ExxonMobil paying taxes in Bahamas but not a cent to Guyana

Feb 11, 2025 News

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…Terrence Campbell says Gov’t should negotiate with company for changes

Kaieteur News-As ExxonMobil Guyana Limited (EMGL), continues to make massive profits from the resources in the Stabroek Block, the company enjoys an unlimited tax holiday, meaning it does not pay a cent in corporate tax to the Government of Guyana (GoG).

EMGL, formerly Esso Exploration and Protection Guyana Limited (EEPL) is a company registered in the Bahamas with ExxonMobil Global Holding Investment B.V. being the 100 percent owner of that company.

With new tax arrangements put in place by the Bahamas, Exxon is required to pay a corporate tax of 15% to the country, as pointed out recently by businessman, Terrence Campbell, during an interview on the People’s National Congress Reform’s (PNC/R’s) Nation Watch. He told viewers of the broadcast, “I personally believe that there is a way to renegotiate the contract that would be revenue neutral- even to Exxon- and it’s from the tax angle.”

The businessman went on to explain, “Globally, a lot of countries signed on to a minimum tax of 15%, so even some of those havens…the last I remember is that they run a company out of the Netherlands that is then owned by a company out of the Bahamas. Even the Bahamas has signed on, the last I checked to this global minimum tax of 15%.”

The Bahamas enacted the Domestic Minimum Top-Up Tax Act, 2024 (the Act) on 28 November 2024. The Act introduces a Domestic Minimum Top-Up Tax (DMTT) in line with the Organisation for Economic Cooperation and Development’s (OECD) Pillar Two Framework. The objectives of the OECD’s framework are to implement a global minimum tax at an effective rate of 15% on the income arising from multinational entities in each jurisdiction in which they operate.

Consequently, Campbell questioned the logic behind the payment of taxes by Exxon Guyana to Bahamas. He said, “Why should The Bahamas be getting taxes off of Guyanese oil and we (are) not getting anything ourselves here? I believe that there is a way for those who are sophisticated enough financially to sit down with Exxon quietly in a room and extract benefits from Exxon that is really revenue neutral to them, but would be a loss in some other jurisdiction.”

PSA and taxation

The Production Sharing Agreement (PSA) between the GoG and ExxonMobil does not require the company to pay any corporate taxes. Further, it states at Article 32.3 that if any changes are made that has an adverse effect on the economic benefits of the oil company, then the country would be required to take “any and all affirmative actions to restore the lost or impaired economic benefits to Contractor, so that Contractor receives the same economic benefit under the Agreement…”

As such, Dr. Campbell made the point that government should seek to enter discussions with the company to allow taxes to be paid here, instead of Bahamas. “There must be a way to finesse some things where Exxon doesn’t lose any money. Some other jurisdiction will perhaps end up getting taxes off of Guyana’s oil and bring that money home. There are ways to go about renegotiation and that’s only one possibility,” he said.

Jagdeo lacks sophistication

The businessman believes that there may be a plethora of other opportunities available to the country to enjoy a greater share of its wealth generated offshore. He however noted that this will require research and “sophistication” which the chief policymaker for the sector, Bharrat Jagdeo lacks. “Mr. Jagdeo has the ability to speak with passion on both sides of the coin…he was all for renegotiating the contract and he raised issues like no taxes, zero royalty, ring-fencing and so on. None of that has changed, he didn’t consider ring-fencing for the last five years,” Campbell said. As a businessman for about 37 years now, he pointed out that contracts are renegotiated on a daily basis.

In a subsequent interview with Kaieteur News, Dr. Campbell made the point that Guyanese should not be surprised if Exxon approaches government for a modification of contract terms, should oil prices decline. In the same manner, he said the nation should not be fearful in requesting the same. “If the price of oil falls to a point that kind of makes it difficult for Exxon to operate, it’s not beyond them to come to the Guyana government and say times are tough and can we modify the contract and so it shouldn’t be beyond us to go to them and say hey we would like to benefit a little more from this oil contract. These discussions take place all the time and they are not usually controversial,” the businessman said.

Double taxation

Meanwhile, he also addressed the issue of double taxation in ExxonMobil Guyana’s business with the Bahamas.  Since EMGL is presented with a certificate by the GoG indicating that taxes have been paid locally, the company could be eligible for a waiver in the Bahamas. If there is a double tax policy agreement between the two countries and the rates are the same, then taxes paid locally would be treated as taxes paid elsewhere.

On the other hand, Campbell explained, “If Guyana and the Bahamas do not have a double taxation treaty, then Exxon will report its profits in the Bahamas and it would also show its taxes. It would then be taxed at whatever rate the Bahamas is applying taxation, that would be deducted and then the taxation is applied.”

(ExxonMobil paying taxes in Bahamas but not a cent to Guyana)

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• Bahamas, Campbell, ExxonMobil, PSA, taxes

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