Pres. Ali calls on Guyanese businesses to pay taxes

May 27, 2024 News

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…but giving away US billions to ExxonM

Kaieteur News – Addressing the members of Guyana’s Private Sector Commission (PSC) last week, President Irfaan Ali underscored the importance of local businesses fulfilling their corporate tax obligations, saying this was a crucial aspect of national responsibility.

Speaking at the body’s 32nd Annual General Meeting at the Marriott Hotel in Georgetown, President Ali also spoke about the significance of private sector contributions to the country’s development. He then encouraged the private sector to take proactive measures, calling for a nationwide effort to educate businesses about their tax responsibilities. He outlined that tax compliance should not solely be viewed as the government’s duty but also as an obligation for responsible corporate citizenship. Ali said:  “The private sector must launch a national campaign on educating [its] membership on the responsibility of paying their taxes. It is not only the government’s responsibility. As responsible corporate citizens, you have to pay taxes.”

While acknowledging the private sector’s role in social responsibility initiatives, President Ali highlighted the necessity for policies aligning with broader national development goals.  “It is good to do social services, but you can’t rob the treasury of taxes and believe that your small social service will compensate for robbing the treasury of taxes…” the head of state said.

Moreover, Ali also highlighted the potential benefits of investing in sectors eligible for tax write-offs and incentives, particularly in agriculture and eco-tourism. According to the Guyana Revenue Authority (GRA), companies engaged in both commercial and non-commercial activities are taxed at dual-rates as follows: 25% for the non-commercial activity of the company and 40% of the commercial activity.

President Ali calls on corporate bodies to pay their taxes comes at a time when ExxonMobil Guyana Limited (EMGL) and its Stabroek Block partners enjoy a tax-free ride in Guyana. Kaieteur News reported that in the first three months of 2024 ExxonMobil forked out US$11B in income taxes for its global operations but none was paid to Guyana. ExxonMobil Corporation (XOM) in its first quarter report for 2024 details “total taxes were US$11.0 billion, a decrease of US$2.1 billion from 2023.” The oil giant explained that income tax expense was US$3.8 billion compared to US$5.0 billion in the prior year. “The effective income tax rate, which is calculated based on consolidated company income taxes and Exxonmobil’s share of equity company income taxes, was 36 percent. This increased from the 34 percent rate in the prior year period due primarily to a change in a mix of results in jurisdictions with varying tax rates,” the company pointed out.

In the meantime, it was noted that total other taxes and duties decreased by US$0.9 billion to US$7.2 billion. Guyana has been the driving force of the record profits registered by ExxonMobil, but due to the lopsided Production Sharing Agreement (PSA) it signed in 2016 with the Government of Guyana (GoG), the company and its sub-contractors are exempted from tax payments.

In fact, the oil deal provides for taxes owed by the company to be paid by Guyana. The PSA states at Article 15.1 that the Contractor (ExxonMobil Guyana Limited) as well as its affiliates shall not be subjected to tax, value-added tax, excise tax, duty, fee, charge or impost in respect of income derived from petroleum operations, property held or transactions except as specified under the agreement.

It goes on to state at Article 15.4 that the sum equivalent to the taxes owed by the company will be paid by the Minister responsible for Petroleum to the Commissioner General of the Guyana Revenue Authority (GRA). Notably, the GoG also agreed to issue a receipt to ExxonMobil, indicating that it has met the local tax requirements to avoid the burden of double taxation.

Article 15.5 of the contract states, “Within one hundred and eighty (180) days following the end of each year of assessment, the Minister shall furnish to Contractor proper tax certificates in 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 Contractor or parties comprising the Contractor and other particulars customary for such certificates.”

A legal suit brought against these abusive tax giveaways by the Publisher of this newspaper, Mr. Glenn Lall was unsuccessful as the Court dismissed the case in February 2023.

Since oil production activities commenced in 2019, Guyana has lost US$2,841,000,000 in taxes to oil and gas companies.  Kaieteur News reported that tax exemptions granted between 2019 and 2021, according to previous AG Reports, amount to a whopping US$2.3 billion. In 2019, Guyana lost US$600 million in taxes and in 2020 another US$685 million; this was followed by US$1B in tax exemptions in 2021 and US$541 million in 2022. Information on tax waivers for 2023 has not yet been made public.

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• Addressing the members of Guyana’s, ExxonMobil’s, Georgetown, President Irfaan Ali, Stabroek Block

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