[ad_1]
ExxonMobil faces tax hikes worldwide, but is exempt in Guyana
President Irfaan Ali
Kaieteur News – U.S. oil giant ExxonMobil reported an increase in income tax expenses in the second quarter of 2024, to $4.1 billion from $3.5 billion in the same period last year.
The company’s total tax bill for the quarter was $11.6 billion. However, none of these taxes were paid to Guyana, which continues to receive tax exemptions under an existing agreement. Exxon’s effective income tax rate (calculated based on combined corporate income tax and its share of equity corporate income tax) was 34%, up from 33% last year. “This rate is higher than the 33% reported in the prior-year quarter, primarily due to a change in the mix of results across jurisdictions with different tax rates…” Exxon said.
Recently, ExxonMobil announced that it had a profit of $9.2 billion in the second quarter of 2024. Darren Woods, the company’s CEO, attributed ExxonMobil’s profits to its operations in Guyana, saying: “We achieved record quarterly production from our low-cost Permian and Guyana assets, the highest oil production since the merger of ExxonMobil and Mobil. Our high-value product sales also set a record, up 10% from the first half of last year.”
“We delivered our second-highest second quarter earnings in the last decade as we continue to improve our underlying profitability. Our transformative merger with Pioneer was completed in half the time of similar transactions. We are also continuing to build businesses like ProxximaTM, Carbon Materials and virtually carbon-free hydrogen, at approximately 98% CO2 neutral, that will create value long into the future,” Woods said. ExxonMobil Guyana Limited (EMGL), a subsidiary of ExxonMobil, disclosed in June that it had made approximately $2.9 billion in profits last year, fully tax-free.
ExxonMobil CEO Darren Woods
ExxonMobil Guyana is the operator of the Stabroek Block with a 45% interest, while Hess Guyana Exploration Ltd. has a 30% interest and China National Offshore Oil Corporation (CNOOC) Petroleum Guyana Ltd. has a 25% interest. The block partners enjoy tax exemptions in Guyana thanks to the 2016 Production Sharing Agreement (PSA) signed by ExxonMobil with Guyana in 2016.
The oil deal stipulates that Guyana shall pay taxes owed by the company. Clause 15.1 of the PSA states that the contractor (ExxonMobil Guyana Limited) and its affiliates shall not pay any taxes, VAT, excise taxes, duties, fees, charges or import duties on income derived from oil operations, property held or transactions, unless otherwise provided in the agreement.
Article 15.4 also provides that the Minister of Petroleum will pay to the Commissioner of the Guyana Revenue Authority (GRA) an amount equal to the taxes owed by the company. Notably, the Guyana government also agreed to issue a receipt to ExxonMobil indicating that the company has met local tax requirements, avoiding the burden of double taxation.
Clause 15.5 of the contract provides that “within one hundred and eighty (180) days after the end of each tax year, the Minister shall furnish to the Contractor an appropriate tax certificate issued by the Commissioner of the Guyana Revenue Authority in the name of the Contractor certifying that the Contractor has paid income tax under the Income Tax Act and corporate tax under the Corporate Tax Act. Such certificate shall set forth the amount of tax paid by the Contractor or any party consisting of the Contractor and such other particulars as are customary in such certificates.”
Furthermore, the Government of Guyana (GoG) has made it clear that the 2016 Production Sharing Agreement will remain in force due to the sanctity of the contract, despite being labelled as unfair and benefiting oil companies more. It is noteworthy that the legal action filed by Mr. Glenn Lall, the publisher of this newspaper, against these abusive tax incentives was unsuccessful as the court dismissed the case in February 2023.
Related
[ad_2]
Source link
