MP’s demands BOSAI disclose taxes paid

Jul 19, 2014 News

---

A Partnership for National Unity’s  (APNU) Shadow Minister of Public Works, Joseph Harmon insists that although BOSAI signed a contract “with slack contractual terms” with government, certain clauses of the contract stipulate that it has to pay royalties.

Harmon says he maintains his position that the bauxite company owes millions of dollars in royalties to Guyana and called on them to satisfy the nation by disclosing how much taxes it paid.
BOSAI Minerals Group has denied owing royalties to Guyana.
Harmon, who is a member of the Natural Resources Sectoral Committee, made his comments at a press conference yesterday. It was held at the Hadfield Street Headquarters of the APNU.
The Parliamentarian said, “I have seen the BOSAI agreement and in plain English language, the agreement is clear about the obligations of BOSAI. In fact, Mr. Norman Mclean, the Company Secretary for BOSAI, copied to me a letter which it sent to the Guyana Geology and Mines Commission. Attached to it was an opinion that was given by Mr. Edward Luckhoo, Senior Council, which concurs with the position we have always taken.  And that is simply that royalties are to be paid.”
Harmon then made reference to the agreement signed between the Chinese Company and the Government of Guyana. The agreement the politician related, says that after the first five years which can be described as a tax holiday, any year in which the taxes paid by the company exceeds the amount of royalties to be paid, it would have been exonerated from the payment of royalties.
This clause of the Business arrangement, Harmon said, “Was the funny part of the agreement and this is why I said I don’t respect agreements entered into by Winston Brassington, Head of NICIL, because it gives away a lot of the resources in this country… in my view, these are slack contractual terms.”
Harmon continued, “The royalties is 1.5 percent of the bauxite exported. Now if the company is saying that they have nothing to pay, then they should state how much taxes were paid and how much bauxite was shipped. In my view it is not that the government should be running around looking to find what the company actually owes… you must know how much was shipped out of this country if you are the executive…you have the records and therefore, you can make a claim on the company saying that you shipped so much bauxite and 1.5 percent of that is x and it is left for the company to show that it paid taxes in excess of that. They have to prove that.”
The Guyana Revenue Authority he said, had explained that it would not be providing that information as it is a personal relationship between them and the taxpayer.
He added, “It is that tax payer who should get access to that information and satisfy Guyana that it has paid that amount of taxes to be exempted from paying royalties. It is a simple matter and I have told this to the Minister of Natural Resources, Robert Persaud and the company. This is simple Mathematics.”
BOSAI recently sent a letter to Rickford Vieira, Commissioner of the Guyana Geology and Mines Commission (GGMC), questioning whether the Government and the Commission are now reneging on the Agreement to which they are both signatories, as part of the Terms of Business.
While Harmon contends that the Company should pay royalties, Mclean had made reference to Article 9.2 of the Mineral Agreement which states that, “The Company shall not be liable to pay any royalty on any production for the first five years following the Effective Date. Thereafter, the Company shall pay a royalty at the rate of 1.5% on the FOB (Freight on Board)  value of any shipment of bauxite from Linden, provided that in the event the Company pays any amount of corporate tax in any given year of Operations following the Effective Date, the Company shall be exonerated and relieved, effective immediately after having paid any such amount of corporate tax, from paying the aforesaid royalty to Guyana up to an aggregate amount of royalty, payments being equivalent to the amount of corporate tax paid.”
“For greater certainty, any amount of corporate taxes paid by the Company for any given year shall reduce correspondingly the overall amount of royalty to be paid thereafter by the Company. Guyana hereby agrees and irrevocably undertakes to make all necessary arrangements to give full force and effect to the provisions of this clause 9.2”
Mc Lean said that this Agreement is standard, and is what has been enforced from the days of Guybau, Guymine, Linmine, Bermine etc.
On Monday last, the Ministry of Natural Resources and the Environment, led by Minister Robert Persaud, appeared before the Parliamentary Sectoral Committee on Natural Resources.
Harmon is of the opinion that BOSAI owes over US$5M from royalties of bauxite produced, but Government is not having much success in collecting it.
GGMC is expected to make a decision on the matter within 10 days of its meeting which was held last Monday with the Parliamentary Committee.

---

---