When Value Added Tax (VAT) was introduced in 2007, all companies operating in Guyana, local and foreign alike had to adapt. No one was exempted. However, should Guyana introduce any new tax in the future, or even a new fiscal law, it shall not apply to ExxonMobil.
The contract signed between the Government of Guyana and ExxonMobil clears the company from any future law or tax that can come in the way of the huge profits that the company intends to reap.
That kind of security for ExxonMobil is enshrined under Article 32 of the contact that speaks to “Stability of Agreement.”
Article 32 states that “Except as may be expressly provided herein, the government shall not amend, modify, rescind, terminate, declare invalid or unenforceable, require renegotiation of, compel replacement or substitution or otherwise seek to avoid alter, or limit this agreement without he prior written consent of the contractor.”
The drafters of the contract were very explicit in stating that under no circumstances should ExxonMobil have to submit to any new law or pay any new tax; no new taxes “whatsoever” were expressly included in the contract.
The contract reads, “After the signing of this agreement and its conformance with Article 15, the Government shall not increase the economic burdens of the contractor under this agreement by applying to this agreement or the operations conducted hereunder any increase of, or any new petroleum related fiscal obligation, including but not limited to any new taxes whatsoever, any new royalty, duties, fees, charges, VAT or other imposts.”
Also, the contract states that if at any time after the signing of this agreement there is a change in the laws of Guyana whether through the amendment of existing laws or the enactment of new laws or a change having the force of law in the interpretation implementation of application, ExxonMobil must not be affected.
Guyana agreed that despite whatever may change, ExxonMobil must receive the “same economic benefit under the agreement that it would have received prior to the change in law.”
The contract compels Guyana to resolve “promptly” and by “whatever means may be necessary” any conflict or anomaly between this agreement and any such new or amended legislation including by way of exemption, legislation, decrees and or other authoritative acts.
Yesterday, Minister of Natural Resources, Raphael Trotman, said that he is quite happy with the contract that Guyana was able to negotiate. He said that ExxonMobil stuck with Guyana even after other companies explored and found nothing and even after the threats made by Venezuela. The Minister said that under those circumstances, there was need for Guyana to make compromises or to, “give a little.”
He said, too, “We are sticking with the companies that stuck with us.” Trotman said that it is important for Guyana not to try to “play the field at this point and just be committed.”
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