Section 18

Liability for tax payable by a company 

(1) Subject to subsection (2), where an arrangement has been entered into by any director, general manager, company secretary, or other senior officer or controlling member of the company with the intention or effect of rendering a company unable to satisfy a current or future tax liability under a tax law, every person who was a director or controlling member of the company when the arrangement was entered into shall be jointly and severally liable for the tax liability of the company.

(2) A director, general manager, company secretary, or other senior officer or controlling member of a company shall not be liable under subsection (1) for the tax liability of the company if that director, general manager, company secretary, or other senior officer or controlling member did not derive a financial or other benefit from the arrangement and if––

• (a) the director, general manager, company secretary, or other senior officer or controlling member notified in writing the company of his or her opposition to the arrangement on becoming aware of the arrangement and notified in writing the Commissioner of the arrangement; or 
• (b) at the time the arrangement was entered into, that director, general manager, company secretary, or other senior officer or controlling member was not involved in the executive management of the company and had no knowledge of and could not reasonably have been expected to know of the arrangement; and 
• Finance Act, 2017Effective 3rd April 2017 
• (c) at the time the arrangement was entered into, that director, general manager, company secretary, or other senior officer or controlling member was not involved in the executive management of the company and had no knowledge of and could not reasonably have been expected to know of the arrangement.

Finance Act, 2017Effective 3rd April 2017 
(3) A reference in this section to a tax liability of a taxpayer includes any penalty or late payment interest payable in respect of the liability.

(4) In this section––
“arrangement” means any contract, agreement, plan or understanding, or an act, whether express or implied and whether or not enforceable in legal proceedings which is contrary to the provisions of a tax law;
“controlling member”, in relation to a company, means a member who beneficially holds, directly or indirectly, either alone or together with a related person or persons—

• (a) fifty per cent or more of the voting rights attaching to membership interests in the company; 
• (b) fifty per cent or more of the rights to dividends attaching to membership interests in the company; or 
• (c) fifty per cent or more of the rights to capital attaching to membership interests in the company; 

“member”, in relation to a company, means a shareholder or any other person with a membership interest in the company;
“membership interest”, in relation to a company, means a share or other ownership interest in the company; and

Cap. 486 

“private company” has the same meaning assigned to it in the Companies Act.

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