Govt. tax waiver to oil companies amounts to massive loss in revenue for Guyana

Apr 10, 2022 News

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…decision to grant concessions should be overturned – Glenn Lall tells High Court

By Rehanna Ramsay

Kaieteur News – Maintaining that he is within his legal right to file court action against the Government of Guyana (GOG) over its decision to grant Exxon Mobil and its affiliates extensive tax waivers, Kaieteur News Publisher, Glenn Lall has told the High Court that the concessions granted to oil companies amounts to a massive loss of revenue for Guyana.
As such, Lall is arguing fiercely to have the government’s decision to grant the concessions overturned by the court. The GOG has already filed a response through the office of the Attorney General defending its decision to grant the tax waivers.

Among other things, the government has said that Lall has no right to file the action since the agreement it has with the oil companies is a matter of private law.
In an affidavit filed in response to the GOG, however, Lall held to his position that the Stabroek Block Production Sharing Agreement (PSA) between the Government and oil companies contains discriminatory tax provisions.
The newspaper publisher is adamant too that the law allows him to challenge such actions by the government.
He noted that as a citizen, businessman, newspaper publisher and taxpayer of Guyana, the Constitution broadly provides him with the right to make the application for an interpretation by the Court of whether the concessions given to expatriate employees under Article 15.12(ii) of the Petroleum Agreement are discriminatory of the contractor, affiliated companies and non-resident sub-contractors.
Lall noted, too, based on the advice of his attorney, the issue falls in the category of administrative law, which is considered a branch of public law and not private law.
In the sworn document, the KN publisher noted that the issue deals with the decision-making of such administrative units of government that are part of the executive branch in such areas as international trade, manufacturing, the environment, taxation, etc.
“That I have been further advised by my Attorney-at-Law, and verily believe that …a person as acting in the capacity of a public authority where “the person is endowed under the law with functions, duties and powers of a public nature and for the purpose of the application of the law, he was clothed with coercive powers,” Lall said in his affidavit.
He continued that, “…The Petroleum Agreement clearly states that the Minister responsible for petroleum represents the Guyana Government and accordingly, his functions, duties and powers are of a public nature…”
Added to this, Lall noted that the Petroleum Agreement clearly envisions the possibility that its provisions can affect public law rights, obligations and expectations.
This, he said, is seen by the fact that “the Guyana Geology and Mines Commission (GGMC) is required in the exercise of its responsibilities under the Petroleum Agreement to ensure for the people of Guyana the maximum benefits…”
As such, the applicant (Lall) contends that the opinion of the Attorney General that the agreement is between the licensees and the GOG is made in private law is misconceived and erroneous.
As it regards, the actual granting of tax concessions to the oil companies, the newspaper publisher noted that the GOG, through the conduct and actions of the Minister of Natural Resources, violated the Petroleum Exploration and Production Act (PEPA), the Financial Administration (and Audit) FAA Act and Prevention of Discrimination Act under the Constitution of Guyana.
He stressed that the Minister not only exercised his power under Section 51 of the PEPA to make concessions or tax exemptions to the licensees of the said Petroleum Agreement, but he also improperly made concessions and tax exemptions for persons other than the licensees, namely sub-contractors, affiliate companies and expatriates, which is contrary to the laws of Guyana.
While Lall admits that as far as the PEPA and the order empowers the Minister to provide that specified tax laws shall apply to or in relation to a licensee under the PSA, he argues that the same favour is not to be extended to sub-contractors, affiliates and expatriate employees of such persons.
Consequently, the newspaper publisher said that both waiver of taxes and remission of taxes by the GOG on behalf of licensees are both concessions that involve [massive] loss of revenue to Guyana.
To this end, he asked the High Court to grant the declarations requested in his Fixed Date Application (FDA) and to strike down the GOG’s affidavit of defence immediately.
Last January, Lall through his attorney, Mohamed Ali filed an FDA in the High Court to challenge the tax waivers. In the application, the newspaper boss noted the broad and extensive concessions granted to Exxon and its affiliates.
According to the FDA, Article 15.11 of the Petroleum Agreement states: “There shall be no tax, duty, fee, withholding, charge or other impost applicable on interest payment, dividends, deemed dividends, transfer of profit or deemed remittance of profits for Contractors’, Affiliated Companies’ or Non-Resident Sub-Contractors’ branch in Guyana to its foreign or head office or to Affiliated Companies.”
This, Lall said, is in violation of the petroleum law.
Further, the section of the agreement, which outlines “the oil affiliates shall not be liable for personal income tax in Guyana on income earned in Guyana for any given tax year if the expatriate is physically present in Guyana for one hundred eighty-three (183) days or less on a cumulative basis in the tax year of assessment,” Lall said for all intents and purposes, this section is also in violation of the petroleum law.

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