The Bahamas gets 15% tax on Guyana oil revenue and Guyana (like Piggy) gets none
“The OECD/G20’s Pillar Two framework mandates that all in-scope MNEs (multi-national enterprises) pay a minimum effective tax rate of 15% on profits in each jurisdiction. The Bahamas must act decisively to ensure that these taxes are collected here, rather than abroad”:
Introduction
In a development that would be almost comical were it not so devastatingly costly to Guyana, The Bahamas is now poised to collect taxes on income earned by Exxon from Guyana’s oil wealth. Contrast that with Guyana, whose government, despite widespread calls for similar action, refuses to exercise its sovereign right and power to tax all income earned in Guyana. The Bahamas’ initiative-taking adoption of the OECD’s Pillar Two framework exposes Guyana’s fiscal negligence and its leaders’ spineless subservience to ExxonMobil and multinational interests. The framework ensures that multinational enterprises pay a minimum tax of 15%.
Guyana’s refusal to adopt the OECD framework reveals an uncomfortable truth: our government has actively given up billions in revenue rather than even suggesting that ExxonMobil and its partners Hess and CNOOC should pay taxes on its hefty profits from Guyana. This active, deliberate and calculated inaction has led to the absurdity where The Bahamas, a country with only sand, sea and shells, will soon generate more tax revenue from Guyana’s oil industry than Guyana itself!!
The Bahamas is known for its tax haven status, but the country wants to collect revenues from its multinationals and stand alongside countries that take their reputation seriously – at least until Exxon finds another country to shield its Guyana profits.
The Cost of Inaction: Billions Lost, No Accountability
No one should be fooled that Guyana’s refusal to join the OECD framework is an oversight -it is a manifestation of the country’s leadership kowtowing to Exxon and Hess over the interest of their own people. They know that if they sign on, they must commit self-styled heresy by charging tax on Exxon. Unfortunately, this is not their only show of loyalty to Exxon. Their refusal to utilise the renegotiation clause in the 2016 Petroleum Agreement already stands as a glaring example of fiscal surrender, with Guyana not only waiving its right to collect taxes but also reimbursing ExxonMobil for its tax obligations and providing receipts for taxes Exxon and Hess never actually paid.
This is not about legal constraints or contractual obligations – this is about a government that has chosen to protect ExxonMobil from taxation rather than safeguard the financial future of its own people.
Giving away the Billions
It is estimated that Guyana has already given up around three billion United States Dollars in taxes which the oil companies should have paid since 2020. To put this in perspective, The Bahamas anticipates generating approximately US$$140 million annually through its new tax measures, applied across its entire economy. Given the vast scale of ExxonMobil’s operations in Guyana, our potential revenue under the same framework would dwarf this figure multiple times over.
The Flimsy Justifications for Guyana’s Tax Giveaway
Government officials, from President Irfaan Ali to Vice President Bharrat Jagdeo, continue to hide behind “contract sanctity” rhetoric to justify this inaction. Yet, their arguments collapse under even the most basic scrutiny. While The Bahamas is demonstrating the ability of a small nation to assert its tax sovereignty, Guyana’s leaders remain silent on why they refuse to do the same.
Former Prime Minister Samual Hinds has jumped on the Exxon Train and recently claimed that Guyana’s 2% royalty and profit-sharing arrangements compensate for the complete tax exemption granted to ExxonMobil. This is nineteenth-century, misleading, and fiscally irresponsible. No other oil-producing nation has accepted such terms, and the insistence on defending them reflects either shocking economic mismanagement or deliberate efforts to placate corporate interests at the expense of national development.
What contract sanctity?
It seems that the Government is engaged in some dodgy accounting regarding the taxes to be paid to the Guyana Revenue Authority. Under the 2016 Agreement, those funds should come from the government’s share of profits. But as we know, the 2021 Natural Resource Fund Act limits the use of the NRF funds. That, as lawyers would say, is an amendment by implication. However, an examination of the Government Estimates shows that there is no collection by the GRA, so the question then is who issued the Tax Certificate since it is not the GRA.
The inevitable question is whether Exxon accepted the amendment to the tax payment provision in the 2016 Agreement and whether there is some off-the-book arrangement between the company and the Government of Guyana.
Conclusion
The stark absurdity speaks for itself: The Bahamas, a country of sand and sea, will soon collect more tax from Guyana’s oil wealth than Guyana itself. While The Bahamas boldly asserts its rights under the OECD framework, Guyana’s government remains locked in what can only be described as an unholy alliance with ExxonMobil – providing tax receipts for unpaid taxes, refusing to renegotiate terms, and refusing to sign on to an international tax framework thereby surrendering billions in revenue. To describe this as fiscal negligence is too kind. It constitutes a deliberate betrayal of national interests that transforms Guyana’s oil blessing into a case study of corporate colonialism in the 21st century.
