Former owners of registries released from ‘unlawful’ tax assessments

Belize Supreme Court building

Wednesday, October 1, 2014. AARON HUMES Reporting: Earlier this year, the former owners of the IMMARBE and IBC Registries, Belize International Services Limited (BISL), took the Government of Belize to court, charging that they unlawfully assessed taxes owed of over $30 million dating back to 1993.

The company says it operated under the original management services agreement signed in 1993 which was extended a further seven years from the original decade-long arrangement but Government contends that this was illegally and improperly done.

GOB says BISL was contravening the International Business Companies Act by carrying on business with persons in Belize and lost its tax-free status, and additionally insists that it should not have had that status to begin with because no parliamentary approval was ever sought for the agreement.

It also noted that the law could provide through the courts for a stay of execution to challenge the decision of Commissioner of Income Tax Kent Clare to avoid the ‘pay to play’ status envisioned by the Income and Business Tax Act.

But the Supreme Court today said the assessments were unlawful because the IBC Act exempts BISL and there was no indication that it lost its status, and the alleged violation is not a condition for losing that status, and that Commissioner Clare did not have the jurisdiction to make the assessment.

Senior Counsel Eamon Courtenay, BISL’s attorney told us that the court largely agreed with his arguments that the Government and the Income Tax Department erred in their calculations.

However, presiding judge Shona Griffith declined to make a finding on the validity of the agreement or the legal and constitutional provisions argued at trial in July, stating that having resolved the primary issue of whether or not the assessments were lawful, it was not necessary to consider the other matters.

The decision removes a major hurdle from the company as it seeks the return of its property, in a concurrent claim being heard later in October before Justice Michelle Arana.

There, some US$60 million is being claimed in damages, but Courtenay says today’s decision removed an option for the Government to offset any possible damages against the allegedly unpaid taxes.

Deputy Solicitor General Nigel Hawke and Crown Counsel Marcia Mohabir appeared for the Government.

Costs will be agreed between the parties in favour of the claimant BISL.

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