Apr 11, 2021 News
– 2019 waivers four times more than 2016
Kaieteur News – For the period January 2016 to May 2020, the Guyana Revenue Authority (GRA) granted a whopping $$422B in tax exemptions. The waivers were granted to Diplomats; Hospitals; Remigrants; Companies/Businesses; Foreign Funded Projects; Public Officials/Officers; Churches/Charitable organisations, and Ministries or government departments.
The category with the most tax exemptions for the period highlighted was ‘Companies/businesses’. Taxes exempted in 2016 for example, stood at $30.3B then jumped to $172.3B in 2019. Exemptions for companies/businesses stood at $51B for the first five months of 2020 alone, despite a massive economic slowdown for that year.
Kaieteur News also noted that exemptions for 2019 waivers totaled $181.2B, making it four times more than what was granted in 2016.
The GRA noted, in documents seen by this paper, that the increase in taxes being exempted to companies/businesses over the years was due primarily to the introduction of the oil and gas sector.
It was further noted that the emergence of the sector led to the approval of 98 Tax Exemption Certificates/letters for Value Added Tax (VAT) on services provided by firms to several companies including Guyana Industrial Minerals, ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited, Repsol Exploration, and Tullow. GRA said that these certificates are renewed yearly based on the expiration date on the various Investment Agreements.
It is important to note that the exemptions granted by GRA to the oil sector are based on the deals Guyana would have signed with ExxonMobil and other oil majors. Guyana’s Production Sharing Agreements (PSAs) with these exploration companies specifically state that the oil majors, their subcontractors, and affiliated companies, are free of all duties, taxes and any other levies.
Since 2016, calls have been unceasing for the review of Guyana’s systems governing tax exemption as they are deemed to be too exorbitant. Even the Tax Reform Commission (TRC), which was set up by the Granger administration, had called for the review of the concessions granted to companies in various sectors.
The Commission had comprised of National Industrial and Commercial Investment Limited (NICIL) head, Maurice Odle; Chartered Accountant, Christopher Ram; Guyana Revenue Authority (GRA) Commissioner General, Godfrey Statia and economist Dr. Thomas Singh.
In its report, the Commission had highlighted that Guyana is one of the leading countries in the Caribbean region with massive overlay of tax exemptions and remissions that ultimately make tax administration difficult and revenue losses significant.
The Commission pointed out that the relatively weak revenue buoyancy in Guyana in recent years is related to the spate of tax incentives that have been granted to companies. It had also stressed that more detailed studies of the economic efficiency and revenue costs of these exemptions should be undertaken in order to plan a transition away from use-based exemptions to more limited automated exemptions.
Furthermore, the Commission had said that the losses from the granting of Investment Development Agreements are a cause for some concern. The TRC pointed out that many sectors receive concessions that even exceed what they contribute in taxes. The Commission had also said that while this fact itself does not per se justify the abolition or the withdrawal of the concessions, “it is clear that an urgent review is required.”
Equally important, the Commission had said, is the need for a post-audit system for concessions granted including the posting of a bond/guarantee to ensure that commitments are met. It called too for a periodic audit and publication of reports of tax holidays granted and investment agreements entered into.
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