ST. VINCENT-FINANCE-Prime Minister Gonsalves says the firm that closed in Mustique owed millions in taxes.

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KINGSTOWN, St. Vincent, Prime Minister Dr. Ralph Gonsalves says the construction company in Mustique that announced its dissolution and liquidation last Tuesday, leaving an estimated 100 people unemployed, had “a very checkered interaction” with tax authorities in St. Vincent and the Grenadines.

He told radio listeners that the company, JAD (Mustique) Ltd., owed “close to four million dollars (One EC dollar=US$0.37 cents) on various ranges of taxes” at one point.

Gonsalves rejected the company’s claim, founded in 2002, that “the country’s political and economic climate” had contributed to its closure.

Last week, attorney Jomo Thomas, representing 41 of JAD’s former employees, told the Caribbean Media Corporation (CMC) that the company had dissolved itself amidst a legal battle to get to outstanding payments to workers dating back to 2008.

But the lawyer, however, said the workers were only claiming payment from 2017 onward.

Gonsalves spoke on the issue on the radio after one of the workers telephoned the program asking whether the government can order a foreign contractor to deposit a certain amount of money in case they go bankrupt.

“In terms of protection of workers, that is a debate that has been going on not only about contractors but also to other investors, whether it’s in hotels,” he said.

Several companies have closed their doors here in recent years, leaving unpaid severance payments and debt to the government and state-owned entities.

“It is a real problematic issue,” Gonsalves said, adding that companies would not set up in the country if they were required to make certain deposits to cover severance payments.

“Unless, of course, all countries worldwide do this sort of thing. Because it’s an expense to set up shop,” he said.

Prime Minister Gonsalves said that since 2020, the government has been making sure that “in the granting of things like work permits and residence and the like,” JAD and its principals were compliant with the tax laws, employees’ National Insurance Services (NIS) payments, and the Commercial and Intellectual Property Office (CIPO) requirements.

“What I would suggest always is that the workers be unionized. And that they use the union instruments to make sure that the collective bargaining agreements have particular provisions about these matters,” Gonsalves said, adding that he is reluctant to disclose matters related to the JAD’s relationship with the state.

He said he was doing so because of the company’s statement that the political and economic environment in St. Vincent and the Grenadines had caused it to close.

Gonsalves said the political environment here is “stable” and the economy “is on the uptick, so, too, the activities in Mustique.

“The fact of the matter is that this company, for some time, has been delinquent in its payment of the various taxes, corporate taxes, paying over the value added taxes and the like,” Prime Minister Gonsalves said, adding that the matter came to his attention in 2019 when James Archibald, the company’s founder, and chairman, applied for citizenship.

Gonsalves said he asked for a Special Branch report and for checks to be made on the company’s status regarding various taxes and NIS payments.

“That notation is in the file from early 2019. In 2020, when the matter came back to me, the Special Brand report came back. Still, nothing was submitted to me about the liabilities to all the various taxes, NIS, and contributions and information from CIPO, and I made a notation on that.”

Prime Minister Gonsalves, who has ministerial responsibility for granting citizenship, said that when the relevant information came to him by the end of 2020, Archibald’s “tax liability was humongous, close to four million on various ranges of taxes.”

Gonsalves read what he said was January 14, 2021, note he wrote to the Cabinet Secretary regarding the application.

“‘ I will only give favorable consideration to Mr. Archibald’s application for citizenship once he liquidates his company’s indebtedness to the tax authorities in St. Vincent and Grenadines. His company flagrantly ignores its obligation to pay VAT, which he already collects on behalf of the government. His company owes PAYE, which is also trusted money collected on behalf of the government.

“‘The memo from the control of Inland Revenue speaks towards his initiation of arrangements to resolve his tax indebtedness. Let them resolve them. I consider that Inland Revenue is lenient on him. The matter probably should be put before the DPP — the Director of Public Prosecution — but that is a judgment call of the controller, not me, and that is as it should be. However, as Minister responsible for citizenship, I cannot proceed any further with this application until the tax issues are satisfactorily resolved.'”

Gonsalves said that because of the situation he was in touch with and through action by Inland Revenue, “matters were improved, but still needed to be better.

“And I don’t have to go through all the details as to how matters were improved, but there were still some things outstanding,” he said, adding that JAD then applied for a work permit for a gentleman from the United Kingdom to be the construction project manager.

“The memo came to me sometime in late June and went before the Cabinet in July 2022. And I wrote on it “not for approval,” Gonsalves said, indicating that his note further noted, “James Archibald Designs Ltd. is in an unsatisfactory condition for both PAYE and VAT, also in an unsatisfactory condition for his income tax.”

He said that by December 5, 2022, however, a memo came, which he saw on December 8, “and his income tax is in good order, both the filing and payment status. The PAYE filing status is good; his payment status was satisfactory. But there are some questions of an unsatisfactory nature about VAT”.

The prime Minister did not go into details about the VAT payment.

“But there’s a notation from the Comptroller of Inland Revenue: ‘Please be advised that the taxpayer has entered into a payment arrangement with the Inland Revenue Department towards settling whatever is outstanding.’

He said that in the meantime, he had refused a work permit for “a gentleman who was, in every other respect, perfect.

“But I wasn’t satisfied that a sufficiency of the indebtedness had been dealt with,” Prime Minister Gonsalves said, adding that “because progress had been made” he, however, extended the work permit and temporary residence for a JAD employee who was already in St. Vincent and the Grenadines.

“But I didn’t think sufficient progress had been made to give another person, a new person, in a senior position,” Gonsalves said, noting that at the end of August 2022, Archibald’s successor, his son, Maximilian, wrote to him requesting a meeting.

“But I didn’t want to meet him. I didn’t indicate whether I would meet him until certain matters were resolved.”

Gonsalves said he only sometimes knows a person’s tax status “unless a matter comes before me to do something, like in this case, to deal with a particular application on his behalf, on behalf of the company.

“So, don’t come and malign St. Vincent and Grenadines and say the political and economic situation. I don’t know what that means,” Prime Minister Gonsalves said, adding he has been in touch with The Mustique Company on an ongoing basis about the matter.

“There are more details I can give, but I’m just providing for the gentleman who called, and in the light of what Mr. Archibald, his company, had written publicly to maligned St. Vincent and the Grenadines, I thought that I should put some core facts on the table.”

He said Archibald has a home brewing company “which is in good order…

“Of course, Mr. Archibald can dissolve his company as he wants. That is his legal right,” Gonsalves said, noting, however, that he is confident from his conversations with The Mustique Company that it will employ the 90 workers in some capacity or other subcontractors in Mustique would do so.

“Because JAD would have left the Mustique homeowners, for whom they had worked, in a lurch. Not only the workers, but very importantly, the workers, they left them in a lurch.”

He said 38 workers were employed in cleaning swimming pools, adding that they should be given the first opportunity for re-employment in that sector. He further noted that JAD needs to complete 11 or 12 contracts.

“I have reason to believe that The Mustique Company, as part of the assets of JAD, is holding some money in an escrow account. And I expect any liability to the state [would be satisfied].

“But there should be money in there in an escrow account at The Mustique Company, from which I would expect that workers should be able to get their relief,” Gonsalves said, adding he did not know the extent of JAD’s indebtedness to the workers because neither they nor their counsel had so indicated.

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