President Ali wants local private sector to pay its fair share of taxes

Nov 20, 2022 News

…but refuses to impose taxes on ExxonMobil, others

Kaieteur News – President Irfaan Ali has called on the local private sector to pay its fair share of taxes even as his government refuses to tax U.S. oil giant ExxonMobil and other oil companies currently operating in Guyana.

President Irfaan Ali addressing the Business Development Forum

The President was at the time speaking at the Business Development Forum hosted on November 11 and 12 at the Pegasus Suites and Corporate Centre, Georgetown.

“Organizations and associations can’t get away under the umbrella of being an organization. We have to hold everybody accountable. The government, the private sector, and the businesses – we talk about primitive taxation system but why don’t you Timothy, also address compliance? Because if everybody pays their fair share of taxes then you have greater compliance and then can talk about reduction too,” President Ali remarked.

Speaking earlier at the event was President of the Georgetown Chamber of Commerce and Industry (GCCI), Timothy Tucker, who argued the need for reforms to the existing tax regime. In fact, Tucker had made it clear that if government wants businesses to grow, the taxation system must be remedied to foster such development.

However, the President in his response reasoned, “Why the private sector must not take on the battle of tax compliance? We can’t have lopsided responsibility. We have to have shared responsibility. I share your burden, you share my burden.”

The President told the room of Guyanese investors that “It’s not an easy situation.”

On the sideline of that event, the GCCI President told reporters that over the years, local businesses in Guyana have been the driving factor in the country’s economy, and it is time for the taxation policy to be reviewed so that small companies can enjoy benefits similar to that of oil giant, ExxonMobil.

Cognizant of the fact that last year over $266B in taxes were waived by the Guyana Revenue Authority (GRA) with $203B alone to oil companies, the Chamber President called for tax incentives to be introduced for local businesses to allow growth and even regional expansion.

He explained that while he believes frontier companies like ExxonMobil should be privy to tax exemptions given that they made investments in a very uncertain environment, Government must find a way to level the playing field.

“I would like to see something also given to local existing businesses that have been here all the years that maybe want to go public or want to be able to redefine and re-innovate themselves, should be able to have some sort of tax benefits that is similar to what they are getting,” Tucker said.

He was keen to note, “So you got a few companies in the country that are being taxed in the corporate rate, a lot of people operating under and below the radar, hiding under the guise of sole proprietorship and then the multinational conglomerates get the free pass.”

As such, the GCCI Head alluded to the need for a revised taxation policy. “So really the tax base is narrow but we need maybe a modern taxation system that encompasses everybody and be able to get more of it…the Private Sector has been here working doing all of the work over the years, got the country surviving, paying the bills really and truly need a break and need something to look forward to and I believe that the time is now.”

It was reported that GRA at the end of the fiscal year 2021 granted a total of $266.774B in tax waivers with a whopping $203.8B alone to the oil and gas sector or 78.3 percent of all tax exemptions granted for the year.

This information is contained in the Auditor General’s 2021 Report. Notably the tax waivers also amount to more than what the country gained in revenue from the oil sector during the same period.

According to the Natural Resource Fund (NRF) Summary, as at December 31, 2021 the total balance was $126,694,310,000 billion (US$633.47M); while the total tax waivers for this period amounted to US$1.019 billion.

The tax body at the end of 2021 collected the sum of $242.091 billion.

So far, the Publisher of this newspaper, Mr. Glenn Lall has filed a case in Guyana’s High Court challenging the tax giveaways in the Stabroek Block Production Sharing Agreement (PSA) to the oil companies.