Wood VAT

Lumber is exempt from VAT as it was from Consumption Tax
Tuesday, January 16th 2007
Dear Editor,

We the members of the Forest Products Association, refute a statement in Freddie Kissoon's column in the Kaieteur News of Friday. January 12, 2007 headed "Farmers and saw millers do not pay VAT: they should be made to do so" that "saw millers should be compelled to pay VAT." We feel that Mr Kissoon should have done his homework thoroughly.

We would like to inform that saw millers, or forest producers, are not exempted from VAT on inputs into their manufacturing process unless those items are zero rated or tax exempted by law. No VAT on lumber is required by law. The VAT paid on inputs has to be reclaimed as input credit from GRA if they are registered. And the law, not Mr Kissoon, stipulates who must be registered - that is all businesses earning in excess of $10 million annually.

In the past, forest producers, including saw millers, enjoyed waiver of Consumption Tax on a number of items used as inputs for the processing of lumber and other wood products. Apart from the large capital items, the producers now have to pay VAT on items such as chain saws, knives and cutting blades for wood working machines, bands and circular saw blades, sharpeners, strapping materials, cutlasses, felling axes, saw chains, just to name a few, all of which previously enjoyed waiver of Consumption Tax.

Over the past year, the forest producers have been lobbying government continuously to have the VAT on lumber zero rated or waived, as lumber had initially enjoyed a waiver of Consumption Tax and any additional tax imposed on it would be to the detriment of the low income housing drive.

This has been granted.

On the issue of increased prices, if any, for 'furniture wood' whatever that is, we can say that it has nothing to do with VAT impacting it and we are not aware that prices of lumber had increased.

Yours faithfully,

Mona Bynoe

Executive Director

for Members of the FPA

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