Oct 13, 2017 News
Sleep-In International Hotel had secured a sweetheart deal through the Memorandum of Understanding (MOU) that it had signed with the People’s Progressive Party/ Civic (PPP/C). That MOU secured a 10-year corporate tax holiday, limited taxation on income, and even waivers on Value Added Tax (VAT) and excise tax.
The MOU was signed in February 2015. Sleep-In went about investing in the hotel and casino on Church Street through the Guyana Office for Investment (Go-Invest). Therefore, the MOU was prepared by Go-Invest.
Interestingly, from all indications, the then Chief Executive Officer (CEO) of GO-Invest, Keith Burrowes, was in constant communication with former Attorney General, Anil Nandlall about the content of the MOU. Nandlall is now representing Clifton Bacchus, the owner of Sleep-In in a number of cases.
Kaieteur News has seen a letter that proves communication with Nandlall and Burrowes on the MOU. Burrowes was indicating that he made some “minor changes” to the document.
Under the MOU, Sleep-In’s obligations include operation and maintenance as well as upgrade and expand the hotel and casino “where deemed appropriate” by Sleep-In.
“I was mandated to carry out effective management and hiring and training of local staff so that international best practices are transferred. The hotel also needed to employ non-Guyanese to the minimum of 25 percent.
“Sleep-In also agreed to work with the appropriate local institutions and organizations in the tourism and hospitality sector to provide support in several areas. It was also required a minimum of 1000 new direct jobs “the specific areas of such employment was supposed to be clarified in the official investment agreement.”
The MOU stated that the Hotel had to, as far as possible; seek to acquire goods, equipment and services form local manufactures provided that their quality and prices are competitive.
The Hotel also agreed to comply with statutory requirements necessary for the operation of the hotel as well as that for the protection of the environment and the prevention of pollution. Sleep-In was also required to invest a minimum of US$15M for the construction of the hotel and casino. There were also some other requirements.
Under obligations of government, the MOU stipulated that “subject to the approval of the president”, Government will provide the hotel division and operations with a corporate tax holiday for a period not exceeding years and was supposed to have commenced from the commencement of business.
The PPP/C government had also committed to facilitate the granting of a casino licence. This is despite the fact that the Gaming Authority is supposed to be an independent body.
The MOU also stated, “Subject to the official approval of the President the casino division/operations will be taxed at 35 percent on the net profit and there will be an accelerated depreciation allowance and then unlimited carryover if losses from previous years according to the laws of Guyana; interest payments, not the principal of foreign loans, will be subject to the 20 percent withholding tax when repaying; waive Customs Duty, Value Added Tax and Excise Tax, where applicable, on building materials, machinery, equipment, furnishings, fixtures, fitting and vehicles (proportionate to the investment and specifically for the project), for the expansion and upgrading of the hotel and casino facilities provided that all items will be demonstrably used for the purposes outlined in the business proposal..”
Government also promised to waive Customs Duty, VAT and Excise Tax on casino equipment, the spares and related parts.
Further, Government committed to grant visas and work permits through then Ministry of Home Affairs “provided the applicants meet the requirements of the laws of Guyana.”
The MOU was clear that Sleep-In will not be the only one to benefit from this. It stated that all incentives for the Casino that are granted by the Guyana Revenue Authority and the Gaming Authority to Sleep-In will be offered to the other licensed casino operators under the Gambling Prevention (Amendment) Act of 2007.
The MOU could have been terminated by the mutual consent of Government and Sleep-In. It could have also been terminated if Sleep-In failed to live up to its commitments “without providing a reasonable explanation” or if the company becomes insolvent. However, there was a force majeure clause.
There was also a non disclosure clause.
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