$1.2m refund – Court of Appeal orders taxman to pay insurer
11 December, 2019, 8:50 am
THE Fiji Revenue and Customs Service (FRCS) have been ordered to return $1.2m to New India Assurance Limited.
The Fiji Court of Appeal, in a ruling on November 29, had set aside the judgment of the High Court in January 2017 that ruled on the issue of FRCS demanding $1,230,993.75 from New India Assurance Limited as Branch Profit Remittance Additional Normal Tax (BPRANT).
This tax is levied on profits made in Fiji which are sent overseas to the parent company.
The Court of Appeal has stated BPRANT would apply to after tax profits only in instances where a remittance has been made.
Justice Eric Lloyd Basnayake, Justice Susantha Lecamwasam and Justice Viraj Dayaratne have set aside the judgment of the High Court dated January 16, 2017.
“It is unfortunate that the learned High Court judge failed to look at Section 7C as a whole. A perusal of the judgment makes it clear that the learned High Court judge considered Section 7C (5) in isolation and sought to interpret ‘Tax shall be based on the profits paid or credited for remittance’ by breaking it up and concluding that the word ‘or’ made it disjunctive,” stated the panel of judges.
“BPRANT is based on remittances either paid or credited. It is simple as that.”
New India Assurance Limited explained to the court that it remitted only 5 per cent of its profits to the head office and that the balance 95 per cent was paid to the policyholders in Fiji as bonuses.
“This has been recorded as an agreed fact in the High Court. Needless to say these were clearly payments made within Fiji and they cannot be construed to come within the expression “paid or credited for remittance,” stated the judgment.
“Once the monies are paid out to the policyholders as bonuses, they no longer belong to the appellant (New India Assurance Limited).”
The Court of Appeal has ordered the tax imposed by FRCS amounting to $1,230,993.75 be refunded to New India Assurance Limited with court costs of $5000.