High Court quashes GRA’s $35M withholding tax assessment against Guyana Shore Base

…orders full refund with interest

In a major ruling against the Guyana Revenue Authority (GRA), the High Court on Monday overturned a $35.4 million tax assessment that the tax authority issued against Guyana Shore Base Inc (GYSBI) in 2020, finding that GRA acted outside the law when it sought to impose withholding tax on payments made to three foreign companies for services performed entirely overseas.

The judgement was delivered by acting Chancellor of the Judiciary, Justice Roxane George. Justice George has ordered the GRA to refund the full assessment amount of $35,492,147, along with 12 per cent statutory interest. The authority was also ordered to pay $1 million in costs to GYSBI by December 29, 2025.
Justice George ruled that GYSBI was not liable to pay withholding tax on the payments, as the income earned by the non-resident companies “arose outside of Guyana” and therefore fell within the exemption provided under Section 39(1)(b) of the Income Tax Act. “For withholding tax to be charged, the payment cannot relate to income that is derived outside of Guyana. The tax can only be applied to income payable in Guyana which is derived from business engagements or activities within Guyana,” the Judge noted.
“I have concluded that… the appellant has provided sufficient evidence to support the conclusion that income relates to the provision of services outside of Guyana and the income that led to the payment arose outside of Guyana, such that withholding tax would not be chargeable.” In February 2020, GYSBI had been assessed for withholding tax totalling $35,496,147 for transactions carried out during the 2018–2019 assessment year. The payments were made to three non-resident companies: Pacific Rim Constructors Singapore Pte Ltd, LED Offshore Ltd, and LEAD Engineering Inc. The payments were for engineering consultancy, recruitment, offshore procurement, and project management services.
GYSBI argued that these firms have no offices or personnel in Guyana and that all services, as well as the resulting income, originated overseas. GYSBI maintained that under the Income Tax Act, withholding tax applies only to income earned within Guyana. Justice George agreed, emphasising that the law focuses on where the foreign company’s income is earned, and not where the Guyanese company’s revenue originates, nor where the payment is dispatched from.
“It is evident that the payments related to income arising overseas,” the judge noted, adding that the location of GYSBI’s own business activities in Guyana was irrelevant for determining the tax liability of the non-resident service providers.
Withholding tax is a form of taxation in which a business is required to deduct a portion of a payment before passing the remainder to the recipient and then remit that deducted amount directly to the Government. It is typically applied to payments made to non-resident companies or individuals for services such as management, consultancy, technical work, or royalties. Under Guyanese law, withholding tax becomes payable when a local company pays a non-resident for certain categories of services, however Section 39 (1)(b) of the Income Tax Act, notes that “… in the case of payment of income arising outside Guyana to such a person withholding tax shall not be payable.” GRA argued that GYSBI was subject to the withholding tax given that “the payments for the services provided by the three companies allowed [GYSBI] to generate income in Guyana, and therefore the payment to the three companies would be subject to the withholding tax.”
However, the Judge challenged this noting “I do not agree with the respondent’s assertions in these regards. To conclude would be to misapply the clear intent of s 39 (1)(b).” She further noted that, “The focus has to be on where the income to which the payment relates is derived and for what purpose. The income of the paying entity, in this case the appellant, more especially how and where such income is generated, is irrelevant.” According to the court, GYSBI provided unchallenged evidence showing that the recruitment, engineering and procurement services were performed abroad and that payments were made to foreign bank accounts.

No rebuttal evidence
Justice George criticised the GRA for failing to produce any rebuttal evidence, despite having conducted an audit prior to issuing the assessment.
The ruling leaned on long-standing Caribbean tax jurisprudence, including decisions from Trinidad and Tobago’s Court of Appeal, which held that withholding tax cannot be imposed on payments linked to income generated outside the taxing jurisdiction, and also cited Denbow’s text, ‘Income Tax in the Commonwealth Caribbean’.