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Court challenge to ‘tax-free ride’ in Exxon deal could level playing field for Guyanese – Ram
Kaieteur News- The recent legal challenge filed by Kaieteur News Publisher, Glenn Lall via his lawyer, Mr. Mohamed Ali, against the extraordinary tax-free ride given to the affiliated companies and subcontractors of ExxonMobil, Hess Corporation and CNOOC Limited as noted in the Stabroek Block Production Sharing Agreement (PSA) could, if successful, level the playing field for locals that struggle to compete in the industry.
This is the viewpoint of Chartered Accountant and Attorney-at-Law, Christopher Ram in his column titled, “Every Man, Woman and Child Must Become Oil-Minded” which was published in the Stabroek News.
In the latest installment of his column, Ram said the case by the Kaieteur News publisher is significant since it would essentially retain more revenues for the country while giving locals a fighting chance in the industry.
Chartered Accountant, Christopher Ram
If the tax-free ride granted to the subcontractors and affiliated companies of the Stabroek Block partners are removed, Ram asserted that payments to them during the exploration phase for contract work will now attract the 10% Withholding Tax under Section 10 B of the Corporation Tax Act. Since the withholding is creditable against the eventual liability for that year, the consequence is temporal.
Additionally, Ram said Withholding Tax under the Income Tax which is now exempt will now become payable on interest, dividends, deemed dividends, remittances of actual and deemed profits.
He said too that income earned during the exploration phase by Affiliated Companies and subcontractors who are in Guyana for less than 183 days in any tax year which is now exempt from tax will become taxable. Also, expatriate employees of the oil companies, their Affiliated Companies and of Non-Resident Sub-Contractors who are physically present in Guyana for one hundred eighty-three (183) days or less in any tax year whose income is now exempt from tax will become taxable.
In light of the foregoing impacts, Ram said Lall’s case certainly gives the PPP/C government, which is on record as being heavily critical of the deal renegotiated by the APNU+AFC regime, an opportunity to rebalance the Stabroek Block Production Sharing Agreement in favour of the Guyanese people.
He said it will be interesting to see what would be the posture of the respondent, being Attorney General, Anil Nandlall S.C, that the government by extension, on this historic legal challenge.
The case filed by Lall via his Attorney-at-Law Mohamed R. Ali, is set to be heard on March 10, 2022 at 10:30hrs before the Honourable Justice Nareshwar Harnanan.
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