Kaieteur News Publisher challenges 8 most oppressive, reprehensible tax provisions in ExxonMobil deal

Jan 16, 2022 News

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Kaieteur News Publisher, Glenn Lall this past week filed a historic legal action through his lawyer Mohamed R. Ali, against eight of the most repressive tax provisions listed under Article 15 in the Stabroek Block Production Sharing Agreement (PSA).

The onerous provisions being challenged speak to the fact that ExxonMobil, its partners, subcontractors and affiliated companies can all enjoy a tax-free ride on remittances to their parent companies abroad when this is not catered for in Guyana’s laws. They are also exempt from any charge or levy or fee or duty.
The provisions also state that Guyana should pay the income taxes for ExxonMobil and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited out of the nation’s share of profit oil then issue the conglomerates a tax receipt showing same. Other companies in Guyana do not enjoy such a luxury.
Lall is also challenging provisions in the contract which allow the expatriates hired by Exxon and its partners to enjoy a tax-free ride on their super salaries so long as they exit the country by the close of 183 days.
Additionally, Kaieteur News is challenging the exemption of Exxon and its subcontractors from the Property Tax Act.
Since it is Lall’s opinion as well as that of his lawyers that these provisions violate the Petroleum Exploration and Production Act, the Financial Administration (and Audit) Act, the Prevention of Discrimination Act, and the Constitution, the High Court is being asked to deem the eight Articles of the contract unlawful, null and void and therefore of no legal effect.
Below is a list of the eight oppressive Articles being challenged in the Stabroek Block Production Sharing Agreement.
Article 15.1 states: no tax, value-added tax, excise tax, duty, fee, charge or other impost shall be levied on the Contractor or Affiliated Companies, in respect of income derived from Petroleum Operations or in respect of any property held, transactions undertaken or activities performed for any purpose authorised or contemplated hereunder.

Article 15.4: that a sum equivalent to the tax assessed pursuant to Article 15.2 and 15.3 will be paid by the Minister to the Commissioner General, Guyana Revenue Authority on behalf of the Contractor and that the amount of such sum will be considered income of the Contractor; and that the appropriate portion of the Government’s share of Profit Oil delivered in accordance with the provisions of this Agreement shall be accepted by the Minister as payment in full by the Contractor of Contractor’s share of each of the following levies, whatsoever the applicable rate of such levies may be, which the Minister shall then pay on behalf of the Contractor under Article 15.4 (a) to the Commissioner General, Guyana Revenue Authority or such successor authority:
(i) the Contractor’s share of the income taxes imposed by the laws of Guyana, including, but not limited to, income tax imposed by the Income Tax Act and corporation tax imposed by the Corporation Tax Act and payable at the date hereof, or from time to time thereafter, and any other levy or charge on income or profits which may become payable from time to time under any laws, acts, statutes, regulations or orders by the Government; and (ii) any other similar charge imposed and payable in respect of Petroleum Operations at the date hereof, or from time-to-time hereafter, except charges of the type specified in Article 15.1 (a-b).”

Article 15.5: “The Contractor shall provide the Minister with the Contractor’s income tax returns to be submitted by the Minister to the Commissioner General, Guyana Revenue Authority so the Minister can pay income tax on behalf of the Contractor as provided under Article 15.4 (a). On such returns, the Minister shall note that he is paying the income taxes on behalf of the Contractor, so that the Commissioner General, Guyana Revenue Authority can properly prepare the receipts required under this Article 15.5. Within one hundred and eighty (180) days following the end of each year of assessment, the Minister shall furnish to the Contractor proper tax certificates in the Contractor’s name from the Commissioner General, Guyana Revenue Authority evidencing the payment of the Contractor’s income tax under the Income Tax Act and corporation tax under the Corporation Tax Act. Such certificates shall state the amount of tax paid individually on behalf of the Contractor or parties comprising the Contractor and other particulars customary for such certificates.”

Article 15.7: “Subject to the conditions of section 49 of the Act, the Minister may remit in whole or in part, or defer payment of, any royalties payable by Contractor.”

Article 15.9: “The Minister hereby agrees that the Contractor shall be exempted from the Property Tax Act pursuant to section 51 of the Act and any other act which amends or replaces in part or in whole the Property Tax Act.”

Article 15.10: Notwithstanding any provision to the contrary in this Article, Affiliated Companies or Non-Resident Sub-Contractors shall not be subject to the provisions of the Income Tax Act (Cap 81:01) and Corporation Tax Act of Guyana (Cap 81:03) during the expiration period on income earned in Guyana for any given tax year if the Affiliated Company or Non-Resident Sub-Contractors has conducted business for one hundred and eighty-three (183) days or less on a cumulative basis in the tax year of assessment.

Article 15.11: “There shall be no tax, duty, fee, withholding, charge or other impost applicable on interest payment, dividends, deemed dividends, transfer of profit or deemed remittance of profits for Contractor’s, Affiliated Companies’ or Non-Resident Sub-Contractors’ branch in Guyana to its foreign or head office or to Affiliated Companies.”

Article 15.12: “Notwithstanding any provision to the contrary in this Article, expatriate employees of Contractor, Affiliated Companies or Non-Resident Sub-Contractors shall not be subject to the provisions of the Income Tax Act of Guyana (Cap. 81.01) and shall not be liable for personal income tax in Guyana on income earned in Guyana for any given tax year if the expatriate is physically present in Guyana for one hundred and eighty-three (183) days or less on a cumulative basis in the tax year of assessment.”

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