Trinidad and Tobago
Express
TSTT wins against BIR in tax appeal hearing
Rickie Ramdass
STATE-OWNED telecommunications provider Telecommunications Services of Trinidad and Tobago (TSTT) has successfully challenged a multi- million-dollar tax assessment imposed by the Board of Inland Revenue (BIR) over payments to foreign technology companies.
In a 167-page ruling delivered on Tuesday, the Tax Appeal Board substantially upheld TSTT's appeal and overturned an additional corporation tax assessment of more than $47 million for the company's 2012 year of income.
The panel, led by chairman Anthony Gafoor and member Roland Hosein, ruled in TSTT's favour on the major issues arising from the dispute, which centred on withholding taxes tied to payments made to overseas service providers.
TSTT was represented by attorneys Barrie Attzs and Victoria White, while the BIR was represented by Dhamendra Punwasee, instructed by Ufi Broomes and Karuna Singh.
The dispute arose after the BIR revisited a completed tax audit and disallowed several expenses claimed by TSTT. The authority contended that the company had failed to remit withholding taxes on payments made to foreign-based technology firms.
Among the largest disputed items were payments to Research In Motion, the company behind BlackBerry services, and US-based Syniverse Technologies.
The BIR had imposed adjustments of almost $49.5 million in relation to transactions involving Research In Motion and a further $46.8 million tied to roaming and switching services provided by Syniverse.
TSTT's attorneys argued that the services were performed entirely outside Trinidad and Tobago, with the infrastructure, servers and related systems hosted and operated overseas. It maintained that the income therefore did not arise within this country and could not attract local withholding tax.
The board agreed and set aside the assessments linked to both companies, ruling that the technical services and infrastructure were located offshore.
The ruling also addressed a separate dispute involving payments to US-based More Magic Solutions Inc. The board ordered that aspect of the assessment to be returned to the BIR for further review with TSTT to determine which payments related to software use and which constituted business profits.
In another finding, the board directed the BIR to reconsider a $92.2 million wear-and-tear allowance claim connected to TSTT's capital plant construction projects. The BIR had previously rejected the claim on the basis that TSTT failed to sufficiently prove the expenditure. However, the board ordered the authority to engage with the company and review its project records to determine an appropriate figure.
The judgment also noted that TSTT's evidence was largely presented through an affidavit from company witness Robert Pankar. The board refused a late application by the BIR to cross-examine Pankar after state attorneys failed to make the request within the timeframe required under the rules, leaving his evidence unchallenged.