Banks DIH sues Govt for $28B


…triggered by DDL’s $3.8B tax write-off

As forecasted, the floodgates have opened and one of the country’s leading beverage giants has slapped Government with a multibillion-dollar lawsuit, claiming in excess of $28 billion in repayment, in light of the controversial tax write-off given by the Guyana Revenue Authority (GRA) to its competitor, the Demerara Distillers Limited (DDL).Banks DIH Limited
Banks DIH Limited on December 16, 2016 filed legal proceedings against Attorney General Basil Williams and the GRA, seeking a refund of approximately $28 billion.

According to the court documents seen by Guyana Times, the corporate entity paid some $12.8 billion in taxes over the period 2001 to 2006. But since Government granted DDL a whopping $3.8 billion tax write-off from its assessed $5.3 billion owed, Banks DIH calculated that it should have only paid some $3 billion instead of $12.8 billion.

The company, therefore, argued that the Guyana Government would be “unjustly enriched” if it retained the approximately $9 billion (the difference between the paid amount in taxes and the net figure Banks DIH estimated it should have paid).Demerara Distillers Limited
In this regard, Banks DIH claims that it is entitled to some $9 billion plus 10 per cent interest compounded over the period 2001 to 2006 resulting in a total of some $28 billion after taking into account the settlement figure payable by DDL of $1.5 billion.

More lawsuits

Given the perceived nature of the DDL tax write-off, it is believed that Banks DIH will file another lawsuit with additional refund claims.

Opposition Leader Dr Bharrat Jagdeo

According to People’s Progressive Party (PPP) General Secretary and Opposition Leader Bharrat Jagdeo, the beverage giant might claim up to $30 billion more.

He explained during a news conference on Monday that the DDL tax write-off possibly spans the years 2006 to 2016 and when that figure becomes available, Banks DIH might make more repayment claims accordingly.

Jagdeo reminded that he had warned of the domino effects this secret out-of-court tax write-off arrangement with DDL would have triggered – an outcome so calamitous with the potential to cost the treasury billions of dollars.

He highlighted too that desperate efforts were exhausted, even at the highest discussion forum in the country – the Parliament to seek answers on this clandestine deal, but to no avail.

Jagdeo, a former President, also argued that Government could have used the billions of taxpayers’ monies it gave away to the multibillion-dollar corporation to otherwise support the Wales Sugar Estate in the interest of sustaining the livelihoods and economic well-being of hundreds of Guyanese and by extension, the entire country.

The Opposition Leader believes that this secretive deal reeks of corruption and has the potential to dwarf all the previous scandals which occurred thus far under the A Partnership for National Unity/Alliance For Change (APNU/AFC) coalition Administration.

DDL write-off

An extended legal battle between DDL and the GRA grinded to an end after the APNU/AFC Government, upon assumption to office, decided to grant the drinks company a whopping $3.8 billion tax write-off.

The legal proceedings arose out of the Consumption Tax assessment levied against DDL by then Commissioner General Khurshid Sattaur in January 2009, in the sum of $5,392,020,753. This assessment was challenged in the High Court by DDL.

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 the 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, the GRA issued a new claim in the crippling amount of $5.392 billion.

But the secretive arrangement between the APNU/AFC Government and DDL saw the company only being liable to pay $1.5 billion.

This cloudy tax write-off sparked immense controversy causing many, including the business community, to raise eyebrows over the deal.

Questions still abound regarding who negotiated the settlement; if the settlement was approved by Cabinet or the board of the GRA; on what principles was the sum of $1.5 billion arrived at; and whether other deals were concluded or were currently being negotiated.


Finance Minister Winston Jordan

Finance Minister Winston Jordan had previously declared that any attempts by other businesses seeking similar tax write-offs would be vigorously challenged.

“Any attempts by other business persons to make claims and so on will also be vigorously opposed based on principles that underline the settlement with DDL,” he had stated.

Jordan had explained that Government could not stop other companies from wanting to make similar claims, but they would only have a solid case if they have reasonable grounds.

Defending the DDL tax write-off, Jordan said the GRA engaged in tax settlements all the time and the DDL matter was nothing new.

“The judgment is sound, based on what is told to me,” he had stated. (Devina Samaroo: Guyana Times)


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