The Government is considering making residency a requirement for the owners or shareholders of companies seeking to obtain a Local Content Certificate in order to operate in the oil and gas sector.
This is according to Michael Munroe, Legal Officer at the Local Content Secretariat.
“We’re exploring, should there be a residency requirement? Should the Guyanese be a participating taxpayer. So, these are some of the areas we’re looking at. Because we want to ensure that the true spirit and intent of the (Local Content) Act is achieved,” Munroe said on Tuesday at the Local Content Summit.
Local Content Act of 2021 is under review with the aim of tightening up loopholes.
Currently, under the Act, a “Guyanese company” is defined as one incorporated under the Companies Act, beneficially owned by Guyanese nationals who hold at least 51% of voting rights, and where Guyanese nationals hold at least 75% of executive and senior management positions, and at least 90% of non-managerial and other positions.
In order to participate in the oil and gas industry, companies must register with the Local Content Secretariat and receive a Local Content Certificate.
A criteria for receiving such certificate is for the company to be Guyanese-owned.
However, many have found ways to bypass this requirement through what is known as “rent-a-citizen” schemes.
“Our experience has disclosed that there are companies or persons, who are engaged in the practice of renting or leveraging their Guyanese nationality as a means to allow foreigners who should be the minority shareholders in this arrangement, to more or less beneficially own the company,” Munroe admitted, noting that this is a loophole which needs addressing.
Munroe pointed out that the government wants to ensure that persons follow the Local Content Act, in both the letter and spirit. He also noted that there are Guyanese engaged in fronting, which would have them using their Guyanese nationality to pose as the face of the company, while the real beneficial owner’s profit.
“We are looking closely at this definition. And we’re looking at ways in which we can add more conditionalities as to who is a Guyanese company. And I say this to say, we’re exploring for example, if residency should be an option. So yes, you’re Guyanese, yes you perhaps live abroad. And you want to play a part in this. And that might be the case.”
The Local Content Act currently outlines 40 different service areas that oil and gas companies and their subcontractors must procure from Guyanese and Guyanese-owned companies.
These include 90 per cent of office space rental and accommodation services; 90 per cent of janitorial services, laundry and catering services; 95 per cent pest control services; 100 per cent local insurance services; 75 per cent local supply of food; and 90 per cent local accounting services.
