The Full Court recently ruled that Grace Kennedy Remittance Services (GKRS), which operates Western Union and Bill Express Services, is liable to a tax debt of $377,135,184 to the Guyana Revenue Authority (GRA).
In court documents seen by this publication, from 1994 up until May 2018, GKRS was assessed for corporation tax at a non-commercial rate having been classified as a non-commercial company.
In a ruling delivered by Justices Navindra Singh and Diana Insanally, the Court found that GRA was lawfully recouping corporation taxes from GKRS from which it could not be estopped.
The Full Court found that the bill payment and money transfer entity is a commercial company that earns by payment of commission having derived 75 per cent or more of its income through being a commission agency since it is an agent of Western Union and an agent for various other companies facilitating the payments of bills due to those companies. GKRS was ordered to pay $500,000 in court costs to GRA.
In May 2018, GRA informed GKRS that it had been reclassified as a commercial company, and therefore additional assessments were raised for the years 2011-2017 with respect to its liability for corporation tax.
This resulted in the company having tax liability for those said years in the sum of $377,135,184. GRA further informed GKRS that it is a commercial company as defined in Section 2(1) of the Corporation Tax Act and that it was previously incorrectly classified as a non-commercial company.
Section 2(1) of the Corporation and Tax Act reads: “Commercial Company” means a company at least seventy-five per cent of the gross income of which is derived from trading in goods not manufactured by it and includes any commission agency, any telecommunication company, any body corporate licensed or otherwise authorised by law to carry on banking business 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.”
However, GKRS objected to the reclassification and the additional assessments and GRA maintained its position on the reclassification and the additional corporation tax assessments. GKRS then took GRA to court over its decision, and on July 5, 2019, Justice Nareshwar Harnanan ruled that the company was not a commission agency and, therefore, not a commercial company.
GRA then appealed the ruling of Justice Harnanan to the Full Court. During the hearing of the appeal, GKRS contended that since those additional assessments were discharged by GRA, it is estopped from raising the assessments it had raised in 2017.
The Full Court held that whenever and however GRA became aware of the fact that GKRS was improperly classified in accordance with the law and, as a result, was being incorrectly taxed, it has a lawful duty to correct such errors. Further, the Court also held that similarly, if GKRS was being overtaxed and GRA discovered such an error, even without an objection being raised by the company, GRA would have been under a lawful duty to correct such an error.
In light of the circumstances, the Full Court reversed and set aside the ruling of Justice Harnanan. GKRS was represented by Senior Counsel Stephen Fraser, while GRA was represented by State Counsel Judy Stuart-Adonis.