CABINET NOTES: IRD Claims $25M from Sandals Over Unpaid ABST

The latest conflict between the government and the prestigious luxury resort brand, Sandals, took center stage during Cabinet on Wednesday.

Reports indicate that the Cabinet summoned a specialized team led by Ralph Warner, the Commissioner of Inland Revenue.

This team included his Deputy, a Legal Advisor, and a technician, all of whom were brought in to address the escalating issues surrounding the Antigua and Barbuda Sales Tax (ABST) that has emerged with Sandals Resort and Spa.

According to the Cabinet Notes, the Inland Revenue Division (IRD) informed the Prime Minister that Sandals has failed to remit the full amount of ABST collected from guests at checkout.

This tax is levied on the total bill incurred by hotel visitors during their stay, essentially making it government revenue collected by the resort on behalf of the state.

The Cabinet notes said that during the previous administration, an agreement was reached allowing the resort to retain a portion of the ABST to offset the marketing costs associated with promoting the Antigua and Barbuda destination.

However, once the Gaston Browne administration discovered this practice, it promptly overturned that policy, mandating that Sandals must pay 100% of the ABST it collects directly to the IRD.

It now appears that the resort has resumed making similar deductions; the IRD has since issued a demand for over $24 million, a sum collected between 2017 and 2021.

Furthermore, the IRD is actively auditing the resort’s financial records to ascertain any shortfalls in payments made during 2022 and 2023.

During the Cabinet discussions, additional troubling information came to light regarding the resort’s tipping policy.

The Cabinet discovered that employees at Sandals are prohibited from accepting tips directly from guests. Instead, all tips must be pooled together, with the proceeds directed toward funding the Sandals Foundation.

 In light of this revelation, the Cabinet is contemplating legislation that would require hoteliers to distribute tips directly to their staff, ensuring that these funds are not redirected for other purposes.