In early November 2017, the coalition government received a critical report from the International Monetary Fund (IMF) highlighting some of the troubles facing the mining industry.
The IMF identified some of these issues to be unfairly distributed exemptions as well as an insensitive tax system. Even though the international body offered a menu of recommendations to address the issues it highlighted, the government has taken no action.
The Guyana Standard recently contacted Finance Minister, Winston Jordan on the matter. His Ministry is responsible for ensuring that the IMF’s recommendations are implemented by the respective ministries and statutory bodies.
Jordan confirmed that the Ministry of Natural Resources is yet to take on the IMF’s suggestions. He directed the Guyana Standard to speak with Minister, Raphael Trotman as to why he failed to take any action on the matter.
This news site made several attempts from Friday up until press time to speak with Minister Trotman but these were unsuccessful.
In its November 2017 report, the IMF pointed out that there are several fiscal challenges facing Guyana’s mining sector.
On the aspect of exemptions, the IMF found that there is an ad hoc approach to who gets what and to what extent. It said that the authorities are in the habit of negotiating “on a one-on-one” basis, various exemptions into mining agreements which lead to competitive imbalances and administrative complexities.
The Fund said that revenue administrators, in turn, dedicate significant resources to interpreting individual mining agreements. This involves assessing imports to determine whether they qualify for exemptions that may differ from one mining agreement to the next. The IMF said that this creates a number of imbalances in Guyana’s administration system which needs to be fixed now.
Furthermore, the IMF said that there is an urgent need for the local authorities to conduct a comprehensive review of the mining tax regime.
In this regard, the organization stated that tariffs should be eliminated on capital goods and other business inputs for all businesses, not just foreign-owned entities with the ability to negotiate preferential provisions in a mining agreement.
The IMF said that such a change would greatly simplify the current administrative approach of exemptions and annual Investment Development Agreements while improving the competitive position of domestic businesses.