Country report Guyana

Economic overview

From a historically poorest country in the whole area, Guyana could become by the end of the decade one of the richest in the entire Western Hemisphere thanks to the huge discoveries of offshore crude oil, equal to at least 10 billion barrels equivalent and localized about 200 km from the coast in a basin that includes Guyana and Suriname. Furthermore, the quality of this crude oil, light and low in sulfur, makes it suitable for intercepting Asian demand, which is still growing in the coming years. After decades of fruitless research, since 2015 Exxon Mobil and other major oil majors have announced a series of discoveries and worked towards the commercial exploitation of the fields, which began in 2019. According to IHS Markit, by 2027 Guyana will join the restricted club of producers from over 1 million b / d, becoming the state in the world with the highest per capita production. The composition of its GDP has already changed markedly.

The huge inflow of resources deriving from the rapid growth of the last two years has been largely allocated to the sovereign fund (Natural Resource Fund, NRF), whose amount at the end of 2021 was equal to over 600 million USD (8% of GDP) . Since history is full of geographies plagued by the “resource curse,” the problem for Guyana is to manage them transparently and effectively. The Guyanese parliament approved in December 2021 a new regulation of the NRF which limits annual uses to a percentage of the amount at the end of the previous year. However, 2022 is an exception and the entire stock of the NRF will be used to finance public investments, equal to 80% of the budget (2.5 billion USD, almost a third of GDP).

The significant investments are aimed, first of all, at improving the country’s infrastructure, as well as health and education facilities, without neglecting renewable energy, to proceed with an initial economic diversification and create, over the course of a few years, a manufacturing sector capable of to make the country’s economy structurally stronger. To do this, Brazil could help, interested in creating an energy corridor with Guyana and Suriname to favor the development of the north of the country, which is historically poorer. There will therefore be some opportunities in the coming years from the rapid development of Guyana.

Main sectors of industry

The economy is mainly based on commercial agriculture (sugar cane, bananas, citrus fruits, coconut palm and tropical fruits of various kinds) and on the export of bauxite, gold and diamonds. Another important activity is shellfish fishing.

Guyana is heavily dependent on foreign capital, so much so that poverty is widespread and the public debt is very high. The industry is of little importance, limited to food production (beer, rum, sugar) and the infrastructures are inefficient.

A great variety of woods are obtained from the forests, as well as oils, essences and resins. Among the main agricultural productions rice, cassava and sugar cane. The upgrading of the European Space Agency’s (ESA) space base near Kourou has had positive effects on the local economy.

The Guyana government has started talks to discuss legislation aimed at creating and structuring the hemp industry within national borders.

In particular, the bill proposes the establishment of a governing body entirely and exclusively dedicated to the development of the sector: a Regulatory Authority, which, as stated by the Minister of Agriculture Zulfikar Mustapha, will also have the task of providing the matter first for the cultivation and production of industrial hemp (and, consequently, of derivative products) and to provide, at the same time, for the development of research activities related to the plant and its uses.

The ultimate goal of this project is to be able to insert the country into an increasingly profitable global market.

“There is a great opportunity that awaits us in terms of the hemp industry, not to mention the technological push, from construction materials to the pharmaceutical world,” said President Mohamed Irfaan Ali during a press conference held in early March. 

Taxation for businesses in Guyana

The tax system is based on the world wide income principle whereby the income of resident individuals is taxed in Guyana wherever it is produced, while for non-resident individuals the income is subject to taxation in the country only if it derives from a Guyanese source. A natural person is considered resident in Guyana if he meets one of the following conditions: he has permanent residence or is present in Guyana and intends to reside there permanently; resided in Guyana for 183 consecutive days in a fiscal year. A legal person is considered to be resident if management or control is effectively exercised at the headquarters in Guyana.

Corporate tax is levied at a rate of 30% on the income of non-commercial companies and 40% on those of commercial ones. A company is defined as commercial when at least 75% of its gross income derives from trading in goods not directly produced by it. 

Taxable income is made up of profits and and is calculated by subtracting the exempt income and the amounts allowed in deduction from the gross income. Capital gains are taxed separately at a rate of 20%. Losses can be deducted from taxable income and carried forward indefinitely but cannot exceed 50% of taxable profits in each year. The tax system also provides for the application of an alternative minimum tax to loss-making commercial companies. The rate is 2% of gross turnover.

Withholding tax (WHT): withholding tax as a general rule are applied to non-residents. Withholding taxes apply to the following income: salaries, dividends, interest, royalties etc. with the rates indicated in the following table:

dividends 20%

interest 20%

royalties 20%

commission for technical services 10%

Investing in Guyana

Guyana’s economy was ranked among one of the five fastest growing economies in the world by Nasdaq, Bloomberg and the International Monetary Fund (IMF); at a time when the rest of the world’s economy is in decline. The country’s GDP for 2019 was US$4.28B, a 10.36% increase from 2018 and is expected to have a 26.2% growth in 2020 according to the IMF revised forecast. Exxon Mobil has projected to produce at least 750,000 barrels of oil per day by year 2025.

Guyana is on the verge of becoming the largest oil producing country in the world on a per capita basis. Guyana is already preparing for this by putting in place the regulatory framework to manage the sector and the investments that would follow.

Other productive sectors such as tourism, agriculture, construction, manufacturing, energy, transportation, mining and services is set to significantly expand and offer broader scope of investment opportunities.

Why invest in Guyana

  • Fastest growing economy
  • Resource rich country
  • Multi-sector opportunities
  • Low operation costs
  • Ideal location to access global markets
  • Fiscal incentives for investments
  • Private sector focused government
  • Diverse cultures and heritage

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