Bcl Sent Out K89m Overseas To Avoid Paying Taxes: Irc LawyerPublished by MAC on 2005-07-15
Source: The National ()
BCL sent out K89m overseas to avoid paying taxes: IRC lawyer
By Moresi Ruahma'a, The National
15 July 2005
The Bougainville Copper Ltd has allegedly sent out of the country a total of about K89 million to avoid paying corporate income taxes to the government, the Supreme Court heard yesterday.
Marshall Cooke, QC, representing the IRC, told a lone Supreme Court bench presided by Justice Timothy Hinchliffe that since 1998 BCL was alleged to have remitted to Australia a total of about K89 million to avoid paying corporate taxes to the Internal Revenue Commission.
"There was this movement of funds offshore,'' said Mr Cooke in objecting to a BCL application seeking to stay an order by Judge Gibbs Salika of the National Court decision.
In a decision last April, Judge Salika directed BCL to pay the outstanding income tax of about K30 million, an assessment made by IRC covering the years from 1998 to 2001.
However, Gadens Lawyers representing BCL, opposed the tax assessment and appealed to the Supreme Court to restrain IRC from carrying out the National Court decision.
Mr Cooke told the court what BCL currently has is about K12.9 million in Treasury Bills with the Central Bank.
He said: "If IRC did not act and issue tax assessment notice there would be no money left from the Treasury Bill.''
He argued that BCL has been refusing to pay taxes to IRC over the years although it has substantial investment of about K320 million here and oversedas.
He argued that K12.9 million held in the Treasury Bills was deposited for a six-month period and will be mature on July 29.
The IRC counsel said if IRC exercised its powers under the Taxation Act the K12.9 million would represent only a third of the tax liability.
Towards the end of his presentation, Mr Cooke then made a successful interim stay application and obtained the orders to restrain BCL from using or paying out funds from the Treasury Bills.
Erik Anderson of Gadens Lawyers at the beginning of the court hearing told the court that "it would be a big loss for BCL if the stay order was not granted".
Mr Anderson said if the application was refused it would also be a loss for the State amounting to about 20% from outstanding taxes owed to the IRC. He warned that it could lead to the company's shutting down its office in the country.
Mr Anderson further argued that it was not accurate to charge that BCL "improperly" sent the money offshore.
The company, he said, did it on the basis of an investment decision.
He also argued that BCL could not pay the taxes to IRC because it was not in a position of making any profit after the Bougainville crisis shut down its operations and its assets were completely destroyed and stripped off.
Therefore, he submitted the tax regime applied by the respondents was "harsh and oppressive" under sect 41 of the Constitution.