FINANCE Minister Winston Jordan has said the Guyana Revenue Authority (GRA) is constantly working out tax settlements with businesses.Dispelling criticism that the Government’s recent agreement with the Demerara Distillers Limited was a giveaway, Jordan said at a news conference on Monday that the recent $1.5B Consumption and Excise Tax settlement between the GRA and DDL is not novice.

“No, settlements at GRA go on all the time…. Listen, they (GRA) didn’t wake up overnight and decide to settle,” he said. He made it clear that Government did not give up G$5B in exchange for G$1.5B.

Reiterating the point that the Revenue Authority is authorised to settle matters outside of the court, the Finance Minister said the matter has been before the High Court and the Court of Appeal for 14 years, and the GRA has been on the losing end.

“14 years this matter has been going on for…. Every time GRA went to courts, they lost.” Minister Jordan thus stressed that GRA’s decision was a “sound” one.

DDL announced in April that it had reached an amicable settlement with the GRA to resolve a longstanding dispute over Consumption Tax owed to the state.
The agreement is intended to settle all claims by the GRA and liability by the entity for both Consumption and Excise taxes up to March 9, 2016 to the tune of $1.5B.

“This sum is payable over 12 months. DDL, in good faith, very recently effected payment of one hundred million dollars in compliance with the settlement terms,” a statement to the media said.

The issue began in 2002, and the company said settlement follows an extended legal battle between DDL and the GRA, arising out of the $5.3B Consumption Tax assessment levied against DDL in January 2009 by then Commissioner-General Khurshid Sattaur.

The Finance Minister is expected to respond to several questions on the issue to be posed by the Opposition in the National Assembly.

Opposition Leader Bharrat Jagdeo has contended that the tax deal recently struck between the two entities has set a precedent for similar requests to be made by other companies.

Jagdeo described the tax settlement as scandalous, noting that it 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 (then) settle its debts to the State,” said Jagdeo.

“If one were to calculate interest on this sum at a rate of 10 per cent per annum using only the past 10 years, the liability would amount to $10.6B. The GRA assessment of $5.392B was based on a formula handed down by the court, but yet DDL refused to pay,” Jagdeo stated.

The Private Sector Commission (PSC) has welcomed the move by GRA and DDL to settle the matter out of court, and has called on the Revenue Authority to negotiate with other companies that are in the same position as DDL was in.

“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 formula to correct the distortions in the market place resulting from this action,” the PSC said in a statement.

But Minister Jordan has made it clear that should other companies feel the need to make claims based on the principles of the DDL settlement, those claims would be “vigorously opposed”.

In 2002, DDL had 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 GRA’s Appeal.

Following the dismissal of the appeal, the GRA commenced a new assessment in August 2008; and notwithstanding attempts by the parties at resolving the matter, on January 16, 2009, GRA issued a new claim in the crippling amount of G$5,392B.