GRA sought $1.5B from Baishanlin for breach of tax exemptions terms

The Guyana Revenue Authority (GRA) wrote Chinese logging company Baishanlin in February this year seeking $1.58B for breach of the terms under which tax exemptions were granted. According to the letter seen by Stabroek News, the GRA said that Baishanlin did not undertake the aspects of the project specified in the investment agreement signed with the Government of Guyana i.e. upgrading and building a modern wood processing facility at Conception, Linden. It was also argued by the GRA that Baishanlin failed to create and sustain employment for 150 persons over three years and that the company failed to procure and provide all of the investment and other financing needed for the undertaking in the sum of US$130M over a three-year period from the date of the signing of the investment agreement. The GRA letter by then acting Commissioner-General Ingrid Griffith to Chu Hongbo, Managing Director of Baishanlin said that the company’s accountant, Nigel Persaud, had told GRA investigators that the design of the wood processing facility was now being finalized in China and the company was in the process of seeking alternative sources of financing to continue the project which would now include value adding processing. Griffith’s reply to this was that the “…concessions were granted on the basis that activities of your company would be value added processing and not the cutting, felling and exporting of logs”. As a result, Griffith’s letter advised that Baishanlin was in breach of Covenant 5 (1)b (i) of the investment agreement with the government for which the penalty is termination of the agreement. The GRA therefore said that the residual customs duty and taxes were now due and payable on the machinery, equipment and motor vehicles to the tune of $1.58B in accordance with Section 36 of the Customs Act, Chapter 82:01.