PSC urges similar engagement with other delinquent companies

DDL, GRA tax settlement

In light of the recent $5 billion tax settlement between the Guyana Revenue Authority (GRA) and Demerara Distillers Limited (DDL), the Private Sector Commission (PSC) is urging that similar procedure be adopted with other delinquent companies.
“From the point of view of the Private Sector Commission, we wish to urge that the Guyana Revenue Authority now engage other aggrieved companies to apply similar formulae to correct the distortions in the market place resulting from this action,” the Commission said in a statement on Friday.
Furthermore, the PSC applauded GRA and DDL on the settlement and compromise over the long outstanding consumption and excise taxes. “We wish to congratulate the Company on the amicable resolution of this issue, which has been ongoing since 2002 – that is an achievement which took fourteen years and is also a credit to all concerned,” the brief statement added.
Last week, DDL announced that it has reached an “amicable” settlement with GRA thus resolving the longstanding legal battle between the two, which arose out of a Consumption Tax assessment levied against DDL by former Commissioner General Khurshid Sattuar in January 2009 to the tune of $5,392,020,753.
However, the legal battle dated back to 2002, when the local beverage giant raised a legal challenge against the GRA on the methodology adopted by the latter for the assessment of Consumption Tax.
In February, 2005, the High Court found in favour of DDL. The GRA subsequently appealed that decision and on July 31, 2008, the Guyana Court of Appeal unanimously dismissed the GRA’s Appeal.
But the following month, GRA commenced a new assessment, this time issuing a new claim, billing the company a crippling $5.392 billion. This was again challenged by DDL in 2009 and the High Court had issued an Order Nisi pending the hearing of the matter.
“DDL and the GRA were able to recommence negotiations for a resolution of the methodology for a calculation of Consumption Tax (and its successor, Excise Tax), and have now been able to arrive at consensus to fully and finally settle all claims by the GRA and liability by DDL for both Consumption and Excise tax up to March 9, 2016 in the sum of $1,500,000,000. This sum is payable over 12 months. DDL, in good faith, very recently effected payment of $100,000,000 in compliance with the settlement terms,” a statement from the company on 12 April, 2016 stated.
However, while the PSC has lauded the settlement, Opposition Leader Bharrat Jagdeo has strongly condemned the transaction, calling it a “scandalous out of court settlement” that has cost the State billions of dollars in revenue.
“The settlement sends the wrong message to the business community; that a company can unilaterally decide to stop paying taxes, while other companies comply with the law, take the matter to court and drag it out until a sympathetic government comes to power and settles its debts to the State,” the former Guyanese President stated.
Jagdeo further outlined that the settlement has opened the door for other companies to seek refunds on taxes paid: “There have already been reports in the private sector of other major companies consulting lawyers about this possibility. Management officials from a major local alcohol and beverage producing company have made it clear, in the past when I was President, that the company would be seeking a refund depending on the outcome of the DDL matter,” he noted.