Royalty is tax – really, Mr. Routledge

Sep 26, 2025 Features / Columnists, The GHK Lall Column

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Kaieteur News – When Exxon delivers a tax receipt from Guyana for what it didn’t pay, then a question is repeated before Guyanese.  Is that a scam or is that a scam?  When Exxon takes that Guyana Revenue Authority (GRA) issued tax receipt and includes it in its US tax filing, then what is that a double scam or, as Guyanese would say, doubling the sweetness out of one bone, the Guyana tax bone?  The oil production profits are rich, pushes Exxon’s numbers into the stratosphere, but there is that tax never paid, that GRA tax receipt that should never be issued (receipts [plural]), and the never-never Alice in Wonderland environment that dominates Guyana’s oil.

It surprises that this Exxon tax sleight of hand stayed so long under U.S. radars.  Which Guyanese can engage the GRA for a tax receipt that is built on a tax mirage, a phantom tax payment?  The result either would be the SWAT team is called out; or residency in a lunatic asylum is prescribed.  In contrast, a smart few in Exxon, and quite a willing few in Guyana (no names, yet), are doing just that – no taxes paid, but receipts collected.  Instead of a stint in the slammer, they are celebrated in headlines.  I recall some illustrious Yankee names of yore.  Try Charles Ponzi from way back.  Then exhume Bernie Madoff, who was the Golden child with the golden touch until he found himself in a house of correction made of steel and overlooked by men armed with lead.  At least those two masterminds dealt in physical money, money moving from one hand to another, and ending up somewhere.  It was usually to themselves.

From where moves the tax payment money made by Exxon to Guyana’s coffers moving?  Into which Guyanese institution’s goes that same make-believe Exxon tax remittance money?  The GRA cannot certify any such check intake, since nothing was deposited into its cash register.  If no tax money moving from Point A (Exxon) to Point B (the GRA), then how the hell can there be a tax receipt?  How can anyone, regardless of how bright they are, or think they are, be due, or be issued, such a tax receipt?  I wish that house lots and local content contracts are shared out in the same way.

It so happens that not only a dumb fellow like me is eyeballing this Exxon tax sleight of hand, but a small handful of American senators.  Before proceeding, any Guyanese who has a better description than sleight of hand is assured of hospitable reception from this citizen-ministry.  Said the American senators: “Payments to a foreign government in exchange for an economic benefit [such as the right to extract oil and gas] are not considered taxes at all and thus cannot qualify for a U.S. foreign tax credit.”  Exxon may think that these chaps should get a life, find better things to do.  I applaud their interest and effort.  I agree completely with the U.S. senators.  Somebody from Exxon doesn’t, and he had the foresight to do that long before the senators made the news with their interest in Exxon’s business in Guyana.

Enter Exxon’s Guyana honcho, Alistair Routledge, and checkout how well he laid out the tax land.  “In effect, that profit-sharing royalty is tax. In other systems like whether you are running a different local business, you pay corporate tax – in effect it is the same. It is giving a tax, a revenue to the state. It is remitting revenue to the state…while it is not called tax in the Petroleum Sharing Agreement in effect that’s what it is. It is payments to the state in lieu of there being a tax agreement.”

From one American to another: I am pained that an American of the caliber of Alistair Routledge could so unashamedly deliver that contortion that “royalty is tax.” That “it is payments to the state in lieu of there being a tax agreement.”  Guyanese aren’t that dumb, Mr. Routledge.  Insulting, sir.  Royalty is an agreed upon amount/percentage finalised between the host country owner of a precious resource and a corporate entity investing dollars, expertise, technology, and more.

Royalty rate is a hardnosed recognition, appreciation, and declaration of what both parties bring to the table.  Royalty level is a reciprocal thank you.  Mr. Routledge knows that royalty is not a proxy for tax.  Royalty is in addition to taxes.  I may be swayed if the royalty is 20 or 25% indicating built-in tax provisions.  But not when it is an insulting 2%.  Separately, Exxon’s Routledge is representing something, maybe unintentionally.  Namely, the 2% royalty in lieu of tax equates to a 2% tax rate between Exxon and Guyana.  Self-explanatory, I assert.  Make the royalty rate 22%, Mr. Routledge, and I will echo those words, royalty is tax.

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

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• Exxon, Guyana Revenue Authority, Routledge, royalty, tax

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