The Guyana Revenue Authority (GRA) and the Local Content Secretariat are upping their enforcement of “rent-a-citizen” practices designed to bypass the country’s Local Content Act (LCA). This is according to Minister of Natural Resources Vickram Bharrat, speaking exclusively with OilNOW on February 13.
The practice involves foreign investors using Guyanese nationals or companies as fronts to circumvent provisions in the country’s Local Content legislation.
Bharrat explained that detection is not always straightforward. However, he noted that the involvement of the GRA and the Local Content Secretariat’s unit has strengthened enforcement.
“So, this fronting and this economic trend that I spoke of…shell companies, it happened like in the fourth year of implementation, where people believed that they could look at loopholes, and when they realized that we were serious about clamping down on these things, you see it start to minimize,” he said.
“On the paper they submit to us, they own 51% of the company, but…we started to threaten them that we’re going to check GRA records. Because if you’re getting 51% revenue of this company, which you’re entitled to, then your taxes should match the revenue that you’re receiving, then the truth is uncovered,” he explained.
The LCA sets forth 40 sectors and sub-sectors for Guyanese businesses. Foreign investors wanting to operate within those areas can partner with Guyanese companies, with 51% Guyanese beneficial ownership in the joint venture, among other critical factors, to benefit from mandatory preference in the procurement of goods and services by companies in the sector.
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Verified Guyanese companies receive a Local Content Certificate from the Secretariat. However, moving forward, before the Secretariat issues renewals, there will be an added layer of scrutiny of the information submitted by contractors to ensure accuracy.
Minister Bharrat described discrepancies uncovered during reviews, noting that documentation alone is not always sufficient.
“Now, how can you say to a Guyanese, you’re lying? They provide the documents. But when you go and check sometimes, you realize that, yes, it’s fronting…”
He added: “It causes some honesty from Guyanese people too, because you want Guyanese to benefit, you want your country to benefit, but you’re here with a foreign company robbing yourself of your own country.”
The Minister credited strict oversight for the decline in violations. “Because of our vigilance and the stern approach we took towards it, we have seen almost elimination of that kind of behavior, which is very good.”
The Local Content Secretariat has further strengthened oversight with the recent launch of its online portal, aimed at accelerating the local content certification process.
As a key feature of the portal, applications will not be accepted for review unless all required documents are uploaded, a change aimed at cutting down back and forth communication and stalled reviews.
