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 that it should not have had that status to begin with because no parliamentary approval was sought for the agreement. It also noted that the law could provide for a stay of execution to challenge the decision of Commissioner of Income Tax, Kent Clare.
But the Supreme Court on Wednesday said the assessments were unlawful because the 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.
We spoke with Senior Counsel Eamon Courtenay, BISL’s attorney.
“What the judge has said is that, that was an unlawful assessment, and she said so because section 130 of the International Business Companies Act specifically exempts all IBCs from the payment of taxes, and so she squashed the assessments by the commissioner.
Very importantly, what the judge said was that the argument by the Government that BISL was carrying on business with persons resident in Belize, meant that they were afoul of section 5 of the act, which then meant they were available to be taxed. She said that, that is wrong. Even if you carry on business with people resident in Belize, which is not allowed by the law, it doesn’t mean you are no longer an IBC. You continue to be an IBC but you can be subject to a fine and is not that it means you can be assessed.”
The Court 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, as explained by Eamon Courtenay.
“That is another court, and that will come up later this month before Madam Justice Arana, where we are seeking constitutional relief and damages for the unlawful taking of our client’s property. But that is before Justice Arana.
It was helpful to the client because what the client was facing was an assessment of the 30 million dollars with interest and penalty continuing to accrue on the one hand, and then clearly Government was going to say they will set off for whatever damages in the other matter against the 30 million. Well there is no 30 million now.”
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.