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Guyana Goldfields received US$50M in tax exemptions in last three years …Duty free concessions for Peruvian company being questioned
In the early 90s, there were little investments coming. Guyana was seen as not so attractive.
Guyana managed then to bring two major investments, including Malaysians for Barama Company Limited and a US company for the Guyana Telephone and Telegraph Company Limited.
Over the years, to attract investments, Guyana offered tax incentives, including duty free concessions and holidays as a means to woo overseas businesses, which had the resources and skills capacity.
After evidence emerged pointing to widespread abuse in those tax incentives, there were attempts made locally to streamline it.
A few of the abuses include the import and sale to the local market of materials, including steel and paint, and equipment including trucks, SUVs and even heavy machinery.
While in the beginning there was a focus more on creating local jobs, in recent years, the attention has been on getting a good deal on investments for Guyana.
According to Government, and tax officials, there should be a formula that allows Guyana to get a fair share.
However, in last few years, several of the agreements that consecutive governments signed with investors that have been coming to light, have pointed to an alarming situation.
In many cases, Guyana has foregone billions of dollars in taxes to receive a pittance in royalties and income tax from employees of those investors.
In other words, valuable resources like gold and bauxite were being mined with Guyana not getting its fair share.
One company that came under the spotlight was Canadian-owned Guyana Goldfields Inc.
TThere are questions over $1.1B in tax exemptions granted to Stracon, a Peruvian company that has been contracted to the Guyana Goldfields Inc.
That company had been exploring for years in its Cuyuni concessions and finally raised money to invest in the largest gold mine in Guyana.
There was lots of excitement.
The previous government granted significant concessions, including duty free concessions on heavy-duty equipment, vehicles and other supplies.
Between 2016, when commercial operations started, to now, Guyana granted over $10B (US$50M) in tax exemptions to the company.
According to government officials, the company between 2016 to present, brought in equipment and other items with Cost/Insurance/Freight charges amounting to $37B (U$185M).
After paying just $600M (US$3M), the company was allowed to collect those equipment.
The Guyana Revenue Authority, according to government sources, would have lost over $10B (US$50M).
Between 2016 and to recently, the company said it produced almost 500,000 ounces of gold.
Guyana was supposed to collect eight percent in royalty. That amounts to about 40,000 ounces, just around US$48M ($9.6B) for the government coffers.
A significant portion of those concessions reportedly went for tax exemptions for Stracon, a Peruvian company that was hired to assist Guyana Goldfields to move into underground mining.
However, according to officials, there may be a breach of the arrangements that Guyana has with Guyana Goldfields.
“We have signed agreements with Guyana Goldfields, not Stracon, therefore it cannot follow that you would extend concessions also to a contractor that is coming to Guyana. Something is wrong here! Could Guyanese companies have received those same concessions?”
Stracon has come when Guyana Goldfields says it is preparing to begin underground mining at its Aurora mines, Cuyuni, Region Seven.
It was given over $1.1B in concessions over the past year.
The mining company is facing a major challenge involving a number of shareholders who are unhappy with the way things are being managed.
The company’s share value has dropped significantly, they say.
A special shareholders’ meeting is scheduled in a few weeks.
On the other hand, the Government of Guyana has been worried as the company’s contribution has been significant.
On Thursday, a ministerial delegation is expected to visit the Region Seven mine to talk with workers and tour the facilities.
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