After two years struggling over its tax evasion allegation, the Supreme Court on Friday, September 9, turned down Lonestar Communication Corporation’s (LCC) appeal to claim deduction of US$2,376,098.78 as unpaid expatriates’ salary taxes from the government.
The Supreme Court’s action sided with the Board of Tax Appeal’s (BOTA) earlier decision that allowed the Liberia Revenue Authority (LRA) to re-characterize the taxable period of 2009-2011 as the taxes on expatriate salaries owed by LCC, which the GSM operator claimed it did not owe.
“BOTA did not err in its ruling that under the Revenue Code of Liberia Act 2000, as amended. The LRA has the authority to re-characterize certain arrangements entered into by a taxpayer and other parties with taxable implications,” read the judgment delivered by the Supreme Court, adding, “and that under the said authority the LRA acted properly in re-characterizing in the taxable period from 2009-2011 as the taxes on expatriates’ salaries, inclusive of withholding taxes on expatriates in the amount of US$956,786.20”
The judgment added that “Withholding on non-residents in the amount of US$889,682.38, including interest of US$159,391.99 and US$370,238.21 respectively totaled an accumulated amount of US$2,376,098.78.”
Accordingly, the ruling said,” LCC is adjudged liable to the Government in tax obligation in the amount of US$2,376,098.78.”
The Supreme Court authorized its clerk to send a mandate to the lower court directing the judge presiding to resume jurisdiction over the case and to give effect to its judgment against the LCC.
Before the Supreme Court action, BOTA had earlier held Lonestar liable and authorized the telecommunications operator to pay US$1.9 million, which the company rejected on grounds that it owned no taxes, thereby contesting the decision and appealing to the Supreme Court.
Initially, the LRA had claimed that the LCC owed US$19.2 million including the unpaid expatriate salaries, which BOTA reduced to US$1.9 million, before it was increased to US$2,376,098.78 by the Supreme Court.
The 2000 Revenue Act provides that “to access or audit once and to reassess or re-audit once a taxpayer’s books, records and accounts for the same period, but not more than twice for the same period, unless fraud is expressly shown on the part of the taxpayer.”