Sol Guyana denies massive abuse of fuel tax exemption letters
– Says a third party hired to prove GRA wrong
Kaieteur News – Although an investigation by the Guyana Finance Authority (GRA) found a large oil importer abusing his tax exemption letters for years, that company has come forward to deny such a finding, adding that it is “false , very misleading, and damaging. ”
The company involved in this debate is SOL Guyana Inc.
GRA Commissioner General, Godfrey Statia
In a press release last night, the oil importer said it had robust procedures in place to ensure it continued to comply with the use of its exemption letters.
In addition, SOL said that it had commissioned an independent third party to carry out validation and reconciliation of its duty position, “which (will) confirm that Sol currently complies with import regulations that are exempt from importation. duty… ”
The company’s defense of its reputation comes on the heels of reports from Kaieteur News and other media outlets that its aggressive behavior regarding the tax exemption letters and the GRA Consent for Immediate Delivery (PID) system, has led to the loss of billions in revenue.
In a letter seen by Kaieteur News, the tax body said that it had, for several years, been involved in the practice of allowing large oil companies to import and enter tax-exempt fuel for various businesses that benefited on partial or full fuel exemptions.
In doing so, GRA stated that oil companies are required, among other things, to achieve the full imported and recorded exempt quantities for all such beneficiaries, which the beneficiaries are expected to use for the purposes intended.
In 2017, GRA’s Commissioner-General, Godfrey Statia, had directed the Law Enforcement and Investigation Division (LEID) to visit the beneficiaries’ places of business to make sure this was done. To his disappointment, LEID officials found importing and clearing fuel through the Consent for Immediate Distribution (PID) system flawed, as oil importers used exemption letters to clear fuel regardless of who it was supposed to be, ie the fuel was fully exempt, partially exempt, or taxable.
On request for explanations, it was noted that the oil importers’ excuse was that the fuel was stored in so-called “virtual tanks” for distribution to beneficiaries when needed.
In correspondence seen by Kaieteur News, President, Irfaan Ali; Attorney General, Anil Nandlall; The Senior Minister at the Office of the President with responsibility for Finance, Dr. Ashni Singh, “This explanation explicitly shows that mixing and the oil importers were abusing the system, where not all the exempt fuel cleared by the importer was acquitted by the beneficiary, thereby allowing the oil importer to benefit from increased cash flow by not paying the government on the required basis. ”
The head of tax advised officers that he had subsequently instructed LEID and the Customs and Excise Tax Office to initiate reconciliation exercises between the fuel importers and beneficiaries starting with the main beneficiaries, the Guyana Gold and Diamond Miners Association (GGDMA) , Bosai, Aurora Gold Pits, Rusal and late 2020, on Exxon. The three major oil importers, SOL, Rubis and GUYOIL, participated. However, GRA noted that SOL participation is to a greater extent.
GRA was keen to point out that the results, coming out of the probe, were alarming. In each case, the trend was seen where some of the major oil importers would have imported and entered the fuel at a duty-free rate using beneficiary tax exemption letters, but failed to distribute the full quantities to ‘ the beneficiaries, as required. In the case of GGDMA, $ 482M worth of fuel was not submitted, plus $ 53M for Aurora, and $ 61M for Rusal.
In late 2020 / early 2021, ExxonMobil was also identified as a beneficiary. In this regard, GRA said that evidence so far reveals that, as early as 2015, the system was being abused by SOL Inc., where exemption letters were used to clear fuel while the amount was not submitted full to Exxon. With the exception of Exxon, which is now awaiting final decision on a cleared and unfulfilled $ 2.6B, all amounts have been paid, the tax body said.
The tax body was also keen to inform senior government officials of one of the more recent cases involving SOL and Bosai.
For the period January 1 to September 30, 2020, a total of 34,554,080 liters of Oil Oil was reported to have been properly imported and recorded by Sol Guyana Inc., using both Bosai company tax exemption letters with addresses LT02-2020 406 and LT02-2020 417.
Of this size, certified records presented by SOL revealed Guyana Inc. and Bosai company that only the accumulated amount of 20,691,379 liters was delivered to the beneficiary. This meant that the balance of 13,862,701 liters should have remained in SOL’s possession.
To this end and based on the irrecoverable evidence obtained, the forgotten Customs Revenue Authority demanded a sum of Six hundred and six million, nine hundred seventy eight thousand, three hundred sixty three dollars ($ 606,978,363 ) on the imported 13,862,701 liters of Gas, duly recorded, exempt from Excise Tax and not delivered to the Bosai company for use for its intended purpose.
In an email dated November 27, 2020, GRA stated that Sol Guyana Inc. accepts the liability. However, he further claimed that, in the past, especially during 2018-2019, the company supplied Bosai with more than 24 million liters of duty-paid diesel at duty-free without exemption letters.
However, GRA noted that the alleged quantity (24M liter) identified at conciliation was only 20.3M liters, clear evidence that Sol Inc., does not keep adequate records of acquittals.
It was further noted that tax officials were currently examining Bosai Exemption records to see if the company had exempted fuel from other importers in 2018 and 2019, as they were receiving exemptions during the claimed period.
Taking the above into account, the tax body wants to explore ways to prosecute SOL and the applicable taxes and benefits recovered in light of the abuse committed.
GRA believes the Attorney General should have his say on the way forward as well.