The GRA owes no one an explanation

Sep 02, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – The Guyana Revenue Authority is now being asked to go public about the tax’s agency capacity to undertake the audit of the oil expenses of ExxonMobil and its partners. According to a report in this newspaper, at his weekly press conference yesterday, the Vice President of Guyana said that he told GRA that it needs to go public about its problems in finding staff to undertake such audits since this matter was never raised as a matter of policy with either him or the Minister of Finance.

This is a shameless abrogation of the government’s responsibilities and a form of blame-shifting on the part of the Vice President. The issue of finding qualified staff is an operational matter and does not fall under the purview of policy.

In any event, the Vice President ought to know that the GRA should not have been asked by the government to undertake such an audit. The GRA, as the tax arm of the government, has specific statutory limitations and a clear mandate outlined in the Guyana Revenue Authority Act of 1996.

According to the 1996 Act, the GRA is primarily responsible for assessing, charging, levying, and collecting all revenue owed to the government under specified laws. It also plays a role in safeguarding Guyana’s interests in international taxation agreements, promoting compliance with revenue-related laws, advising the Minister on revenue matters, and performing other revenue-related functions directed by the Minister. Crucially, any additional functions assigned to the GRA must be tax-related.

The GRA cannot be delegated as an auditor under the Petroleum Act, as it is not the external auditor of the government. This would create a clear conflict of interest for the GRA, as it would be tasked with auditing the government’s financial dealings under the Petroleum Act while simultaneously assessing the tax implications of these audits.

The GRA’s primary role revolves around tax collection, making it ill-suited for the detailed examination of ExxonMobil’s pre-contract costs.  Such a task is best left to professional international auditing firms. It is the Ministry of Natural Resources that ought to be recruiting such auditors.

While the GRA can perform an audit for tax purposes, there is little to be gained from doing so. ExxonMobil and its partners benefit from substantial and extensive tax exemptions. This means that the GRA does not have significant tax revenues to collect and therefore there is little incentive for the GRA to be auditing the oil expenses for tax purposes.

Even if perchance the GRA uncovers errors, omissions, or fraud during its tax-related audit, its primary concern would be the tax implications. This information could be used for potential tax-related prosecution against ExxonMobil. However, the findings of such an audit cannot be shared with the government due to confidentiality obligations between a tax agency and its clients, as stipulated in the Guyana Revenue Authority Act. This legal framework prohibits GRA members from disclosing privileged information obtained during their duties without proper authorization. And if it cannot be shared with the government, it certainly cannot be shared with the public.

The Vice President has sought refuge behind propriety confidentiality. He says that much of the information from the audit is protected information. But the issue is not the revelation of the details of the expenses, which admittedly are propriety information. The issue is really the general findings of the outcome of the audit. It is these findings that the public is anxiously awaiting.

Consequently, the GRA’s role in auditing ExxonMobil’s pre-contract costs remains circumscribed. Its scope is limited to tax-related matters, and it cannot legally serve as the government’s authorized auditor of oil expenses.

In any event, GRA does not have and cannot afford to pay for the expertise needed to undertake audits of oil expenses. As such, the GRA should exit any role it has as the auditor of ExxonMobil’s cost recovery expenses.

Furthermore, the GRA’s capacity to undertake such audits is questionable, as it lacks the requisite expertise and experience. The GRA should refrain from overstepping its mandate and should not overestimate its capabilities in this regard. And it should not be baited into becoming the government’s spokesperson on the oil and gas sector.

That responsibility is reserved for the Minister with responsibility for oil and gas- whoever that is. Because with the PPP/C, you simply do not know who are substantive Ministers and who are not.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• explanation, Guyana Revenue Authority, Minister of Finance, Peeping Tom, Vice President

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