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Guyana Finally Complies With CCJ Eco Tax Ruling

by Mike Godfrey,, Washington

07 August 2015

Guyana's Parliament on July 30, 2015, passed an amendment to the Customs Act to cease the collection of a contentious environmental tax that had been the subject of more than a decade of legal challenges.

Since 2001, Caribbean International Distributors Inc (CIDI) and Rudisa Beverages and Juices N.V. have been seeking a legislative change and compensation from Guyana for its decision to levy its environmental tax on their imports of non-returnable beverage containers, under section 7A of its Customs Act. The tax was charged at a rate of GUY10 (USD0.05) per container and was not applied to domestic producers.

The matter was raised before numerous meetings of the Council for Trade and Economic Development. It was agreed that the measure was discriminatory and contravened provisions in the Revised Treaty of Chaguaramas – which established the Caribbean Community including the CARICOM Single Market and Economy –  on the free movement of goods and the principles of trade liberalization. Despite it being agreed several years earlier that a change to Guyana's legislation was necessary, the law remained in place and the tax levied. Guyana then missed a final May 29, 2009, deadline to revoke the tax. In 2013, Guyana attempted to resolve the issue by proposing an amendment to its legislation. However, this amendment was rejected by Guyana's Parliament.

After several years without progress, a case was brought before the Caribbean Court of Justice (CCJ) by the two companies in an attempt to finally settle the matter, in Rudisa Beverages and CIDI v. Guyana ([2014] CCJ 1 (OJ)). The Court ordered that Guyana cease the collection of the environmental tax immediately; pay CIDI the sum of USD6m, together with any additional tax paid since the last estimates of tax paid; pay interest on that amount at a rate of four percent; and pay the cost of the court proceedings.

In its judgment it required CIDI to notify the Court whether, and if so to what extent, Guyana had complied with the orders of the Court. In case of non- or partial compliance, Guyana was ordered to file a report.

Upon notification of Guyana's initial non-compliance by the attorney for CIDI, the Court ordered the parties to appear before it. At a hearing held on July 31, 2015, the parties reported to the Court that they had reached a full and final settlement with regard to Guyana's compliance with the CCJ's judgment as was evidenced by a signed agreement of settlement, a copy of which was submitted to the Court. It was agreed that Guyana will pay CIDI the amount of USD6.2m on or before January 31, 2016. It was further reported that Guyana will cease the collection of the environmental tax as of July 31, 2015, Guyana's Parliament having passed an amendment to the Customs Act on July 30, 2015.

At its July 31 hearing, the Court expressed its satisfaction with the progress made and adjourned the matter until February 26, 2016, to allow the parties to provide proof of complete compliance with the judgment.

TAGS: court | environment | compliance | tax | interest | law | environmental tax | legislation | Guyana | trade

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