GRA wins case against Grace Kennedy Remittance Services for close to $400M owed in taxes

Aug 18, 2020 News

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The Guyana Revenue Authority (GRA) has secured a court judgment against Grace Kennedy Remittance Services (Guyana) Limited in a matter relating to the company owing back taxes amounting to close to $400M.
The ruling, which was handed down late last month, has since been appealed by the money transfer agency.
Court documents seen by this newspaper outlined that the issue stems from a dispute between the revenue authority and the money transfer and bill payment agency over remittances of corporation taxes dating back to 2011.
The document outlined that GRA through its lawyer, Judy Stuart-Adonis, contended that Grace Kennedy is a company duly incorporated under the Companies Act; CAP 89:01 of the laws of Guyana which conducts the businesses of money transfer and bill payment services in Guyana.
According to the claim, GRA contended that the company was assessed for corporation tax at a non-commercial rate having been classified as a non-commercial company from 1994 up until May 2018.

However, the court document said that GRA the entity tasked with enforcing compliance with Guyana’s tax, customs and related laws, informed Grace Kennedy in a letter dated May 17, 2018 that it had been reclassified as a commercial company and therefore additional assessments were raised with respect to the liability for corporation tax for the years of assessment 2011 – 2017.This resulted in the company owing the sum of $377,135,184.00 for those years.
Further the letter informed Grace Kennedy that it is a “commercial company” as defined in Section 2(1) of the Corporation Tax Act; CAP 81:03 of the laws of Guyana and therefore it was previously incorrectly classified as a non-commercial company.
Having been reclassified as a commercial company, additional assessments were raised under Section 72 of the Income Tax Act; CAP 81:01 of the laws of Guyana resulting in the afore-stated corporation tax liability.
The company in turn wrote to GRA raising objections to the reclassification and the additional assessments but the revenue authority stood its ground on the issue.
As a consequence, the document stated that Grace Kennedy through its lawyer Stephen Fraser challenged the decision to a Judge in Chambers of the High Court.
Justice Nareshwar Harnanan ruled on July 5, 2019 that the money transfer service provider was not a commission agency and therefore not a “commercial company” as defined in Section 2(1) of the Corporation Tax Act.
The ruling was appealed to the Full Court where presiding Justices, Diana Insanally and Navindra Singh, handed down a decision in favour of GRA on July 20 last.
Among other things, the Full Court considered in its ruling the meaning of “commercial company” as outlined by Section 2(1) of the Corporation Tax.
In its judgment, the Court outlined that commercial company means a company at least 75 per cent of the gross income of which is derived from trading in goods not manufactured which includes any commission agency, any telecommunication company, any body corporate licensed or otherwise authorised by law to canyon banking businesses in Guyana, and any company carrying on in Guyana, insurance business, other than long-term insurance business, as defined in Section 2 of the Insurance Act.
As such, the Full Court agreed that all types of commission agencies are “commercial companies” as defined in Section 2(1) of the Corporation Tax Act, as found by the trial Judge.
Further, the Court noted that the evidence is unchallenged that the Grace Kennedy derives 75 per cent or more of its income through being a commission agency.
In the ruling, the Court noted further that the company was in the year 2003, similarly re-assessed after being re-classified as a “commercial company” by the Appellant.
The Court said, “The appellant subsequently reconsidered the re-classification and discharged the additional assessments…The reason/s for the discharge of the additional assessments in 2003 is not known and really is irrelevant since the finding of an officer of the Appellant in 2003 cannot bind the Appellant in the execution of its mandate in accordance with law.
As a result, the Full Court held that this should not have stopped GRA from re-classifying the agency as a commercial company since the re-classification was done in accordance with the law.
Further in the circumstances, the Court held that Grace Kennedy has not stated any facts or advances or any argument in support of that contention. As such, the Court reversed and set aside the ruling of Justice Harnanan in its entirety and further dismissed the High Court action based on its merits.

 

 

 

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