GRA allowed $ 442B in tax exemptions between January 2016 and May 2020
– 2019 omits four times more than 2016
Kaieteur News – For the period January 2016 to May 2020, the Guyana Finance Authority (GRA) issued a staggering $ 422B in tax exemptions. The waivers were given to Diplomats; Hospitals; Remigrants; Companies / Businesses; Foreign Funded Projects; Public Officers / Officers; Charitable Churches / Organizations, and Ministries or government departments.
The category with the most tax exemptions for the period highlighted was ‘Companies / businesses’. Taxes exempt in 2016 for example were $ 30.3B and then jumped to $ 172.3B in 2019. Exemptions for companies / businesses were $ 51B for the first five months of 2020 alone, despite a huge economic slowdown for the that year.
Kaieteur News also noted that exemptions for 2019 waivers totaled $ 181.2B, making it four times more than what was granted in 2016.
The GRA noted, in documents seen in this paper, that the increase in tax exemptions for companies / businesses over the years was largely due to the introduction of the oil and gas sector.
It was further noted that the emergence of the sector led to the approval of 98 Tax Exemption Certificates / Letters for Value Added Tax (VAT) on company-provided services to several companies including Guyana Industrial Minerals, a subsidiary of ExxonMobil Esso Exploration and Production Guyana Limited , Exploring Repsol, and Tullow. GRA said that these certificates are renewed annually on the basis of the expiry date on the various Investment Agreements.
It is important to note that the exemptions granted by GRA to the oil sector are based on the deals that Guyana would have signed with ExxonMobil and other oil majors. Guyana’s Production Sharing Agreements (PSAs) with these exploration companies explicitly state that the oil majors, their subcontractors, and related companies, are free from all duties, taxes and any other levies.
Since 2016, there have been constant calls for the review of Guyana’s systems governing tax exemption as they are deemed unreasonable. Even the Tax Reform Commission (TRC), founded by the Granger administration, had called for a review of the concessions given to companies in various sectors.
The Commission had included the head of National Industrial and Commercial Investment Limited (NICIL), Maurice Odle; Chartered Accountant, Christopher Ram; General Commissioner of the Guyana Finance Authority (GRA), Godfrey Statia and economist Dr. Thomas Singh.
In its report, the Commission highlighted Guyana as one of the foremost countries in the Caribbean region with a massive overlay of tax exemptions and write-offs that ultimately make it difficult to administer tax and revenue losses significantly.
The Commission highlighted that the relatively weak revenue vitality in Guyana in recent years was linked to the flow of tax incentives granted to companies. It had also emphasized that more detailed studies of the economic efficiency and revenue costs of these exemptions should be undertaken to plan a transition away from use-based exemptions to more limited automated exemptions.
Furthermore, the Commission had stated that the losses from the award of Investment Development Agreements were a cause for concern. The TRC pointed out that many sectors receive concessions that are even greater than their tax contribution. The Commission also said that while this fact alone does not justify the abolition or withdrawal of the concessions, “it is clear that an urgent review is required.”
Equally important, says the Commission, is the need for a post-audit system for concessions granted including bond / warrant posting to ensure commitments are fulfilled. It also called for a periodic audit and publication of reports of tax holidays granted and investment agreements entered into.