This policy seeks to inform the general public of the application of VAT on Cargo Handling Services such as inspection of packages, tallying, offloading and clearing goods in connection with international shipping agreements.
Section 15 of the VAT Act Chapter 81:05 outlines the rules governing whether or not a supply is subject to tax within Guyana’s jurisdiction. Section 15 (3) of the VAT Act Chapter 81:05 states that “a supply of services takes place at the location of the supplier’s place of business from which the services are supplied.”
Therefore, where separate contracts regarding the handling of cargo for international carriers are “executed” overseas and the fees are paid outside of Guyana; the service is taxable at the standard rate of fourteen percent (14%).
Note: Although the payment was received overseas, the actual work was done in Guyana and the benefits received in Guyana, thus the place of supply of the service is Guyana.
This is distinct from “international transport services” which is exempt from VAT by virtue of Section 18 (1) of the VAT Act Chapter 81:05 which provides that, “…a supply of goods or services is an exempt supply if it is specified in Schedule II.”
Schedule II, Paragraph 2 (b) of the VAT Act Chapter 81:05 exempts “a supply of international transport services.” Supply of international transport service which is defined as:
(a) the services, other than ancillary transport services, of transporting passengers or goods by road, rail, water or air –
(i) from a place outside Guyana to another place outside Guyana where the transport or part of the transport is across the territory of Guyana;
(ii) from a place outside Guyana to a place in Guyana; or
(iii) from place in Guyana to a place outside Guyana.
Therefore, services which constitute international transport service occur when the recipient is charged by the provider of the service to handle international cargo which originates from or terminates in Guyana.
Schedule II, Paragraph 1 (c) of the VAT Act Chapter 81:05 exempts “the services, including any ancillary transport services, of transporting goods from a place in Guyana to another place in Guyana to the extent that those services are supplied by the same supplier as part of the supply of services to which paragraph (a) applies.”
In addition, Schedule I1, Paragraph 1 of the VAT Act Chapter 81:05, states that “ancillary transport services mean “stevedoring services, lashing and securing services, cargo inspection services, preparation of customs documentation, container handling services and storage of transported goods or goods to be transported.”
Consequently, where cargo is subject to ancillary transport services, such as cargo inspection, clearing of goods, preparation of customs documentation, transportation etc., these will be exempted from VAT if they form part of the services provided by the same supplier to the recipient.
On the other hand, where the ancillary services are provided by a separate supplier, these are not considered part of international transport and therefore subject to VAT at the standard rate of fourteen percent (14%) to the recipient or beneficiary of the service or goods/cargo.