Exxon contract mandates Minister as middleman between company and GRA
Jan 04, 2018 , https://www.kaieteurnewsonline...een-company-and-gra/
While Guyana’s tax act establishes a direct relationship between the taxpayer and the collecting agency, the Petroleum Agreement signed by the Government of Guyana and ExxonMobil stipulates a completely different set up.
Based on this agreement, the Minister of Natural Resources will be the middleman between ExxonMobil and the Guyana Revenue Authority (GRA). In effect the Minister, who is supposed to be looking out for the interest of the nation, will essentially be working with the GRA on behalf of the ExxonMobil.
Such a unique provision is made in Article 15.5 of the contract. It states, “The Contractor (ExxonMobil and its partners) shall provide the Minister (of Natural Resources) with the Contractor’s income tax returns to be submitted by the Minister to the Commissioner General, Guyana Revenue Authority so the Minister can pay income tax on behalf of the Contractor as provided under Article 15.4.”
The drafters of the agreement were keen to make sure there is no ambiguity. They did not even leave room for any other interpretation. It was written that the Minister will indeed be acting “on behalf” of the company. Here is what the contract states, “On such returns, the Minister shall note that he is paying the income taxes on behalf of the Contractor, so that the Commissioner General, Guyana Revenue Authority can properly prepare the receipts required under this Article 15.5.”
That clause further notes, “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.”
This provision is a new one. While there was indeed an Article 15 under the Petroleum Agreement signed by the Peoples Progressive Party’s Janet Jagan, it did not include the provision for the Minister to act as ExxonMobil’s representative.
Attorney at Law, Christopher Ram also highlighted Article 15 in one of his recent columns.
Ram noted other changes made to Article 15. He said, “One of the amendments is to make the Article subject to the stability article so the taxes are generally frozen as at the date of the agreement. In other words, if the contract lasts for forty years, no changes to the tax laws that are adverse to the interest of the oil companies will apply to them.”
Ram also noted as well, “Just to be clear: (Raphael) Trotman has continued Janet Jagan’s liberal arrangement whereby the government’s share of profit oil is accepted by the Minister as payment in full by the contractor of any income tax or corporation tax otherwise payable.”
Ram also made brief mention of the Minister’s role as middleman. He said, “the contractor is required to submit its tax returns to the Minister who is then responsible for dealing with the Guyana Revenue Authority on behalf of the contractor! The Minister is required to state on the returns that he is paying income taxes on behalf of the contractor, and the Revenue Authority must then prepare and issue receipts for the taxes so deemed to be paid.”
Ram noted that the Agreement also provides for ExxonMobil to be exempted from property tax and from the provisions of section 10 B of the Corporation Tax Act, dealing with payments to subcontractors, during the Exploration Period. “Exploration Period is defined in Article 1 to mean the (undefined) initial period, and or the first and second renewal period.”
Ram also stated, “Affiliated and non-resident contractor companies which conduct business in Guyana in any tax year for 183 days or less on a cumulative basis, is exempted from the provisions of the Income Tax Act and the Corporation Tax Act during the exploration period, on income earned in Guyana.
“The 2016 Agreement also provides for exemption from “tax, duty, fee, withholding, charge or other impost applicable on interest payments, dividends, deemed dividends, transfer of profits or deemed remittance of profits from contractors, affiliated companies or Non-Resident Sub-Contractors branch in Guyana to its foreign or head office or to Affiliated Companies.”