St. Vincent & the Grenadines vs Unicomer (St. Vincent) Ltd., April 2021, Supreme Court, Case No SVGHCV2019/0001

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Unicomer (St. Vincent) Ltd. is engaged in the business of selling household furniture and appliances. In FY 2013 and 2014 Unicomer entered into an “insurance arrangement” involving an unrelated party, United insurance, and a related party, Canterbury. According to the tax authorities United Insurance had been used as an intermediate/conduit to funnel money from the Unicomer to Canterbury, thereby avoiding taxes in St. Vincent.

In 2017 the Inland Revenue Department issued an assessments of additional tax in the sum of $12,666,798.23 inclusive of interest and penalties. The basis of the assessment centered on Unicomer’s treatment of (1) credit protection premiums (hereinafter referred to as “CPI”) under the insurance arrangement, (2) tax deferral of hire-purchase profits and (3) deductions for royalty payments.

Unicomer appealed the assessment to the Appeal Commission where a decision was rendered in 2018. The Appeal Commission held that the CPI payments were rightfully disallowed by the tax authorities and that withholding tax was chargeable on these payments; the deferral of hire purchase profits was also disallowed; but royalty expenses were allowed.

This decision was appealed by Unicomer to the Supreme Court.

Judgement of the Supreme Court

The Supreme Court predominantly ruled in favor of the tax authorities. The court upheld the decision of the Appeal Commission to disallow deductions for CPI’s and confirmed that withholding tax on these payments was chargeable. The deferral of taxation of hire-purchase profits was also disallowed by the court.

However, although the additional taxes should of course be collected by the tax authorities, the procedure that had been followed after receiving the decision of the Appeal Commission – contacting the bank of Unicomer and having them pay the additional taxes owed by the company – was considered wholly unacceptable and amounted to an abuse of the power. The taxes owed should be collected following correct procedures.

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Unicomer (St. Vincent) Ltd v Appeal Commissioners


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