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Guyana lost $137B to oil companies in 2020
…tax exemptions will continue to balloon unless policy is changed – GRA Boss
Kaieteur News – For the period 2019 to 2020, Guyana gave away $327B in tax exemptions and unless policy changes are made in the oil sector, the Guyana Revenue Authority (GRA) predicts these exemptions will only continue to balloon.
GRA Commissioner General, Godfrey Statia
The authority made these and other remarks in response to queries from the Auditor General’s office in its 2020 Annual Report.
The Auditor General had found that tax exemptions for 2020 alone totalled $137B in foregone revenues, representing 62.75 percent of total collections by the authority.
Meaning the $137B forgone by government through tax exemptions for that period, amounts to 62.75 percent of what was actually collected by the revenue authority.
Commissioner General, Godfrey Statia, in the report, was keen to note that the award of tax exemptions is not under the control of that agency.
He said, the tax exemption regime is a matter of policy, and therefore only administered by the authority.
In fact, the Commissioner General reiterated that he is on record, as stating his preference for the removal of the concession regime and having it replaced with a system of tax credits, as practised in the developed nations, thereby allowing for improved compliance with the tax laws and the terms of Investment Development Agreements (IDAs).
Statia said it should be noted that IDAs and conditional and unconditional exemptions are granted under Item 11 of the First Schedule, Part III B (ii) of the Customs Act.
He said the GRA from 2016 onwards, under new strategic directions from the Commissioner General, has undertaken several interventions that saw a significant reduction in the number and value of exemptions granted.
Statia was keen to note that requests for tax exemptions are scrutinised to ensure they meet specific criteria so as to curtail the significant loss of revenue that may result from the haphazard manner in which concessions were granted previously.
Furthermore, it was noted that a majority of the Unconditional Exemptions relates to IDA’s.
Statia said these were made available to the staffers of the Auditor General for their review, the summation of which would have provided an informed analysis as to the coherent reasons for the increase in exemptions in certain categories, such as the Oil and Gas sector.
In conclusion, Statia cautioned, “significant increase in exemptions is expected in the coming years owing to the burgeoning Oil and Gas sector, and unless policy changes are effected, exemptions are expected to grow exponentially as the industry develops and matures, and in particular, if the Production Sharing Agreements (PSAs) for other blocks have similar provisions for exemptions.”
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