Latest update December 23rd, 2024 3:40 AM
Guyana earn $130B in income taxes at midyear, but allowed Exxon and partners to walkaway with $306B last year
“Guyana earn $130B in income taxes at midyear, but allowed Exxon and partners to walkaway with $306B last year. While Exxon, Hess, and CNOOC are not required to pay income taxes, the 2016 oil contract provides for the taxes to be paid to the GRA by the Government out of its share. In 2023, Guyana earned $336 billion from oil sales and royalties”.
Godfrey Statia, Commissioner General of the Guyana Revenue Authority (GRA)
Kaieteur News – The Guyana Revenue Authority (GRA) collected almost $130 billion in income taxes by mid-2024, the Bank of Guyana (BOG) reported.
The Central Bank said that GRA’s overall income tax revenue collection within the first six-months of 2024 increased by 21.8% to 129.7 billion, largely driven by a broader base of collection from oil and gas related firms.
President of ExxonMobil Guyana Limited (EMGL), Alistair Routledge
However, despite this growth, it remains noteworthy that the overall income tax GRA collected within six months is less than what ExxonM0bil Guyana Limited (EMGL), Hess Guyana Exploration Ltd. and China National Offshore Oil Corporation (CNOOC) Petroleum Guyana Limited did not have to pay to GRA in income taxes for 2023.
BOG revealed that total current revenues increased by 18.7% to some $227.2 billion. This figure excludes inflows like the Natural Resource Fund (NRF), Guyana REDD+ Investment Fund (GRIF), and Carbon Credit Sales (CCS).
The increase was due to greater tax collection which rose by 18.8% to $216 billion, on account of increased economic activities. Corporate tax payments from private firms rose by 21.1% to $48.8 billion, while public corporation taxes saw a modest increase of 8.1%, reaching $2 billion. Also, personal income taxes and withholding taxes expanded by 14.6% and 31.9%, respectively, amounting to $39.5 billion and $39.4 billion. Additionally, the collection of VAT and excise taxes grew by 13.9% to $55.8 billion.
Kaieteur News previously reported that for 2023, the Government of Guyana (GoG) had to pay the combined sum of about $306 billion in income taxes for ExxonMobil and its Stabroek Block partners, Hess and CNOOC, according to the companies’ audited financial statements.
Exxon is the operator of the Stabroek Block, with 45% interest, Hess holds 30% interest and CNOOC holds 25% interest. Last year, the three companies earned $1.3 trillion in profits – entirely tax-free in Guyana, in accordance with the 2016 Production Sharing Agreement (PSA).
While Exxon, Hess, and CNOOC are not required to pay income taxes, the 2016 oil contract provides for the taxes to be paid to the GRA by the Government out of its share. In 2023, Guyana earned $336 billion from oil sales and royalties.
According to the PSA, the Stabroek Block partners are allowed to recover 75% of the oil produced to recover their investment costs; the remaining 25% is considered profit, which is split between Guyana and the Stabroek Block consortium, giving each 12.5%. However, the consortium pays a 2% royalty from its share to Guyana. From its 14.5% Guyana then has to pay taxes for the oil companies.
Notably, the provision of the Stabroek Block contract which gives Exxon and its affiliates a tax-free ride in Guyana has attracted criticisms locally and internationally. Despite this, the Irfaan Ali-led administration is adamant that the deal will not be renegotiated due to the implications of the sanctity of contract.
The contract states in 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 in 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 GRA. It should be noted that the contract also allows for the issuing of a receipt to ExxonMobil, indicating that it has met the local tax requirements to avoid the burden of double taxation in the United States.
(Guyana earn $130B in income taxes at midyear, but allowed Exxon and partners to walkaway with $306B last year)
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