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Tax breaks to oil companies in 2021 double what Guyanese workers paid
– Guyana gave away US$397M, while citizens paid US$206M
Kaieteur News – Back in 2021, Guyana reportedly gave oil and gas companies US$397 million in tax breaks on profit oil, which is about US$191 million more than the country received in that same year from personal income taxes paid by Guyanese workers.
This was highlighted in a missive by members of the Oil & Gas Governance Network (OGGN). The OGGN members Alfred Bhulai, Andre Brandli, Janette Bulkan, Darsh Khusial and Joe Persaud, stated that the Bank of Guyana (BOG) reported that the country received US$206 million in personal income tax for 2021, while the oil companies received a tax break of about US$397 million. It is in this vein that the OGGN members said that in 2021 every Guyanese worker could have received a tax break instead of the rich oil companies receiving a tax holiday.
Using their own calculations, the members arrived at US$397 million in tax exemption for ExxonMobil Guyana and its partners, Hess and CNOOC who are operating in the Stabroek Block. For those unfamiliar, under the 2016 PSA, neither Exxon nor its affiliates pay taxes. In fact, Guyana has agreed to, under the taxation provisions, to pay ExxonMobil’s share of Corporation and Income Tax. As such, it would mean that Guyana foregoes each year, billions of US dollars. On top of this, documentation to this effect is then provided to the US based company allowing it to not have to pay any taxes in its home country for its earnings overseas.
The OGGN members highlighted that in June 2021, during a Guyana Extractives Industry Transparency conference, the Ministry of Natural Resources (MNR) had promised to release the Tax Certificates that Guyana issues to the oil companies. However, it was stated that to date the information has not been released by the ministry. Nevertheless, they said, there are other ways to make an educated guess about the taxes that Exxon and its partners should have paid but did not have to pay in 2021. The OGGN members cited country-by-country reporting information published on Hess USA website, which discloses taxes, paid in each country the company operates. As it relates to Guyana, the tax figure disclosed to the US Tax Authority (IRS) is US$119 million in deferred income tax expense and no current tax expense for 2021.
“We know Hess has a 30% share in the Stabroek Oil Block. Hence, a 100% of taxes would be US$119m/0.3 which would total US$397 million in taxes for the oil companies operating in the Stabroek Block. One should recall that this is US$397 million that Guyana is forgoing in taxes to rich oil companies,” the OGGN members said.
To this end, it was noted that if they try to reconcile the US$397 million tax figure with what the Auditor General Report for 2021 disclosed, “We have a material anomaly.” The AG’s 2021 report had revealed that the Oil and Gas sector had close to US$1 billion (GYD$204 billion) in exemptions for 2021. The members stated that if the estimation of exemption for taxes on profit oil is about US$397 million, questions loom on the detailed breakdown of the other exemptions to the oil companies which totals about US$580 million.
Mentioned in their statement was the audit result for Exxon and its partners in the Stabroek Block from 1999 to 2017 revealing a stunning US$214 million in questionable expenses; to this, the members said, “there is a larger figure that is a mystery and it relates to the exemptions given to the oil companies and their related contractors for 2021.”
Last week, the audit of the oil companies’ expenses was leaked some two years after it was completed by British firm, IHS Markit. The OGGN members noted that this raises questions about why the government was not transparent with the Guyanese people, given the outrageous amount of money under question. Added to this, they said that given the recent audit revelation it raises alarms about what may be hidden in the almost US$1 billion exemptions given to the oil companies and their partners for 2021.
Moreover, it was underscored that what is astounding is that in the same year, the country only earned US$409 million from oil but give away more than two times that amount in exemptions to the oil companies. “This is yet another case of the Guyanese poor fattening the rich,” the OGGN members said.
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