Navigating transfer pricing risk in the oil and gas sector: Essential elements of a policy framework for Trinidad and Tobago and Guyana

Charles, Don
Rajkumar, Antonio
McLean, Sheldon

2021-04-28T14:51:55Z

LC/CAR/TS.2021/3/Rev.1
LC/TS.2021/10/Rev.1

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Abstract .-- Introduction .-- I. Hydrocarbon industry in Trinidad and Tobago and Guyana .-- II. Oil and gas global value chain .-- III. Oil vs gas markets and pricing .-- IV. Taxation modalities: oil and gas industries .-- V. Transfer pricing, base erosion and profit shifting .-- VI. Estimated revenue loss for Trinidad and Tobago .-- VII. Policy recommendations.

This study explores the oil and gas value chain by first examining the oil and gas taxation framework and assessing the mechanics of the industry’s natural creation of opportunities for transfer pricing. The results of the analysis are then used to identify the most appropriate regime with which to address transfer pricing and provide sound policy recommendations for its implementation. Consequently, the study posits that inherent pricing risk can be mitigated by developing an appropriate fiscal and legislative framework complemented by the designation of a competent revenue authority to ensure that multinationals set fair hydrocarbon prices. Further research possibilities however remain, particularly by expanding the focus of the analysis to include Latin American economies and employing a game theory framework.

ECONOMIC DEVELOPMENT; FISCAL POLICY; INCOME; RISK; TRANSFER PRICING; MARKETS; TAXATION; INDUSTRIA PETROLERA; INDUSTRIA DEL GAS; PRECIOS DE TRANSFERENCIA; MERCADOS; TRIBUTACION; INGRESOS; RIESGO; POLITICA FISCAL; DESARROLLO ECONOMICO; PETROLEUM INDUSTRY; GAS INDUSTRY;