The state-owned Guyana Oil Company Limited (GuyOil) has declined a request to comment on allegations by the Guyana Revenue Authority (GRA) that it abused excise tax exemptions on fuel to skirt tax obligations.
When Stabroek News made contact yesterday, a representative of the GuyOIl public relations department said that the company had no comment.
In a letter to Minister with responsibility for Finance, Dr Ashni Singh, dated March 2nd and seen by the Sunday Stabroek, GRA Commissioner General Godfrey Statia said that a 2017 investigation discovered that Rubis, GuyOil and SOL Guyana were allegedly misusing the Permit for Immediate Delivery (PID) system by commingling exempted fuel with fuel not exempted or partially exempted so as to avoid paying taxes owed on the required basis.
While SOL Guyana was identified as engaging in the practice to a “major extent” both Rubis and GuyOil were also found to be culpable.
According to the GRA it was the practice for several years to allow the major oil companies (mainly SOL, Rubis and GuyOil) to import and enter tax exempted fuel for various businesses which benefitted from partial or full exemptions on fuel.
On so doing, the oil companies are required and expected to, inter alia, deliver the full exempted quantities imported and entered to all such beneficiaries, which the beneficiaries are expected to utilise for the intended purposes,” it further notes.
However, the 2017 investigation and reconciliation by the Law Enforcement and Investigation Division (LEID) of GRA found that the PID system was being misused as oil importers were utilising exemption letters to clear PIDs without regard to whom the fuel was destined for, i.e., whether the fuel was fully exempted, partially exempted, or subjected to the tax.
An explanation that the fuel was held in “virtual tanks” for delivery to the beneficiaries showed that there was commingling and the oil importers were abusing the system since not all exempted fuel cleared by the importer was being cleared by the beneficiary, thus allowing the oil importer to benefit from increased cash flow by not paying the government on the required basis.
Both LEID and the Customs, Excise and Trade Operations conducted a reconciliation which indicated that while all three major oil importers were allegedly involved. It was found that oil importers had imported and entered the fuel at duty free rate using the beneficiaries’ tax exemption letters, but failed to deliver the full quantities to the beneficiaries.
Letters held by the Guyana Gold and Diamond Miners Association were used to avoid payment of $482 million in taxes, Bosai’s letters were used for $606 million in un-acquitted exemptions, $53 million for Aurora Gold Mines and $61 million for Rusal.
Further in late 2020/early 2021 letters from ExxonMobil were used for exemptions which according to initial assessment could equal $2.6 billion in taxes. It is explained that with the exception of the sum assessed to Exxon, all amounts have been paid.
SoL Guyana on Sunday released a statement denying the allegations but the other companies named have not commented.
In its statement, SoL underscored that the company holds strong to its “core values of Integrity, Respect, Safety and Community” and they are the pillars of its operations.
SoL said that it has worked with the GRA collaboratively and has systems in place to ensure its compliance at all times.
“We have worked collaboratively with the Guyana Revenue Authority … and want to assure our customers, partners, and the people of Guyana that we have robust procedures in place to ensure that we remain in compliance with our duty obligations as well as our other legal and corporate social responsibilities,” the company stated.
“As part of its assurance process, SoL has commissioned an independent third party to conduct a verification and reconciliation of its duty position, which confirms SoL is current and compliant with duty exempt importation regulations,” the company said.
