One of the tools a Government has to attract investments, including Foreign Direct Investment (FDI), is tax exemption. It is a tool, however, that can be abused, and according to Vice President Bharrat Jagdeo, the Government will be aggressively policing tax exemptions through the Guyana Revenue Authority (GRA).
During his recent press conference, Jagdeo responded to questions regarding exemptions for oil companies and how the Government is guarding against its abuse. According to him, GRA is tasked with ensuring that companies do not abuse the system. Though there have been times when companies did just that, the system was able to catch them and force them to make restitution.
“GRA polices exemptions. So GRA should aggressively ensure that the exemptions are used only for the dedicated purposes. That’s GRA’s job, to police exemptions to ensure that people are not abusing this.”
“We’ve had cases, including from reputable companies that have abused this. You recall the recycling of the fuel and one company had to pay in excess of $3 billion. A recognised company, that is located here. So GRA has to police those exemptions,” Jagdeo explained.
Jagdeo further noted that from discussions he has had with GRA Commissioner General Godfrey Statia, the tax agency’s staffing woes whereby staff are being poached by oil companies at alarming rates, are confined to the petroleum unit. However, GRA’s regular departments, including the one that looks at tax exemptions, are adequately staffed.
“The discussion I’ve had with Statia, because he said to me on the regular GRA, I have adequate staff. In fact, I may even have too much. It is the petroleum unit where they had the problem with.”
“But not so much GRA regular staff that looks at customs, exemptions and the other stuff. So, they should have the capability now, to look at this, in-house, every contract. And to make sure there are systems in place,” the Vice President said.
Guyana has long been recognised as an attractive investment destination. With a projected growth rate of 37.2 per cent for 2023, Guyana is expected to continue its trend this year, of outpacing every other Latin American and Caribbean (LAC) country when it comes to economic growth. Additionally, the nominal Gross Domestic Product (GDP) has almost tripled in the space of two years, moving from $1.1 trillion in 2020 to $3.1 trillion at the end of 2022.
Guyana has also recorded the highest Foreign Direct Investment (FDI) inflows in the Caribbean. The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) “Foreign Direct Investment in Latin America and the Caribbean” 2023 report stated that Guyana recorded FDI inflows for 2022 totalling US$4.389 billion. It is a similar result to the record inflows in 2021. All in all, Guyana played a critical role in the overall 55.2 per cent rise in FDI in the Caribbean – a historic rise.
According to the report, the rise in FDI project announcements in Latin America and the Caribbean was mainly a result of a higher number of projects in Guyana, Mexico, Brazil, and Panama. In Guyana’s case and the Caribbean in general, companies from the United States were responsible for a significant chunk of these investments.
However, there has also been a push for the European Union (EU) to increase its investments in Guyana. During Europe day celebrations in May of this year, EU Ambassador to Guyana Rene Van Nes had said that an EU/Guyana business chamber will be set up to help both European and Guyanese companies navigate their respective markets.
Prior to that, it had been reported that Helena König, who is the Deputy Secretary General of the European External Action Service, would visit Guyana to help fast track the setting-up of a fully-fledged EU-Guyana Chamber of Commerce. Guyana already has Chambers of Commerce with the United States of America (USA), Canada, the United Kingdom (UK) and Ghana.
