Govt. paid over $197 billion in taxes for Exxon in past two years

Sep 09, 2024 News

– Annual Report shows company did not have to pay $138B in 2023, $59B in 2022 

By Renay Sambach

Kaieteur News – ExxonMobil Guyana Limited (EMGL) did not have to pay over $197 Billion in taxes to the Guyana Revenue Authority (GRA) for the past two years, as the taxes were paid by the Government of Guyana (GoG) in keeping with the lopsided Production Sharing Agreement (PSA) the Coalition Government signed with the US oil major back in 2016.

President Irfaan Ali

Exxon is the operator of the Stabroek Block, with a 45% interest, while Hess Guyana Exploration Ltd. holds 30% interest and China National Offshore Oil Corporation (CNOOC) Petroleum Guyana Limited holds 25% interest. All of the block-partners enjoy a tax-free ride in Guyana.

According to Exxon’s Annual Report, in 2023, the Government paid G$138.182 billion in taxes on its behalf to GRA. This figure represents a significant increase compared to the G$59.381 billion Government had to pay for Exxon in 2022.  The company explained in its report, that while it is subject to Guyana’s income tax laws, the taxes assessed on the company’s operation are paid by the government, rather than the company itself. “Under Article 15.2 of the Petroleum Agreement, the Branch is subject to the Income Tax Laws of Guyana with respect to filing returns, assessment of tax, and keeping of records.

President of ExxonMobil Guyana Limited, Alistair Routledge

Under Article 15.4 of the Petroleum Agreement, the sum equivalent to the tax assessed on the Branch will be paid by the Minister responsible for Petroleum to the Commissioner General, Guyana Revenue Authority and is reported as non-customer revenue,” Exxon stated.

While American oil giant ExxonMobil Corporation (XOM) operation is subject to taxation in other parts of the world, its subsidiary EMGL will continue to enjoy a tax free earnings in Guyana as a result of the Stabroek Block PSA. EMGL disclosed back in June that it earned approximately US$2.9 billion (GYD$614 billion) in profits last year—entirely tax-free.

The Irfaan Ali-led administration has explicitly stated that due to the sanctity of contract, the 2016 PSA will remain in place, despite the deal being labelled as ‘lopsided’. In fact, last year, President Ali, during an interview with British Broadcasting Corporation (BBC) Senior Journalist Gideon Long, reiterated his administration’s position to not renegotiate the ‘lopsided’ Exxon deal. President Ali said, “Well, I would say definitely, we did not have the best of deals, Exxon have a good deal signed by the last government.” Ali then highlighted that sanctity of contract is “very important” to his government, adding, “and we can’t go back on that.”

It should be noted that 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 2023.

Moreover, the provision of the Stabroek Block contract which gives Exxon and its affiliates a tax-free ride in Guyana has attracted criticisms locally and internationally. The contract 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.  It should be noted that the contract also allows for the issuing of a receipt to ExxonMobil, indicating that it has met the local tax requirements to avoid the burden of double taxation. Article 15.5 of the contract states, “Within one hundred and eighty (180) days following the end of each year of assessment, the Minister shall furnish to Contractor proper tax certificates in Contractor’s name from the Commissioner General, Guyana Revenue Authority evidencing the payment of the Contractor’s income tax under the Income Tax Act and corporation tax under the Corporation Tax Act. Such certificates shall state the amount of tax paid individually on behalf of Contractor or parties comprising the Contractor and other particulars customary for such certificates.”

• Alistair Routledge, Exxon, Irfaan Ali, PSA, taxes