A “severe” new law aimed at helping Government recoup $27 million in unpaid taxes will make company directors and officers personally liable for outstanding sums.

The Taxes Management Amendment Act 2006 — which passed its third reading in the House of Assembly on Friday — will not only affect current directors and officers but will be retroactive, meaning court proceedings will be taken against people for taxes not paid in the past 20 years.

Finance Minister Paula Cox told the House that it was “unjust, unfair and unacceptable” for companies to fail to honour their tax obligations.

“This Government is determined that all companies must pay their fair share of the tax burden,” she said. “This Government is committed to ensuring that those who are responsible for the governance and tidy operations of a company may not escape their obligations to pay taxes due to the public purse.”

The Deputy Premier said $27 million of outstanding taxes was owed to the Government — a figure which has attracted criticism from the Auditor General and the Public Accounts Committee.

She said other countries have moved to hold directors and officers personally liable for unpaid taxes, including Jamaica where court action has recouped about $53 million.

The new law will mean “directors and officers of a company or other body corporate which owes tax will be held jointly and severally liable for taxes which became due while they were directors or officers and proceedings may be started against all or any of them for recovery of that tax”.

The Minister said civil court action would be taken by the Tax Commissioner even where people were no longer directors or officers of a company owing tax.

“This legislation is a bold step and some directors and officers may feel some unease,” said Ms Cox. “However, the legislation is not aimed at directors and officers who ensure that their companies’ tax obligations are discharged in a timely fashion.

“Similarly, the legislation is not aimed at directors and officers of companies that are going through a rough financial period.”

She added: “It is our expectation that very few directors and officers will have to face civil proceedings for recovery of taxes owed by their companies.”

Shadow Finance Minister Patricia Gordon-Pamplin agreed that $27 million was an “inordinate amount” but added that she worried about piercing the corporate veil and making individuals liable.

Opposition backbencher Grant Gibbons said his concern was the retroactivity aspect of the legislation. “There is no time limit as far as I can see,” he said.

Finance Permanent Secretary Donald Scott said at the weekend that the Limitation Act 1984 would restrict the retroactivity to 20 years.

Ms Cox said on Friday: “We thought that in these circumstances it required that we take a very strong line.

“I appreciate it’s certainly taking a very severe position. We are going to seek to be firm and fair.”