Guyana gets zero Corporation tax from oil operators
Chartered Accountant and Attorney-at-Law, Chris Ram is calling for the Government to review the use of Production Sharing Agreements as it inhibits the nation from collecting corporation tax from oil operators.
A corporate tax, also called corporation tax or company tax, is a direct tax imposed by a jurisdiction on the income or capital of corporations or legal entities. Many countries impose such taxes at the national level. According to Ram: “We have to look at our tax system very carefully. Our Minister has said we don’t need to look at our tax system in relation to petroleum, but I disagree with this.” “We get zero corporation tax under the model petroleum agreement… The Government’s share of profit oil includes the taxes paid or payable by the oil producer so why don’t we move away from Production Sharing Agreements?” With this in mind, Ram argued that an intelligent approach is really needed to address loopholes in legislation and agreements governing the oil and gas sector.
Government has since taken a decision to review the pros and cons surrounding the continued use of Production Sharing Agreements in the oil and gas sector.
This is according to Minister of Natural Resources, Raphael Trotman.
In an interview with Kaieteur News, Trotman had said that there are different types of Agreements or Contacts which are entered into between governments and oil and gas companies. He noted, however, that in 1999, when a PSA was signed between the Government of Guyana and US oil giant, ExxonMobil, the Production Sharing Agreement model was considered “avant-garde.”
The Natural Resources Minister said that Production Sharing Agreements were the standard in the industry and so across the world, that was the model that was being utilized. Trotman sought to remind as well that in 1999, Guyana was seen as a place where no one wanted to do business, and deep water exploration was considered very risky and costly. He emphasized that many companies shied away from it.
(Kaieteur News)