THE CIGARETTE Company of Jamaica and the tax authorities have begun preliminary talks on the $5.7 billion income tax assessment made against the company, says Tax Commissioner Clive Nicholas.
But Nicholas who heads the Tax Audit and Administration Department, said he would not respond to any of the comments made on the issue since the Cigarette Company made the matter public last Friday.
"I don't want to get into it," he told Wednesday Business, in response to the speculations as to why the tax authorities had taken the action it did. "Normally when the parties object, we continue to look into it."
The talks, said the Tax Commissioner, include the parties and their lawyers.
The business community has been following the issue with interest since it broke on the weekend, but few wished to comment on the basis that they were not privy to all the facts.
Admitting concern at the development, Jamaica Chamber of Commerce, Michael Ammar, Jr. said it was something his organisation needed clarification on.
"Until we get the facts, we cannot comment on the situation," he said. "I'm sure this is going to take a battery of lawyers to figure out."
The TAAD has assessed the Cigarette Company for $2.17 billion of back taxes, applied to loans the company made to its parent, the Carreras Group, between 1997 and 2002, and has applied penalty of $3.54 billion.
Nicholas said that while not all cases come to his desk, he does not recall any other company being similarly assessed.
Attempts at comment from the Cigarette Company were unsuccessful.
OBJECTION
The cigarette manufacturer has filed an official objection to the income tax levy, claiming that the tax authorities were treating the loans as distributions, that is, the movement of funds from one entity to the next. Under the Income Tax laws, distributions are taxable.
The company insists that the transferred funds were loans, and were duly disclosed and accounted for as such.
"The Cigarette Company of Jamaica and all companies in the Carreras Group have always acted responsibly and have been good corporate citizens paying their due and just taxes," the company said in a published statement.
Nicholas meantime said he could not reasonably say when the negotiations and his ruling would be finalised as there was no time limit provision within the Income Tax Act to review and rule on objections before the Commissioner, unlike the GCT Act which mandates a six-month period.
