT on 1 January 
¶2007.  Preparations for the VAT were insufficient at best (Reftel). 
The GoG's public education campaign was misleading on many points 
causing confusion and discontent among the public and the unprepared 
business community. 
 
¶3. In a December 1 briefing, the Director General of the Ministry of 
Foreign Affairs and the Deputy Commissioner of the Guyana Revenue 
Authority (GRA) promised the Diplomatic Corps that the GRA will 
refund all/all VAT paid by Diplomatic missions, international 
organizations, and privileged staff, with no minimum amounts for 
reimbursement and that interest will be paid on reimbursement claims 
delayed more than one month. 
 
¶4. However, at the December 1 briefing, GRA was still drafting forms 
and procedures, and hiring and training staff.  GRA was not able to 
provide any specific information about the mechanism by which exempt 
missions/staff should file their claims for reimbursement. 
 
¶5. Neither was the GRA able to provide any information on procedures 
for exempt missions/staff to avoid VAT payable directly to GRA on 
virtually all imports. 
 
¶6. Multiple follow up meetings with MFA, GRA, and Minister of 
Finance have not provided any more clarity.  Post's sense is that 
the GoG does wish to implement a system that will refund 100% of VAT 
to privileged missions/staff, but is now overwhelmed with the more 
fundamental issues of making VAT work on a commercial and political 
level.  It is not just the diplomatic community that is waiting on 
the GRA: the MFA Director General told DCM that the GRA to date has 
not provided government agencies with instructions on mechanisms by 
which they secure their own statutory exemption from the VAT. 
 
¶7. In the last week the Guyana Customs Authority, acting on 
instruction from GRA, has requested post employees to pay 16% VAT on 
the value of consumable shipments and imported POVs, despite Customs 
having a letter from the MFA instructing Customs that these imports 
should be exempt from VAT.  Post has succeeded in getting shipments 
released, but each shipment is being handled in an ad hoc manner and 
shipments are being delayed during the bureaucratic rangling. 
Unlike VAT on retail goods that is included in a price paid to a 
merchant, the VAT on imports is payable directly to the government 
on the assessed value of the import.  The VAT on imports is clearly 
a direct tax on diplomatic mission and privledged staff. 
 
Action Request 
-------------- 
 
¶8. Post requests Department convoke Guyanese Ambassador Bayney 
Karran and provide him a gentle reminder of the general and specific 
GoG obligations under the 
-- Vienna Convention on Diplomatic Relations, 
-- 1967 Agreement between the United States and Guyana relating to 
the establishment of a Peace Corps program, and 
-- 1979 General Agreement for Economic, Technical, and Related 
Assistance. 
 
¶9. Post further requests Department gently inform Ambassador Karran 
of the potential impact on Guyana Embassy operations and on USG 
funding under the Foreign Assistance Act should Guyana's new VAT 
result in changed GoG tax treatment of the U.S. mission, U.S. staff, 
and USG assistance programs. 
 
ROBINSON