Guyana earned $128B in taxes from oil sector in 2023, but zero from Exxon and partners

Oct 14, 2024 News

(Guyana earned $128B in taxes from oil sector in 2023, but zero from Exxon and partners. Taxes were from companies outside of Stabroek Block.)

Kaieteur News – The Auditor General’s 2023 report has revealed that Guyana earned from oil companies not operating in the Stabroek Block a little over $128 billion in taxes last year but this pales in comparison to the tax exemptions granted to ExxonMobil and its partners Hess, and CNOOC.

President of Guyana, Irfaan Ali

These companies, operating under the 2016 Production Sharing Agreement (PSA), did not have to pay about $306 billion income taxes on their Guyanese operations, leaving the government to cover the costs. According to the AG report, the government collected $128.07 billion from the sector in 2023, a 46% increase from 2022. These are taxes collected manly contractors working for Exxon. This comprised $122.16 billion from internal revenue and $5.91 billion from customs. It was stated that the oil and gas sector contributed 35% of the country’s overall revenue. However, it should be noted that the government granted contractual tax exemptions worth $196 million to the sector during the same period.

President of ExxonMobil Guyana Limited (EMGL), Alistair Routledge

Last year, ExxonMobil, Hess, and CNOOC earned an estimated $1.3 trillion in profits for 2023, all of which were tax-free in Guyana. This arrangement stems from the lopsided 2016 PSA which was signed by the previous Coalition government.

The 2016 deal allows the oil companies to recover up to 75% of their investment costs from production and pay no taxes on their profits. Instead, it stipulates that the government covers their tax liabilities from its share of the profit oil. As part of this deal, Guyana earned $336 billion from oil in 2023, but the government had to pay a staggering $306 billion in income taxes on behalf of Exxon and its partners. The PSA mandates that the government, from its 14.5% share of the oil revenue, must settle the taxes owed by the companies to the Guyana Revenue Authority (GRA).

This tax arrangement has been criticized both locally and internationally. Despite the growing calls for renegotiation, the Irfaan Ali administration has stood by the sanctity of the contract, stating it will not seek to amend the terms. In an interview last year, President Ali acknowledged the deal was not in Guyana’s favour but insisted that honouring the contract is important to his government’s policy.

(Guyana earned $128B in taxes from oil sector in 2023, but zero from Exxon and partners)

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Exxon, Irfaan Ali, PSA, renegotiation, taxes

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