Tax Administration (Amendment) Decree 2010

MORE TAX BUREAUCRACY (for banks and all of us)


1. The government has now issued the Tax Administration (Amendment) Decree 2010(Amendment Decree).

2. The Amendment Decree was issued in the Gazette of 26 October 2010. It has apparently been in force since 15 August meaning that some people may have been in breach of a law before they knew it existed. The drafting creates ambiguity and therefore uncertainty and possibly expense for those who are required to comply with it. In this Alert we try to read the Amendment Decree as we understand is its intent.


The registration squeeze

3. The apparent purpose of the Amendment Decree is to require anyone who is:

(a) renewing any licence with the LTA

(b) registering a vehicle with LTA

(c) applying for or renewing a business licence with a local authority

(d) registering as a charity or religious body with the Registrar of Titles

(e) registering a company or partnership with the Registrar of Companies (and presumably also a business name)

(f) obtaining authorisation to open or operate a third party bank account

(g) opening or operating a bank account

(h) a special body exempted from paying tax

(i) a new or existing employee

to obtain a Tax Identification No (TIN).

4. Each of LTA, the Registrar of Companies, local authorities and financial institutionsmust ensure that all of the above persons have a TIN. We presume the intention (though not the effect) of the Decree is that a financial institution is only required to account for its own customers.

Disclosure of TINs to FIRCA

5. Disclosure obligations are imposed on “financial institutions”. One of the problems is identifying who a “financial institution” is, since there is both a broad general definition and a narrower list of specified “financial institutions” (see paragraph 8 below).

6. The Decree does not compel those who obtain TINs to provide TIN details to FIRCA. But those who do are apparently relieved from confidentiality obligations to the taxpayer under other laws.

7. Anyone whose details are not provided by a financial institution to FIRCA must apply for a TIN by 31 December 2010. It is not clear when these details are to be provided, how a person will know whether their details have been provided and what sanction they will suffer if they do not apply for a TIN.

Who must comply?

8. The Amendment Decree requires, among others, financial institutions to comply (see 5 above). A financial institution is defined as an institution involved in:

(a) banking under the Banking Act

(b) lending or the provision of credit

(c) financial leasing

(d) exchanging cash or the value of money

(e) investing, administering, managing or keeping safe custody of funds or behalf of other persons

(f) trading in money market instruments and derivatives

(g) portfolio management and advice.

Depending on how this is read, this could include lawyers, accountants, real estate agents, insurance brokers, investment advisers and other intermediaries.

9. Despite this, the Amendment Decree then creates its own list of financial institutions at Schedule 5 – a total of 10 banks, home lenders and licensed financial institutions (LFIs). It remains unclear whether the broad definition or the narrower list applies.


10. Errors and ambiguities exist in the Decree. The intent of the Amendment Decree appears to get as many people into the tax net, whether they pay tax or not.We believe that FIRCA could have met these objectives in a clearer, more efficient and less overbearing way. As it is, the Amendment Decree imposes further bureaucracy on citizens, taxpayers and financial institutions; it has the potential to complicate business start-ups; and the legal drafting will create future uncertainty for taxpayers and financial institutions.


Richard Naidu
Direct Dial +679 322 1816

Rajnil Krishna
Direct Dial +679 322 1814

for a copy of the Amendment Decree or further information on this Alert.


The information and opinions in this Legal Alert are for general information purposes only. They are not intended as specific legal or other professional advice and should not be relied upon or treated as a substitute for specific advice. Munro Leys can accept no responsibility for any loss arising from reliance on the general information contained in this Legal Alert.

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