The Guyana Revenue Authority (GRA) is preparing for talks to retrieve nearly $3B from companies alleged to have avoided taxes in a fuel duty exemption scheme, a charge that SOL Guyana Inc (Sol) firmly denied yesterday.
“The GRA is preparing to have talks with the companies to get back these monies but it is pointing at imminent litigation at this time,” an official close to the process told Stabroek News yesterday.
Attorney General Anil Nandall, SC also told this newspaper that his office was looking at the complaints sent to Minister of Finance, Dr. Ashni Singh by GRA Commissioner General Godfrey Statia.
“Tax evasion and corruption in tax collection have now been unearthed by the Commissioner- General’s revelation. You will observe that they implicate large companies operating in Guyana. Hopefully, good sense will prevail and the companies will settle their outstanding obligations with the government in a manner satisfactory to the state,” the Attorney General said.
“Failing which, I would have no other alternative but to advise a full police investigation and the application of the full force of the law. I wish to make it clear also, that in any settlement, the government reserves the right to apply the law even if the taxes are recovered,” he added.
This newspaper contacted both the GRA head and Finance Minister and they both stated that they did not wish to comment.
Statia quoted laws under his agency to justify why he would not comment on private tax matters while Dr. Singh said that he did not want to comment on an ongoing issue.
The Sunday Stabroek yesterday reported that, in a letter to Singh, dated March 2nd, Statia explained that it was discovered that Rubis, GuyOil and SOL Guyana were misusing the Permits for Immediate Delivery (PID) system by comingling exempted fuel with fuel not exempted or partially exempted, so as to avoid paying taxes owed on the required basis.
“Evidence so far reveals that as early as 2015, the system was being abused by SOL Inc., whereby exemption letters [from Exxon] were utilised to clear fuel while the full quantity was not delivered to Exxon,” Statia alleged in the letter, which was copied to President Irfaan Ali, Vice President Bharrat Jagdeo and the Attorney General Anil Nandlall.
SOL Guyana Inc (SoL) was identified by Commissioner General Godfrey Statia as engaging in the practice to a “major extent”.
This newspaper had reached out on Saturday to Earl Carribon, General Manager of SOL Guyana for a response to the claim, and was told that the company had no comment but would “release a statement in due course.”
‘Highly misleading’
Yesterday, a statement was released and the company denied having any part in acts of abuse of fuel exemptions here.
“(SoL) is aware of recent statements alleging that fuel importers, including Sol, have abused duty exemptions in Guyana. Sol categorically denies these false, highly misleading, and damaging allegations,” the company’s statement said.
It 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 (the “GRA”) 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.
“Sol is proud to be a safe and reliable supplier of fuels and energy solutions to the people of Guyana, and will vigorously defend the strong reputation it has built over many years against libelous and damaging statements,” it added.
‘Intended purpose’
The GRA’s letter to the Minister of Finance details an act implicating SoL. “Permit me to explain one of the more recent cases involving Sol and Bosai which reveal why the oil importers are not desirous to move the process aforementioned,” Statia wrote as he also listed a number of measures to tighten oversight.
“For the Period January 1 to September 30, 2020, a total quantity of 34,554,080 litres of Gas Oil was imported and duty entered by SOL Guyana Inc. using both Bosai companies’ tax exemption letters with references (named). Of this quantity, certified records submitted by SOL Guyana Inc. and both Bosai companies revealed that only the accumulated quantity of 20,691,379 litres was delivered to the beneficiaries. This meant that the balance of 13,862,701 litres should have remained in SOL’s possession,” he explained.
“To this effect, and based on the incontrovertible evidence obtained, the Revenue Authority demanded the forgone Excise Tax in the sum of six hundred and six million, nine hundred and seventy-eight thousand, three hundred and sixty three dollars [$606.9M] on the 13,862,701 litres of Gas oil which was imported, duly entered free of Excise Tax and was not delivered to both Bosai companies to be utilized for the intended purpose,” Statia continued.
He said that in an email, late last November, SOL had accepted liability but said that in the past it had supplied an excess to the company without the requisite exemption letters.
“The alleged quantity (24M litres) stated in paragraph 4 above when reconciled was found to be only 20.3M litres, clear evidence that SOL Inc. , does not keep adequate records of acquittal,” the letter says.
GRA officers, according to the agency’s Head, are currently examining Bosai’s Exemption records to see whether the company acquitted fuel from other importers in 2018 and 2019, since they were in receipt of exemptions during the period claimed.
The GRA Commissioner General had also explained that it was the practice of the Revenue Authority for several years to allow the major oil companies (mainly SOL, Rubis and GUYOIL) to import and enter tax exempted fuel for various businesses who 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,” he wrote.
However, a 2017 investigation and reconciliation by the Law Enforcement and Investigation Division (LEID) of the 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, SOL was allegedly engaged in the practice to a major extent.
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 assessments could equal $2.6 billion in taxes. It was explained that with the exception of the sum assessed to Exxon, all amounts have been paid.
Yesterday, Nandall emphasized oversight given that this country was now an oil and gas producer with its economy expected to mushroom with revenue generated from the sector, and he pointed to measures his government has taken.
He said that already there are plans to tighten the monitoring of these companies and take steps to prosecute.
