Latest update May 25th, 2026 12:35 AM
Guyana waived US$540M in taxes to oil companies; gives public servants US$37M salary increase
Kaieteur News – Guyana in 2022 lost US$540 million in revenue owing to the excessive tax waivers extended to oil and gas companies, but could only afford to pay US$37 million in pay increases to public servants.
Last week the Senior Minister in the Office of the President with Responsibility for Finance, Dr. Ashni Singh announced a 6.5 percent across-the-board salary increase for workers in the public sector. This triggered an almost immediate reaction from stakeholders, arguing that those on the higher salary scale would benefit more than those earning minimum wage for instance. In fact, it would be poignant to note that the salary increase for a minimum wage worker, currently earning $75,000 would only benefit from about $4,900 more monthly.
While the government has explained that a drastic increase in public sector wages could be unsustainable, due to the availability of funds, it has willingly forgone billions in taxes that could have improved the salaries of its public sector employees.
The Auditor General, Deodat Sharma in his 2022 Report indicated that a total of $108B, equivalent to about US$541 million in tax exemptions were granted by the Guyana Revenue Authority (GRA) to oil and gas companies.
Meanwhile, in his announcement of the wages increase on December 8, 2023, the Finance Minister revealed that the payout to public servants would amount to some $7.5 billion or approximately US$37.5 million.
While the taxes lost by the country could have indisputably been used to offer better salary increases, it is important to note that the tax holidays are permissible under the 2016 Production Sharing Agreement (PSA) Guyana signed with ExxonMobil and Co-Venturers, Hess and CNOOC.
The PSA states at Article 15.1 that the Contractor (ExxonMobil Guyana Limited) as well as its affiliates shall not be subjected to tax, value-added tax, excise tax, duty, fee, charge or impost in respect of income derived from petroleum operations, property held or transactions except as specified under the agreement.
It goes on to state at Article 15.4 that the sum equivalent to the taxes owed by the company will be paid by the Minister responsible for Petroleum to the Commissioner General of the GRA. A legal suit brought against these abusive tax giveaways by the Publisher of this newspaper, Mr. Glenn Lall was unsuccessful as the Court dismissed the case in February of this year.
The GoG, though it has accepted on numerous occasions that the oil deal is lopsided, has made it clear that the agreement would not be renegotiated. Guyana’s oil contract has been analyzed by international specialists who have cited support for Guyana to secure fairer terms. In addition to foregoing taxes from the sector, the country has agreed to collect a meager two percent royalty on its sweet light crude. Also troubling is the fact that Guyana allows 75 percent of the monthly revenues generated to go to the investors as cost recovery. The remaining 25 percent is then shared equally as profits with Guyana. In the absence of a key provision, known as ring-fencing, Exxon is allowed to shorten Guyana’s profits and utilize the revenue to invest in projects that are yet to come on stream. A ring-fencing provision would ensure that the country enjoys the benefits of its petroleum sector early on and would mandate that each oil development pays for itself.
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