Grace Kennedy Remittance Services (GKRS), which operates Western Union and Express Services, has been ordered to pay GY$377,135,184 (US$1,807,536.90) to the Guyana Revenue Authority (GRA) following a ruling delivered by Justices in the Guyanese courts.
On 20 July 2020, the court delivered its ruling, finding in favour of the GRA and reversing the previous decision of the judge in chambers.
Parent company GraceKennedy Limited stated in notes attached to its second-quarter results that, having regard to the present ruling, a provision for the assessment has been made in the financial statements.
Moreover, the company has indicated its intention to file an appeal to the decision and its legal counsel maintains that it has a strong case, as related in notes attached to the most recent financials.
The background to the case, as outlined in the company’s second-quarter report, is that by letter dated 17 May 2018, the GRA indicated that GKRS Guyana was “incorrectly” classified as a non-commercial company rather than a commercial company. Based on this, the GRA asserted that GKRS Guyana had wrongly paid corporation taxes at the lower non-commercial company rate.
GKRS Guyana’s tax liability was assessed by the GRA to be the equivalent of JM$225,116,000, excluding penalties and interest if applicable. GKRS Guyana lodged objections to the GRA’s assessment on the basis that the tax authority wrongly assessed GKRS Guyana as a commercial company, and that GKRS Guyana had filed returns for a period of over 20 years as a non-commercial company — which the GRA had accepted.
By letter dated 26 September 2018, received on 4 October 2018, the GRA indicated that it would maintain its assessments despite the objection.
GKRS Guyana filed an appeal on 26 October 2018 and defence in a response filed by the GRA on 21 December 2018.
Oral submissions were heard in chambers before the judge on 27 March 2019 and on 8 July 2019, and the court ruled in favour of GKRS Guyana; setting aside the decision by the GRA to reclassify the company as a commercial company and, therefore, reversing the decision by GRA to impose corporation tax at the commercial rate.
The GRA then appealed the court’s decision; however, the appeal was filed outside of the prescribed timeline. The GRA filed an application to extend the time for the filing of the appeal so that the appeal may be heard. The GRA was granted permission to file an appeal at a hearing held on 27 November 2019. The appeal was filed and a cross-appeal filed on behalf of GKRS Guyana. Submissions by the GRA and GKRS Guyana were filed and the matter adjourned to 7 July 2020 for a ruling.
On 20 July 2020, the court delivered its ruling, finding in favour of the GRA and reversing the previous decision of the judge in chambers. GK plans to appeal.