Sandals clarification on the Withholding Tax issue

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Sandals clarification on the Withholding Tax issue

san(PRESS RELEASE) – Sandals Resorts International (SRI) is grateful to the Government of Saint Lucia for bringing closure to a long-standing tax dispute in respect of withholding taxes assessed by the Inland Revenue Department on Insurance costs allocated to its three resort companies between 2001 and 2009.

We want to make it abundantly clear that this is not money that the company owed or that was outstanding, as has been confirmed in a statement by Minister in the Ministry for Finance, Senator The Honourable Dr. Ubaldus Raymond.

SRI objected to these assessments in accordance with its statutory rights under the Income Tax Act, and has consistently maintained, in correspondence and discussions with Inland Revenue and the Ministry of Finance, that the assessments are not justified, and should be withdrawn. SRI’s objections were based on professional advice and a legal ruling by the OECS Supreme Court that is relevant to withholding tax assessments in Saint Lucia.

The total amount claimed by Inland Revenue is $24.4 million, but this includes $15 million of penalties and interest, as the assessments date back to 2001. If SRI had accepted that there was a legal basis for these assessments, the companies would have been able to have 100% of the interest and penalties waived under the income tax amnesty in effect, since October 2016. As SRI did not accept that there was a legal basis for these assessments, it was prepared to use its statutory rights to appeal to the Income Tax Commissioners or the Courts to have the assessments withdrawn.

The insurance costs allocated to the three resort companies in Saint Lucia represent their share of comprehensive insurance coverage for the Sandals Group of Hotels in the Caribbean. Due to the sheer magnitude of the risks insured, SRI is required to self-insure up to 20% of the coverage, with the balance covered by Lloyds.

Between 2001 and 2009 the costs allocated to the companies in Saint Lucia amounted to $37.7 million, and Inland Revenue sought to impose withholding tax of 25% on these costs. This tax would have increased the cost of SRI’s insurance in Saint Lucia by 25%, with no tax benefit locally.

The evidence was presented to and accepted by the previous administration, which had committed to working with us to have it resolved, and for which we have been waiting for several years.

SRI’s ability to obtain good insurance coverage at an affordable cost ensures that its properties can recover quickly from hurricanes and storms such as they are about to experience in Antigua, Turks & Caicos and the Bahamas. This ensures continuity of operations for employees, visitors and the destination. SRI was therefore able to obtain an exemption from withholding tax on insurance premiums from 2009 under the Tourism Stimulus and Investment Act in 2014. Other companies were entitled to request similar incentives.

The Sandals companies in Saint Lucia are fully compliant with all taxes, statutory deductions and payments. We have a robust Corporate Social Responsibility programme, good employee benefits, and voluntarily contribute payments of US$2.00 per person per night to the Tourism Investment Fund.

The dispute with Inland Revenue over withholding taxes on insurance premiums is an old and exceptional matter that required resolution if SRI was to be able to finance new investments in Saint Lucia.

We urge the Government to address the issue of withholding and other taxes on critical inputs to the tourism industry for all stakeholders, so that we can work together to grow the economy.

 

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15 COMMENTS

  1. Sandals don't like to pay their bills. Ask NIC about them. Ask all the businesses that are giving them credit. They never want to pay, you have to be begging them for your money

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  2. New Testament Verse of the Day:

    Then there was war in heaven. Michael and his angels fought against the dragon and his angels.

    – Revelation 12: 7

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  3. I don't think its incompetence on the part of the IRD. St. Lucians must be cognizant that the areas of law and governance which informs on tax and business is a fluid one. There are always grey areas in laws and there may be misinterpretation until the matter is decided in Court. That's why we must not rush to attach a blame to somebody because there is not at all times "a blame" per se.

    Our combative political culture forces us to persistently attribute a "blame" to somebody or some entity anytime there is an anomaly. We only see things in black or white (or red and yellow), however knowledge would guide us that there are predominantly grey areas in all matters. The politicians take advantage of such opportunities to disinform people in just to gather support for themselves and parties.

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  4. I expect this Administration to take care of Sandals It appears to be the trend.....Butch is running the country. Now that you have taken care of Sandal getting its returns.....when was the last time a non Inland Revenue Employee got his or her returns or is it not important? Let us make the system fair for all.....

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  5. The dispute with Inland Revenue over withholding taxes on insurance premiums is an old and exceptional matter that required resolution if SRI was to be able to finance new investments in Saint Lucia.

    In other words, Sandals told their boys in the Government: Drop this withholding tax thing, or we're not building another hotel in St. Lucia!

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  6. Sadly the damage has already been done amongst the unknowledgeable, they don't realize that it is the advertising from Sandals that keeps this rock of sages relevant in tourism it wasn't St Lucia Jazz Festival for sure.

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  7. facts and the slp never go together. once again, the slp twists the info and continues to lie to the people and yet they still don't understand why they were kicked out. so sorry slp, wrong again.

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  8. An error by the inland revenue department is simply being corrected. This should not create an issue. Sandals has done nothing wrong.

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  9. Why would Mr. Raymond make such a statement like this? I think there is some koko-makak somewhere and poor Helen is paying for it once again.

    We the people of St. Lucia are suffering due to the current state of the economy and we cannot afford to have Companies who make millions upon millions and are reluctant to pay taxes in return, you have a day before the Lord. This is highway robbery.

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  10. I fully support Sandals and the ruling in its favour. I also support the Inland Revenue Department for doing their work. In the end, investment must prevail.

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    • Growing what economy....Unless CHITTI, OJO Labs, Sandals, Fresh Start, Teo is King and DSH qualify as growing the economy. he new Robin Hood is taking from the Poor and Giving To The Rich...Lets continue to grow the economy in oblivion.

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