Guyana is giving tax breaks worth at least USD$1.7 billion over five years to three of the world’s largest oil companies.
Tax concessions granted to ExxonMobil, Hess and the China National Offshore Oil Company (CNOOC) by the Guyanese government absolve the companies from paying annual income taxes that other Guyanese companies and citizens are required to pay.
The Guyanese government has granted a tax concession to three companies (ExxonMobil, Hess and the China National Offshore Oil Company) that are drilling under the Stabroek oil profit-sharing agreement. The tax concession absolves the companies from paying annual income taxes to the Guyana government—taxes that other Guyanese companies and citizens would be required to pay.
The agreement with the companies establishes that the income made by the companies in Guyana is taxable under Guyana law. The normal corporate tax rate is 25%. The contract, however, requires the government of Guyana to pay the annual tax for the companies.
This study finds that:
The government has made a pledge to be transparent about the amount of money the country receives from the oil agreement. The amount announced by the government (USD$388 million) is implied to be the amount available to Guyana’s budget. Greater clarity and improved reporting are needed. The government reporting would be more transparent if it accounted for expenses that are incurred against the revenue received.
U.S. tax law allows ExxonMobil and Hess to claim the tax payments against their U.S. income tax. This is not a matter for Guyana officials. However, additional disclosures might reveal that ExxonMobil and Hess have received an enhanced benefit that is not being considered as part of the profit-sharing agreement.