John Keells Holdings (JKH) has rejected allegations of any irregularities in tax issues at its associate, South Asia Gateway Terminals (SAGT), as claimed by the Department of Inland Revenue (DIR).
The company made these comments in a letter to the Colombo Stock Exchange (CSE) in response to the report in the Business Times on Sunday which stated that SAGT had not complied with conditions that would make it eligible to receive tax concessions under its Board of Investment (BOI) agreement.
In its letter to the CSE, JKH confirmed, as reported by the Business Times, that SAGT has received an assessment for 2007/2008 from the DIR.
“SAGT has fully complied with the BOI agreement and the benefits under the agreement have not been prejudiced in any manner,” it said. Therefore, JKH said the assessment by the Department of Inland Revenue is ultra vires, with no basis in law or fact, and has been responded to on that basis.
The letter also said that there has been a difference of opinion between SAGT and the BOI on the interpretation of the agreement. The issue has since been referred by the BOI to the Controller of Exchange who has confirmed to the BOI that the position taken by SAGT is correct. JKH added, in its letter, that SAGT has also directly received confirmation from the Controller of Exchange to this effect.
Audit firm KPMG also denied allegations of wrongdoing contained in the DIR letter to SAGT.
“With regard to the assertions made on us, we wish to state that there has been neither a false declaration by KPMG nor any intent to commit fraud, evasion or wilful default on behalf of SAGT,” it said in a letter to the Business Times.
The Business Times story was based on a letter sent by the Tax Department to the Chief Financial officer (CFO) of South Asia Gateway Terminals (SAGT) dated March 30, 2010 a copy of which was received by the newspaper.