Georgetown, GRA, Thursday, July 11, 2019: The Guyana Revenue Authority (GRA) has noted a recent Guyana Times article captioned GRA hits Dipcon with $500M tax bill, which quoted Dipcon’s Legal Counsel Timothy Jonas saying that “a similar letter from the GRA, about six months ago, was challenged by Dipcon and thrown out by the court.”
The Legal Counsel was making reference to a previous letter dispatched by the Commissioner-General of the GRA in May 2018, addressed to the requisite Authority that upon payment of the said judgment that taxes due by Dipcon, which has ceased to carry-on business in Guyana, be deducted from any such payment.
The GRA disagrees with learned Counsel on his choice of language which could lead to a misunderstanding of the effect of the Court’s ruling. Contrary to what counsel’s statement has led the general public to believe, the power to garnish the said taxes from amounts due to Dipcon was merely deferred, since the learned Chief Justice in her considered judgment advised that the taxes could not be garnished at said time since the judgment had not been paid by the Government of Guyana. The Chief Justice stated in her written decision that when the judgment is satisfied, it is then that the monies paid pursuant to the judgment would be deemed income for the purposes of taxation, and provided that the judgment has been paid to Dipcon by the Government of Guyana then said judgment is deemed income for the purposes of taxation.
An excerpt from the Learned Chief Justice states:
Since the amounts awarded in the Judgment are yet to be paid, and will be paid no earlier than in this year, 2018, corporation tax on that amount, if payable, can be charged no earlier than next year, 2019. Given this conclusion, and the purpose of this Application, it is unnecessary for this Court to determine whether the judgment amounts are exempt from corporation tax. That issue only arises upon payment of the judgment amounts and subsequent assessment of taxes due and payable, at which time it may be more fully canvassed.
In view of the above, and pursuant to Section 102 of the Income Tax Act Chapter 81:01, when the Commissioner -General has knowledge or suspects that a person is or is about to become indebted or liable to make any payment to a person liable to make a payment of tax under this Act, he may, by registered letter or by letter served personally, require such first-mentioned person to pay the moneys otherwise payable to such second-mentioned person in whole or in part to him on account of the liability of the second mentioned person under this Act.”
As provided for by Section 102 (2) - the receipt of the Commissioner-General for moneys paid as required under this section shall to the extent of the payment be a good and sufficient discharge of the original liability (a) of the person who pays such moneys to the Commissioner-General to the person liable to make a payment of tax under this Act; (b) of the person liable to make a payment of tax under this Act to the Commissioner-General.
The Financial Secretary was also advised that in accordance with section 102(4) of the Act, every person who has discharged any liability to a person liable to make payment of tax under this Act without complying with a requirement under this section shall be liable to pay to the Commissioner General as a debt due to the State an amount equal to the liability discharged or the amount which he was required under this section to pay to the Commissioner General whichever is less.
On Monday, July, 8, 2019, having learnt that the said award was being paid by the Ministry of Finance, the GRA served notice to the Financial Secretary and copied to Dipcon’s legal counsel instructing that the taxes outstanding by the company be garnished and paid over to the Authority as satisfaction of the said taxes outstanding.
Note should be taken that since Dipcon has ceased to carry on operations in Guyana, should garnishment not be effected, the GRA would have had no jurisdiction over the monies collected once transferred out of the Guyana jurisdiction.
Assertions by the Leader of the Opposition in the said Guyana Times that the decision by the GRA to garnish the taxes due “sends a bad signal to investors and damages an already struggling investment climate”, is therefore flawed. The GRA was simply carrying out its mandate in accordance with the Revenue Authority Act. Contrary to such a claim, by ensuring the tax laws are administrated in a fair, transparent and consistent manner whereby all individuals and companies, whether foreign or otherwise pay their rightful share of duties and taxes, this would lead to increased investor confidence.
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