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Internet providers to charge 14% VAT from tomorrow

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The government in its 2017 national budget presentation announced the application of 14% VAT on internet services which become effective on February 1, 2017.

According to GTT, DSL customers will not be required to pay the additional costs at this time, however, the company will apply the 14% VAT to mobile data and dedicated internet business services.

The reduced VAT amount will also be applied to landline services which previously attracted 16% VAT, the telephone company said in a statement on Tuesday, January 31, 2017.

In a mass text to its customers on Monday, Digicel Guyana also advised that “effective Feb 1st, all data related services will now incur VAT of up to 14%.”

Another internet and cable TV provider, E-Networks Inc. has also told its customers via a facebook post that “due to the changes to the Value Added Tax (VAT) Act, please be advised that your Cable TV and Internet subscriptions from February 2017 will attract 14% VAT.”

E-Networks further pointed out that these subscriptions never before attracted VAT and this is now a new measure that was introduced by Budget 2017.

Following the presentation of the 2017 Budget in the National Assembly, the Private Sector warned that the tax administration measures announced by Finance Minister, Winston Jordan on Monday last will inevitably filter down to consumers.

Dubbed as the “Littlest business friendly budget”, Chief Executive Officer of GTT, Justin Nedd at that time said the tax administration measures “reflects a, what I would consider 180-degree inconsistency with the goals of bridging that digital divide and expanding and modernizing the ICT sector”.

According to the CEO, VAT on its will see an increase of about US$6M per year for the current service; “that is US$6M which would be passed to the customers and that will stymie demand for services and create a negative cycle.”

The move was altogether condemned by Digicel as its CEO also told News Room that the implementation of VAT on using the internet would create an unnecessary barrier to accessing information which runs counter to the goal of rapidly increasing ICT access throughout the country.

Digicel’s CEO said “access to information via the internet is an essential service for everyone and a key driver of economic development worldwide. It impacts on every aspect of our lives and affordable access is of growing importance especially to our young people.”

On Monday, January 30, 2017, the Peoples Progressive Party/Civic (PPP/C) brought a motion in the National Assembly calling for the restoration of several zero-rated items removed from the list, however, this motion was rejected. The Government argued that it has several policies in place to buffer the effects of VAT.

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