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Former registry owners challenge tax assessment

Eamon Courtenay (Senior Counsel)

Eamon Courtenay (Senior Counsel)

Eamon Courtenay
(Senior Counsel)

Tuesday, July 29, 2014. AARON HUMES Reporting: In June of 2013, the Government of Belize acquired the International Business Companies Registry and International Merchant Marine Registry, IMMARBE.

At the time of the acquisition, the Barrow administration claimed that then owners Belize International Services Limited (BISL) illegally obtained a 7 year extension of the original contract and were improperly exempted from paying taxes under the original management services agreement signed in 1993.

BISL now owes some $30 million, but without the revenue from the registries it cannot pay.

It has launched separate challenges to the takeover of the registries and assessment of taxes by Commissioner of Income Tax Kent Clare.

The latter case was argued this morning before Supreme Court Justice Shona Griffith.

Attorney for BISL, Senior Counsel Eamon Courtenay, says Commissioner Clare erred in believing that the company operated in Belize and thus owed taxes.

Even if the clause 12 in the management services agreement is not valid, Belize law permits a company like BISL not to pay relevant taxes.

Courtenay noted that Government is using the tax code as a weapon against businesses it wished to acquire.

But Acting Solicitor General Nigel Hawke, appearing for the Government, argued that Clause 12 of the 1993 agreement operated without any formal legislative approval, meaning that the company should have been paying taxes from the very beginning.

He also argued that by employing Belizeans the company was conducting business in Belize in contravention of the International Business Companies Act.

There was also contention over the powers of the court to order a stay of proceedings in relation to the matter.

Hawke urged the court to consider a modification of the law to read that the stay can be granted by the court in the interest of justice.

But Courtenay says that the law as written is hopelessly offensive and needs to be completely rewritten to agree with the Constitution.

He also argued that the Income Tax Department breached separation of powers by assuming judicial powers over those who owe it taxes, making them unable to receive a fair hearing.

A decision will be handed down by Justice Griffth on September 16.

The other matter is currently before Justice Michelle Arana.

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