Supreme Court allows Ministry’s appeal on Tongasat tax argument

Te ke maʻu ʻi lalo hano fakamatalaʻi faka-Tonga ʻo e talanoá ni

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The Supreme Court has allowed an appeal by the Ministry of Revenue and Customs against a decision by the Tax Tribunal over a dispute with Tongasat.

On 14 August 2015 the Ministry issued Tongasat with a Consumption Tax assessment for the period July 2006 to March 2015 amounting to just under TP$18 million, not including  penalties for late  payment.

On 8 October 2015 Tongasat filed notices of objection to the taxation decision and the assessment. It argued that no services had been supplied within Tonga and that its services had been supplied through its office in Hong Kong.

The Tax Tribunal said: “Having studied the various documentation and agency  agreement obligations we have little doubt  that  most  of  the  work carried out by Tongasat  that  resulted  in  revenue  under the Agency agreement was performed overseas for the Government of Tonga though there may, at times, have  been some reporting and possibly meetings  to  update  the  Government that were held in Tonga,”

“Our finding is that the actual performance  of  the  agency  agreement  very  substantially, if not exclusively, took place outside Tonga  and thus the services were in reality  foreign services and not domestic services.”

Judge Scott, presiding, said in his report on the Supreme Court’s consideration of the appeal, that it appeared the Tribunal took  the  view  that since  the bulk of Tongasat’s business activity took place out of its overseas place of business, the services it provided through its Tongan place of business should be  disregarded.

Judge Scott said that in his view neither the existence of places of business outside Tonga not the proportion of business conducted overseas affected the question of whether tax should have been paid on services supplied inside Tonga.

“In my view there was nothing before the Tribunal to show that this was not the case  and accordingly the application should have been dismissed.”

Judge Scott said legal counsel for both sides  had argued that in view of the importance of the question of law raised and the very large sum of money at stake, a second appeal would be taken to the Court of Appeal.

“In my view the better course would be for that Court to remit the matter to the Tribunal if, following disposal of the appeal, there are still matters awaiting resolution,” Judge Scott said.

The Ministry’s appeal was allowed.

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  1. Kuo tali e tangi ‘a e Potungāue Tukuhaú mo e Tuté ke fakataʻeʻaongaʻi e tuʻutuʻuni ʻa e Tulaipiunolo Tukuhaú ʻi ha fakakikihi mo e Tongasat.

    Naʻe tangi e potungāue ke tuʻutuʻuni ke totongi ʻe he Tongasat ʻa e tukuhau kuó ne ʻeké.

    ʻI he ʻaho 14 ʻo ʻAokosi 2015 naʻe ʻoatu ai ʻe he Potungāue ki he Tongasat ha fakafuofua Tukuhau konisamisini mei he 2006 ki Māʻasi 2015 naʻe feʻunga mo e $18 miliona, ʻikai kau ki ai e totongi tautea ki he totongi tōmuí.

    ʻI he aho 8 ʻOkatopa 2015 ne faile ai ʻe he Tongasat ha fakatokanga kuo nau fakafepakiʻi ʻa e tuʻutuʻuni fakafuofua ki heʻenau tukuhaú. Naʻá ne fakafekikiʻi naʻe ʻikai ha sēvesi ia ʻe fakahoko ʻi Tonga pea ko ʻene ngaahi sēvesi ʻana naʻe fakahoko pe ia ʻe hono ʻōfisi ʻi Hong Kong.

    Naʻe pehē ʻe he Tulaipiunoló pe fakamaauʻanga Tukuhaú ia kuo nau vakaiʻi e ngaahi fakamatala mo e ngaahi aleapu ʻa e kautahá pea siʻi haʻanau veiveiua ko e ngāue ia ʻoku tuʻunga ai hono tukuhauʻi ʻo e Tongasat naʻe fakahoko ia ʻi muli. Pea ne nau tali ai ʻe kinautolu e lāunga ʻa e Tongasat ke ʻoua te ne totongi e tukuhau kuo ʻeké.

    Naʻe pehē ʻe Fakamaau Lahi Scot ʻa ia ko ia ne sea ʻi he hopó ni ʻoku ngali ne fakaʻuhingaʻi ʻe he Tulaipiunoló koeʻuhi ko e lahi ʻo e ngaahi ngāue ʻa e Tongasat ne fakahoko pe ʻi muli ko ia ai ko e ngaahi fakahoko ngāue kotoa ne fakafou mai ʻi hono ʻōfisi ʻi Tonga ʻoku totonu ke tukunoaʻi pe ia.

    ʻI he anga ʻeku vakaí naʻe ʻikai ha meʻa ʻe taha ʻi he Tulaipiunoló ke ne fakahā ko e meʻá ia pea naʻe tonu leva ke ne fakataʻeʻaonga ʻa e kole mei he Tongasat, ko e meʻa ia ʻa Fakamaau Scott.

    Naʻe toe pehē ʻe Scott naʻe fakafekiki e ongo fakafofonga lao ʻa e ongo tafaʻaki koeʻuhi ko e mahuʻinga ʻo e lao kuo fai hono tālangaʻí pea mo e lahi ʻo e paʻanga ʻoku ʻeké, ʻe toe fai ʻa e tangi ki he Fakamaauʻanga Tangí.

    Naʻe toe meʻa ʻa Scott ʻo pehē ko e founga lelei angé ko hano toe ʻave pe ʻa e meʻá ni ki he Tulaipiunoló kapau, hili hano fakakaukauʻi ko e hā ha meʻa ke fai ki he tangí, ʻe kei ʻi ai ngaahi meʻa ʻe fakatatali ki ha tuʻutuʻuni.

    Naʻe tali ai ʻa e tangi ʻa e Potungāué.