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Sandals Resorts International is telling its side on the withholding tax issue that surfaced here in what appeared to be a leaked cabinet conclusion this week.

In a statement issued on Wednesday the resort noted that is grateful to the Government of Saint Lucia for bringing closure to a long-standing tax dispute in respect of withholding taxes assessed by the Inland Revenue Department on Insurance costs allocated to its three resort companies between 2001 and 2009.

It stressed that the issue had nothing to do with money that the company owed or that was outstanding.

SRI objected to these assessments in accordance with its statutory rights under the Income Tax Act, and has consistently maintained, in correspondence and discussions with Inland Revenue and the Ministry of Finance, that the assessments are not justified, and should be withdrawn.

The objections were based on professional advice and a legal ruling by the OECS Supreme Court that is relevant to withholding tax assessments in Saint Lucia.

The total amount claimed by Inland Revenue is $24.4 million, but this includes $15 million of penalties and interest, as the assessments date back to 2001.

The statement adds that the insurance costs allocated to the three resort companies in Saint Lucia represent the hotel’s share of comprehensive insurance coverage for the Sandals Group of Hotels in the Caribbean. Due to the sheer magnitude of the risks insured, SRI is required to self-insure up to 20% of the coverage, with the balance covered by Lloyds. Between 2001 and 2009 the costs allocated to the companies in Saint Lucia amounted to $37.7 million, and Inland Revenue sought to impose withholding tax of 25% on these costs.

Sandals claims that evidence was presented to and accepted by the previous St Lucia Labour Party administration, which had committed to working with the resort to have it resolved, and for which it had been awaiting for several years.

Sandals maintains that its companies in Saint Lucia are fully compliant with all taxes, statutory deductions and payments. It adds that the dispute with Inland Revenue over withholding taxes on insurance premiums is an old and exceptional matter that required resolution if SRI was to be able to finance new investments in Saint Lucia.

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