Tuesday, January 31, 2023

Guyana granted US$1.28 billion in tax exemptions in 2021 to support economic upsurge – Report

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For 2021, the Guyana Revenue Authority (GRA) said it waived GY$266.77 billion, equivalent to US$1.28 billion, in tax exemptions as compared to GY$137 billion (US$657 million) in 2020.

This represents an increase of GY$129.77 billion (US$622.42 million) or 94.78% over the corresponding period. The Commissioner General, Godfrey Statia, was keen to note that these exemptions were granted to support the annual upsurge in economic activity as efforts continue in the Stabroek Block to develop and augment the country’s oil bonanza.

According to the Auditor General’s report, Statia said tax exemptions granted to companies and businesses represented 95.1% or GY$235.49 billion (US$1.13 billion) of the total conditional exemptions granted.

Included in the sum of GY$235.49 billion (US$1.13 billion) were amounts totalling GY$209.56 billion (US$1.01 billion), representing the value of tax exemptions granted to 256 companies in respect of Investment Agreements facilitated through the Guyana Office for Investment (GO-Invest) and the Guyana Geology and Mines Commission (GGMC), as well as exemptions granted to the oil and gas sector.

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The Head of the Authority sought to reiterate that its role with the exemptions regime is administrative, and hence, to administer the various conduits through which concessions are granted. These concessions are etched in law and/or policies and are non-discretionary on the part of the GRA. In fact, Statia said he is on record as stating his preference for the removal of the concession regime and to replace such with the system of tax credits.

He said this is practiced in developed nations, thereby allowing for improved compliance with the tax laws and the conditions of Investment Agreements.

More importantly, Statia pointed out that total exemptions have over the year experienced marginal increases, and in some years comparatively decreased when exemptions/concessions which were granted to the oil and gas sector are excluded. From 2019 to 2021, the oil and gas sector accounted for, on average, 75% of total exemptions. For 2021, exemptions granted to the oil industry totalled GY$203.8 billion (US$977.46 million).

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Statia stressed that exemptions to the oil and gas sector have a legal underpinning as a result of the provisions of the Production Sharing Agreement (PSA) between the companies and the Government of Guyana.

As a matter of fact, he said GRA expects that as production and exploration activities are amplified in the Stabroek and other blocks, exemptions will increase exponentially.

Statia said too that at no time is there a correlation between the revenue loss as a result of the exemptions regime and the revenue the GRA collects from Tax Administration. He said investment schemes, concession regimes, tax breaks/holidays and other macros to incentivise investments are designed, with intended benefits, at the level of governance and policymakers, to encourage investment and create investment conditions with an expected return of many factors and not just taxes.

He said there is therefore no parallel and matching proportionality between creating lucrative and attractive investment conditions and collections of taxes.

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