As a result of being incorrectly classified as a non-commercial entity in the Guyana Revenue Authority’s (GRA) records since 2003, Grace Kennedy Remittance Services was able to avoid paying over $700M in taxes. But thanks to the swift action of GRA’s Commissioner General, Godfrey Statia, the agency was able to net at least half of the taxes lost.
According to court documents seen by Guyana Standard, Grace Kenney, for reasons still unknown, was moved from being a commercial entity in GRA’s system to a non-commercial entity. The assessments it owed from 1994 up to that time, were discarded as well. The GRA Boss, who assumed his post in 2016, became aware of this and informed the company by way of a letter dated May 2018, that the error was corrected and assessments going back to 2011, would have to be settled. The tax liability amounted to $377.1M given that is a commercial company as defined in Section 1(1) of the Corporation Tax. The law clearly states that a Commercial company has at least 75 percent of its gross income derived from the trading of goods not manufactured by it and includes any commission agency, any telecommunication company, anybody corporate licensed or otherwise authorized by law to carry on banking business in Guyana and any company carrying on in Guyana, insurance business.
Guyana Standard understands that Grace Kennedy had raised objections to the reclassification and the additional assessments. By way of letters dated September 26, 2018, GRA made it clear that it was maintaining its position. Grace Kennedy then took the matter to court.
Having heard both sides, Justice Naresh Harnanan ruled on July 5, 2019, that Grace was not a commission agency and therefore not a commercial company as defined in Section 2(1) of the Corporation Tax Act.
When GRA appealed the decision by Justice Harnanan, Justice Diana Insanally and Justice Navindra A. Singh found that Grace Kennedy is in fact a commercial company that derives 75 percent of its income through being a commission agency.
The Judges also ruled that the GRA Commissioner General cannot be tied to the alleged errors of an officer and stressed that the revenue authority is bound to act in accordance with the law. The court ruled that GRA has a right to reclassify the company and set aside in its entirety, the ruling of Justice Harnanan.
In addition to being ordered to pay the tax liability, Grace Kennedy was also made to pay GRA $500,000 in other costs.