Vice President (VP) Dr. Bharrat Jagdeo has disclosed that the Government of Guyana (GoG) in collaboration with the Guyana Revenue Authority (GRA) is working to close a loophole in the Income Tax Act that is being abused by some companies in Guyana’s oil sector.
At his press conference on Wednesday, Jagdeo shared that while amendments are still being drafted for Guyana’s Local Content law, a loophole has been discovered in the Income Tax Act, where companies working in the oil and gas sector are rotating foreign workers, particularly those in management positions, to bypass the country’s Income Tax obligations.
Jagdeo said, “So they’re bringing in rotating workers, a long list of them, foreigners. They’re getting work permits for them…rotating them in for six months and then sending them off. So, they’re bypassing the taxation of those individuals, their eligibility for taxation.”
Guyana’s law stipulates that a person has to be resident in the country for six months before they are required to pay Income Tax.
Jagdeo explained, “In the first couple of years, we gave some waivers, because already companies had contracts with ExxonMobil, and the change out would take some time, but this has become a loophole for some of them to bypass the legislation.” He underscored that the Local Content Secretariat, an arm of the government, has a mountain of evidence showing lists of foreign workers in managerial roles rotating in and out of the country. Jagdeo noted that the companies involved in this practice will be written to soon.
Back in 2021, the Local Content Act was enacted to ensure local businesses and workers are prioritized in the country’s oil and gas industry. Foreign companies are required to utilize local goods and services and to hire and train Guyanese workers. Several issues were raised and the government had vowed to amend the legislation.
The Vice President noted that due to ongoing discussions, those amendments will be made next year.
