It is envisaged that the significant number of concessions granted to the oil sector will be reduced “very soon” to make way for the introduction of a system of tax credits. This was recently revealed by Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia.
He was at the time addressing concerns about the authority’s Tax Exemption Unit, which was stretched thin even before the new pressures that came with monitoring oil concessions.
Unlike upfront incentives, which are hard to police, tax credits are only given upon submission of the proof of the actual activity, and hence, forces the taxpayer to comply in order to so benefit.
Statia said, “The records will show that GRA historically has been doing much with little. However, the need for a matching of resources with the requisite facets of the oil and gas extraction programme cannot be overlooked. It is our intent to build outwards from incubation to adequate responsiveness with time.”
“You can well imagine with the coming on stream of other Floating Production Storage and Operating (FPSOs) in a few years’ time, how stretched we will be if there is no simultaneous capacity building. The resources have to match the needs for there to be symmetry. “
On this note, the GRA Commissioner General stated that very soon, exemptions may be reduced and a system of tax credits introduced to allow for more fairness in the system and a reduction in the abuse of exemptions. Adding to this point, Statia said there have been several instances where some “unscrupulous taxpayers” have been using exemptions for different purposes. He reiterated however that a system of tax credits would eliminate the possibility of such occurrences.
It was last year January that this newspaper reported that ExxonMobil and all its affiliates engaged in Petroleum Operations shall be permitted to import, free of duty, VAT or all or any other duties, taxes, levies or imposts, all equipment and supplies required for Petroleum Operations. There is a list of all these items that can be imported by ExxonMobil in Annex D of the contract governing the Stabroek Block.
The items include but are not limited to drill ships, platforms, vessels, geophysical tools, communications equipment, explosives, radioactive sources, vehicles, oilfield supplies, lubricants, consumable items.
This privilege has also been granted to UK operator, Tullow Oil for the Orinduik Block. According to the contract signed with the Granger administration in January 2016, Tullow, Eco Atlantic, Total and all their sub-contractors, non-resident or otherwise, shall be permitted to import all equipment and supplies free of duty, Value Added Tax (VAT) or all or any other duties, taxes, levies or imposts.
It also has a pre-approved list of over 330 items which is with the authorities.
In addition to this, the companies are free to export these items as they deem fit without any tax or fee being applied.
Joining them on this tax free ride are all the expatriate employees of the oil companies and their sub-contractors. The expats of affiliated companies and their subcontractors will benefit too. They all shall be able to import into Guyana free of duty and taxes. They will also enjoy the right to export from Guyana, free of all duties and taxes and at any time.
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