NRF Act does not authorize deduction of taxes for GRA – Attorney General 

Jan 01, 2024 News

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“There is absolutely no provision in the Act which permits or authorises deduction of taxes for on behalf of the Guyana Revenue Authority. In fact, any unauthorised withdrawal from or interference with monies from the Fund constitutes an Offence, upon conviction, is liable to imprisonment and several million dollars in fine.” – AG, Anil Nandlall

Kaieteur News – Attorney General and Legal Affairs Minister, Anil Nandlall SC has said that the Natural Resource Fund (NRF) Act of 2021 does not authorise any deduction for the payment of taxes to the Guyana Revenue Authority (GRA).

His comments over the weekend came in response to a column written by prominent Attorney-at-Law and Chartered Accountant, Christopher Ram, who said that the NRF is overstated by almost $275 billion, as the government has failed to adhere to 2016 Petroleum Agreement which mandates payment of taxes for the oil companies from Guyana’s share of revenues earned.

Ram stated in his weekly column published by Stabroek News: “To my horror, my research discovered that the overstatement at 30 June 2023 after the payment of 2022 corporation taxes for the oil companies, was $274.8b. ($274,765m.), representing 76% of the Fund balance at that date.”

He continued, “With taxes payable amounting to $49.7b for the years 2020 and 2021 to be financed out of Guyana’s share of profit oil, the correct value of the Fund at 31st. December 2022 should have been G$248.4b, the difference representing an overstatement of 20%. A similar overstatement for 2023 alone, amounted to a further G$225.1b., hence the cumulative overstatement of $274.8 Bn.”

The Attorney General in responding to Ram said, “There is absolutely no provision in the Act which permits or authorises deduction of taxes for on behalf of the Guyana Revenue Authority.”

He therefore discounted Ram’s findings as a misinterpretation of law.

The AG reasoned that whether monies are paid to GRA as taxes or are paid into the Natural Resource Fund, they are in the State’s coffers and by operation of law will eventually be deposited into the Consolidated Fund.

Nandlall further elucidated, “The Natural Resource Fund Act defines “Petroleum Revenues” as “all Government revenues specified in section 15”. Section 15 (1) provides: “Petroleum revenues shall be directly paid into a bank account denominated in United States Dollars and held by the Bank as part of the Fund.” Section 15 (2) explains what Petroleum revenue shall include. These are royalties; government’s share of profit oil; any petroleum income tax, additional profits tax or any other future tax levied on the profits of companies or individuals undertaking production operations; any signature or other bonus related to production operations or the award of a petroleum licence; and any other current or future fiscal instrument levied solely or mainly on companies or individuals involved in production operations.”

Moreover, he pointed out that Section 15 (1) and (2) of the NRF Act authorises petroleum revenues to be paid directly into the Fund. This includes taxes leviable in relation thereto. He explained that the law strictly prescribes how monies are to be withdrawn from the Fund, by what process and for what purposes.

“For example, by Section 16, “all withdrawals from the Fund shall be deposited into the Consolidated Fund and shall be used only to finance – national development priorities …” and “essential projects that are directly related to ameliorating the effect of a major natural disaster.”

There is absolutely no provision in the Act which permits or authorises deduction of taxes for on behalf of the Guyana Revenue Authority. In fact, any unauthorised withdrawal from or interference with monies from the Fund constitutes an Offence, upon conviction, is liable to imprisonment and several million dollars in fine,” the AG explained.

He observed that Ram quoted the 2016 Petroleum Production Agreement, which imposes upon the Minister, a number of obligations in respect of the payment of taxes to the GRA on petroleum production.

Nandlall contended, “Those provisions of that Agreement have obviously been overtaken by the Natural Resource Fund Act. It is a very rudimentary principle of law that if a contract conflicts with a Statute, the Statute shall prevail.”

He argued that the NRF Act features a supremacy provision at Section 45 which states: “in the event of any inconsistency between the provisions of this Act and the provisions of any other law on fiscal matters and financial management, or between the provisions of the Act and the terms of a petroleum license, the provisions of this Act shall prevail.”

According to the Legal Affairs Minister, when the 2016 Agreement was ‘secretly executed’, there was no fiscal framework to regulate petroleum revenues and therefore, the extant framework at the time would have applied. With the NRF legislation now enacted, he informed that “It must prevail as the law of the land.” The AG was assertive that, “No agreement can stand in its path.”

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• Anil Nandlall, Attorney General, authorize, GRA, Law, S.C.

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