Tax treaties being reviewed to ensure Guyana benefits – Statia

The Guyana Revenue Authority (GRA) is working to enhance its capabilities with regards to its taxation treaty to avoid tax evasion by developed countries.

Interests from different countries to sign tax treaties with Guyana has increased since the discovery of oil and gas and as a result, Commissioner General of the GRA Godfrey Statia pointed out that the entity has been actively engaged in such negotiations while underscoring the importance of being cautious when embarking on these ventures.
He explained that as a negotiator, he had found that such agreements can be used for tax evasion, or tax avoidance, since those incomes are not taxed.
Statia was at the time addressing participants of a CARICOM Double Taxation forum hosted by Christopher Ram and associates on Thursday at the Georgetown Club.
The workshop targeted accountants, tax specialists, regional companies doing business in Guyana, and Guyanese companies / individuals considering the CARICOM market.
“I have seen too many past agreements negotiated without inputs from tax technicians, which have led to the transfer of wealth from small developing countries to developed ones,” the GRA head said.
Further, he highlighted that GRA is presently preparing recommendations to the Finance Minister to have certain aspects of these signed agreements renegotiated and updated to reflect the changing times and economy since the treaties were signed.
According to Statia, the tax treaty negotiations should ensure multinationals are taxed whenever economic activities take place and where value is created.
He noted that with the advent of oil here, many developed countries have been approaching the Government to negotiate such agreements and as a result, GRA is strengthening its system by moving to set up a special international tax section to deal exclusively with such matters.
The Commissioner General further noted that the treaties do not provide a sufficient basis for adequate tax information exchange between developing and developed countries, particularly with secrecy jurisdictions.
As such, multinationals, who are mostly from developed countries, usually channel investments through intermediary companies formed in convenient jurisdictions so they can take advantage of treaty shopping.
Treaty shopping allows for low or zero tax pathways through the international tax system with some countries, deliberately facilitating these pathways by setting themselves up as conduit countries.
“These are but a few reasons why we, as a developing country, ought to be cautious,” he said.
He stressed the need for tax experts’ active involvement in these negotiations to administer international agreements to avoid being left in the hands of Foreign Service Officers and politicians.
Guyana has Double Taxation Agreements (DTA) with Canada and the United Kingdom and a Tax Exchange Information Agreement (TEIA) with the United States of America. Another such agreement is also expected to be signed with Kuwait.
According to Statia, a DTA was negotiated and approved by Cabinet to be signed with the United Arab Emirates, while negotiations with at least four other countries are ongoing.
Double Taxation Agreements seek to prevent the same income from getting taxed twice, while TIEAs provide for the exchange of information on request relating to a specific criminal or civil tax investigation or civil tax matters under investigation.
He emphasised the need for Guyana to pursue only TEIAs and not DTAs with tax haven countries; as failure to do so may result in our tax dollars leaking offshore through abuse of DTAs by multinational investors.