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CCJ orders Guyana to repay Surinamese beverage company US$6 million in environmental tax

The Caribbean Court of Justice (CCJ) on Thursday ordered Guyana to repay a Surinamese beverage manufacturer more than US$6 million in environmental tax that had been levied on non-returnable bottles because it amounts to a discriminatory import duty that violates Caricom’s Revised Treaty of Chaguaramas (RTC).

The CCJ took note of the fact that the Guyana government had taken steps last year to amend the law to create a level playing field for both local and Caribbean beverage manufacturers.

The combined opposition, which controls the National Assembly, last year voted against the amendment but the CCJ said the State was not divisible.  “The Court noted Guyana’s admission that the imposition of  the tax amounted to a breach of the RTC. It further observed that the explanation provided by the State, namely their inability to pass the necessary legislative amendment to the Customs Act, did not absolve the State from liability for the breach. The State was indivisible for the purposes of liability and had an overarching responsibility to honour treaty obligation,” states the summary of the judgment.

The regional trade court that interprets the Revised Treaty of Chaguaramas ruled that Rudisa Beverages and Juices NV, the Surinamese beverage producer, and co-claimant, Caribbean International Distributors Inc (CDI), which imports the beverages into Guyana, must be repaid a total of US$6,047,244.47 together with such further tax paid from October 25,2013 to the date of judgment.

The CCJ stated that the only way Guyana would not have had to repay the tax was if it could have been shown that it was passed on to the consumer or a third party. “ There was no evidence to suggest that the tax was passed on,” states the summary of the judgment. The court added that the documentary evidence as well as the testimony of the Claimants’ witnesses demonstrated that the tax was absorbed by the Claimants in order to maintain their competitive edge in the Guyana market.

The Court required that if CIDI did not notify the Court that Guyana had complied with the orders of the Court by October 30,2014, then Guyana should file with the Court on or before November 15, 2014 a report on its compliance with those orders.

RUDISA and CIDI had contended that the tax amounted to an import duty that was inconsistent with Caricom’s trade policy in the RDTC which provide “for the free movement of goods and prohibitions on the imposition of import duties on Caricom goods.”

RUDISA and CIDI had contended that the environmental tax which has been imposed on the their goods has the effect of raising the cost price on each imported container by GUY$10. However, no similar tax is imposed on local producers of non-returnable beverage containers and, by the definition of “Import Duties” laid down in the Revised Treaty of Chaguaramas (RTC), the levy must be regarded as an import duty.
The Court document notes that the effect of the environmental tax was first raised with Caricom’s Council on Economic Trade and Development (COTED) by the Suriname government in a series of meetings spanning the period 2001 – 2012.

COTED concluded that in so far as it applied to CARICOM goods the levy was in breach of the RTC. Guyana, in turn, had committed itself to take the necessary action to eliminate the discriminatory effect of the environmental tax.