“Concessions fit for a king.” This statement could perhaps, begin to paint the picture of the entitlements given to a small circle of hoteliers in Guyana under the PPP administration.
And while members of the former regime argued relentlessly against this notion, forensic auditors unearthed irrefutable evidence that there was indeed, a clear bias on the part of Go-Invest as it related to recommendations for concessions for those in the hotel industry.
Forensic auditors found that some investors were told by Go-Invest that it does not recommend tax holidays. Yet, records show that several investors possess signed Memoranda of Understanding (MOU) with Go-Invest that included five or 10-year tax holidays.
By way of the MOU, the auditors said that Go-Invest was in fact recommending to the Minister of Finance to grant the said tax holidays.
The auditors said that this demonstrates the inconsistency in which Go-Invest operates in no uncertain terms.
What was also worse was the fact that there was an inconsistency in how the tax holidays were applied. The auditors explained how this took place in various instances.
ATLANTIC HOTEL INC.
The forensic auditors cited the agreement between Go-Invest and Atlantic Hotel Inc., the special purpose company that was set up for the establishment of the controversial Marriott Hotel.
It was noted that on April 14, 2011, the Government of Guyana, represented by Go-Invest and Atlantic Hotel Inc., signed a Memorandum of Agreement whereby the Government of Guyana, among other things, agreed to grant a ten-year corporate tax holiday, grant a ten-year property and withholding tax holiday, including the payment of interest and dividends to debt
providers and equity holders in Atlantic Hotel Inc., and grant tax concessions for the importation of equipment, machinery, fixtures and fittings, furnishing, building and other materials.
The auditors said, “It should be noted that the hotel is built on state land; a block of land called ‘ALPHA’ located at the North Western part of Kingston contiguous to the Atlantic Ocean and the Demerara River, Kingston, Georgetown.
There is mention in the agreement that the land is leased by NICIL on behalf of the Government of Guyana to Atlantic Hotel Inc.”
The auditors found that only Atlantic Hotel Inc. was able to enjoy tax holidays for its Casino Operations as well as waiver from Property Taxes and Withholding Taxes.
The forensic auditors said that on February 4, 2014, Sleepin International Hotel and Casino Inc. signed a Memorandum of Understanding with the Government of Guyana (represented by Go-Invest). In this instance, the Government of
Guyana, subject to the approval of the President, agreed to do a number of things.
These include; Grant a corporate tax holiday for the hotel operations for a period not exceeding ten years; facilitate the granting of a Casino Operator’s License; Tax the Casino operations at a rate of 35% on its net profits but to allow accelerated depreciation and unlimited carryover of losses; and only the interest payments, not the principal of foreign loans, will be subject to 20% withholding tax when repaying.
The agreement also said that Government would waive Customs Duty, Value Added Tax, and Excise Tax on Casino equipment, the spares and related parts and grant tax concessions for the importation of equipment, machinery, fixtures, fittings, furnishing, building and other materials.
The auditors said that this was the only Memorandum of Understanding that they reviewed that was for a specified time period, in this case one year.
They added, “Sleepin International Hotel and Casino Inc. was the only MOU we examined that was subject to the official approval of the President.”
SUN AND SAND (UK) LTD.
Even a new company received sweetheart concessions. The forensic auditors noted that the company, Sun and Sand Mining and Minerals Resources (UK) Ltd. was formed with the principal objective of establishing a hotel and Casino at Tract V, Pattensen, East Coast Demerara.
The investment was estimated to be $3.2B. It was slated to employ 1,000 persons directly.
In a Memorandum of Understanding dated October 17, 2013 between the Government of Guyana (represented by Go-Invest) and Lilendaal Hotel and Casino represented by Mr. Brian Tiwarie, Director of BK International Inc., the Government of Guyana agreed to a number of things.
These included the provision of the hotel operations with a corporate tax holiday not exceeding 10 years, a casino operator’s license to be facilitated, the Casino operations to be taxed at a rate of 35% on its net profits but to allow accelerated depreciation and unlimited carryover of losses and to only have the interest payments and not the principal of foreign loans subjected to 20% withholding tax when repaying.
The parties also agreed to lease twelve acres of land at Pattensen, East Coast Demerara, with full access from the “Reserve” to Liliendaal Hotel and Casino at rate of $200,000 per month for a period of three years for the construction and establishment of a hotel and casino.
The contact also stipulated that the hotel owners be given the option to purchase the 12 acres of land within three years of the completion of construction and use of the hotel and casino facility at an agreeable rate.
On August 11, 2014 the then Chief Executive Officer of Go-Invest, Keith Burrowes, sent a request for Tax Exemptions on behalf of Sun and Sand Mining and Minerals Resources (UK) Ltd. and along with the relevant Investment Agreement, directly to former Minister of Finance Dr. Ashni Singh.
In his letter, he stated that he was doing so at the request of the former Minister of Tourism, Irfaan Ali. The auditors stressed however that this request should have been sent to the Commissioner General of the Guyana Revenue Authority.
What was also troubling is the fact that the Investment Agreement was unsigned and undated. The auditors said too that the Go-Invest recording system does not provide information on actual concessions granted.
This deal is yet to materialize.
Pegasus Hotel Guyana Ltd
As for the Pegasus Hotel, a successful company that has been around for more than 20 years, the forensic auditors said that there is no evidence in the file of Pegasus Hotel Guyana Ltd.; that any tax holidays were recommended for the company by Go-Invest and or granted by the Government of Guyana through Go-Invest. Unlike the previous cases, there was no Memorandum of Understanding.
There was however evidence that in 2011, 2012, 2013 and 2015 Go Invest merely received tax exemptions on items imported for the upgrading of facilities by way of Initial Investment Agreement, Renewed Investment Agreement and a supplementary Investment Agreement.
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These horror stories are real occurrences about a country named Guyana that in my opinion should not be allowed to continue... more
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