“Now that certain parts of offshore Guyana have been de-risked, an opportunity is before us to examine the exorbitant tax concessions granted to operators in this sector. Certainly, they have to be tempered.”
This unwavering perspective was shared with the media on Thursday by Government’s recently appointed Petroleum Advisor, Matthew Wilks. He was at the time; speaking about the nature of tax concessions in the oil sector and the purpose they serve.
Wilks noted that in the 90s, any “reasonable” person could understand why Guyana gave oil operators “kingly concessions”. He stressed, however, that the incentives served their time and must be amended accordingly.
Wilks said, “The country has taken a small royalty and a ‘half and half’ share of the profit oil. But then you are also leaking revenues from the tax concessions…I quickly observed this when I was brought in to help with the improvement of the contracts. Government agrees with me that this has to be changed, not just with future contracts with oil companies but at the next review of the contract.”
The Government advisor said that ExxonMobil will be engaged in several rounds so that there is a mutual understanding of the need for the country to correct some of the fundamental issues in its fiscal system.
The issue of reviewing the tax exemptions for oil contracts was first proposed by Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia. In an exclusive interview with the Guyana Standard, Statia had said that the tax exemptions granted to ExxonMobil “are exorbitant and the wholesale tax giveaways cannot continue.”
The Commissioner-General said that the country needs to relook at the tax exemptions granted to the oil sector now that there are proven oil reserves offshore Guyana.
He had said, “We need to decide now. It cannot, it should not stay the same way. It is either we continue with the same tax exemptions but collect a higher royalty and profit split or, let them pay all the taxes upfront and they can be compensated by us taking a smaller share of the profit oil but with a higher royalty.”
Whatever road the country goes down, Statia said that will be left to the government. He stressed, however, that heading down the same path will be to Guyana’s own detriment.