Minister of Finance, Winston Jordan, will move a motion in the National Assembly on Wednesday to affirm a tax waiver for Tullow Guyana B.V.
The order paper for that sitting of the National Assembly indicates that the Minister will move to have affirmed, the order he made on February 14, published in an extraordinary legal supplement of the official gazette, dated Monday, 18 February, 2019.
Minister Jordan made an order that “if so required by the provisions,” – of, in this case, a Production Sharing Agreement – “the written laws mentioned in [Section 51, Subsection 2]” shall not apply to or be in relation to the licensees, Tullow Guyana B.V., Eco (Atlantic) Guyana Inc., and Total E&P Guyana BV. This includes any of their permitted assignees and successors in their interest.
This order is for the purpose of giving effect to the Production Sharing Agreement, of January 14, 2016, between the Government of Guyana, on one side, and Tullow Guyana B.V. and Eco (Atlantic) Guyana Inc., on the other side, concerning the Orinduik Block, offshore Guyana.
However, when Kaieteur News reached out to the Minister on Sunday, he said that only Tullow will be debated on, during Wednesday’s session.
The tax exemption is based on a precedent set out by Section 51 of the Petroleum (Exploration and Production) Act of 1986, titled ‘Modification of Tax Laws’.
It states “The Minister assigned responsibility for finance may, by order, which shall be subject to affirmative resolution of the National Assembly, direct that any or all of the written laws mentioned in subsection (2) shall not apply to, or in relation to, a licensee where the licensee has entered into a production sharing agreement with the Government of Guyana.”
The laws mentioned in subsection (2) are the Income Tax Act (81:01); the Income Tax (In Aid of Industry) Act (81:02); the Corporation Tax Act (81:03); and the Property Tax Act (81:21).
According to Article 15.9 of the Production Sharing Agreement for the Orinduik Block, titled ‘Taxation and Royalty’, the Minister agrees that the contractor shall be exempted from the Property Tax Act.
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