Oil and gas sector saw $125.8 billion tax exemption in 2019 – AG report
─ billions in VAT refunds
The oil and gas industry received tax exemptions totalling some $125.8 billion for the fiscal year 2019, Auditor General, Mr. Deodat Sharma has revealed in his annual report.
The exemptions were allowed through the Guyana Office for Investment (Go-Invest) and the Guyana Geology and Mines Commission (GGMC).
Under examination of the Guyana Revenue Authority (GRA), the report which was recently submitted to the National Assembly, showed also that two companies objected to assessed taxes totalling $265.626 million.
Further, the report stated that applications for VAT refunds by companies in the oil and gas sector for 2019 amounted to some $2.422 billion. At the time of reporting in November 2020, VAT refunds totalling $280.952 million were made to one company, the report highlighted.
Mr. Sharma said VAT returns totalling $8.018M were rejected, VAT refunds totalling $26.792 million were disallowed, while $2.1 billion in VAT refunds are being processed by the GRA.
Vice President Dr. Bharrat Jagdeo, recently stated that the fiscal regime of the Production Sharing Agreement (PSA) between the Government and US oil company ExxonMobil was too liberal and has placed the country at a disadvantage.
The PSA, signed in 2016, states “no tax, value-added tax, excise tax, duty, fee, charge or other impost shall be levied at the date hereof or from time to time thereafter on the Contractor or Affiliated Companies in respect of income derived from Petroleum Operations or in respect of any property held, transactions undertaken or activities performed for any purpose authorised or contemplated hereunder.”
“The tax concessions all are enshrined in the PSA. It is almost so egregious that where tax liability falls on the company, often the Government has to pay. So, a lot of the laxity in relation to the oil companies is derived from the PSA,” the Vice President said during a recent interview.
Dr Jagdeo said many sub-contractors hired by Exxon are also benefitting from tax cuts that the “local man does not get.”
Government has already made it clear that the current PSA relates only to the Stabroek Block, and that future oil companies interested in oil production here will be bound by different guidelines, which will correct the deficiencies in the existing agreement.