The developed world is turning a blind eye on matters of tax fairness in the process of exploitation of Guyana’s petroleum oil resources. Under the current oil contract that a Guyana Minister was ‘told to sign’, Guyana gets an effective zero per-cent of profits tax after the Minister pays the contractors’ share of profit tax. This is tax unfairness and the leaders attending the Guyana International Energy Conference have an obligation to consider reversing this injustice against the people of Guyana, for all generations. The finance leaders of the leading Western Nations, named as G7, have seen it fit to apply tax fairness principles that would increase their share of profits tax revenue by agreeing to a minimum tax rate of at least 15 percent, regardless of the tax haven country where they are based. The laws of Guyana should not be neutralized in order to deny Guyana its right to tax any economic activity under its responsibilities and tax jurisdiction.
Caribbean leaders and scholars have pointed out that the major economic benefits of transforming Guyana’s raw materials occur outside of Guyana in the developed world, and this process has led to the state of poverty in a ‘resource wealthy’ country, such as Guyana. All the leaders attending this conference should observe that Guyana depends on taxation revenues and should not be denied this opportunity. Poor countries of Africa and the Caribbean, still struggling with economic development challenges and mass exodus of their peoples, should be treated fairly in the gains from trade, especially in the field of international taxation to halt “a global race to the bottom in corporate taxes, where countries compete by lowering their tax rates instead of the well-being of their citizens and natural environments” (Janet Yellen, Federal Reserve).
Guyana’s benefits under the 2016 Oil Production Sharing Agreement since oil production started in December 2019, is US$607 million without its profit tax. This is far lower than it should be because of the effective zero profits tax on the contractor share of production and sales. With the oil companies profit at about US$550 million, given the 50/50 profit share and the 40% Guyana tax rate, Guyana is losing about US$220 million. This huge amount is a serious deprivation to ‘the well-being of its citizens’ that is taking place in a small-country indefinitely. Guyana is not a Tax Haven Country. It deserves its actual profits tax to fund its social and economic capital budgets.
Sincerely,
Dr. Ganga Persad Ramdas