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Antigua Makes Changes To Personal Income Tax Structure

by Mike Godfrey, Lowtax.net, New York
28 January, 2014

The government of Antigua and Barbuda announced on January 23, 2014 that it has made an interim change to the Personal Income Tax system in order to provide immediate relief to taxpayers. As a result of the change more than 4,000 persons will no longer be required to pay Personal Income Tax.

"I am pleased to announce that effective January 1, 2014, the Personal Allowance for purposes of computing Personal Income Tax will increase from XCD3,000 (USD1,111) per month to XCD3,500 monthly," Finance and Economy Minister Harold Lovell said while delivering the Budget Speech on January 23. "In addition, while we will retain three tax brackets, the Income Tax Bands and Tax Rates will be amended. The first XCD3,500 will be taxed at zero percent."

This means that every dollar up to XCD3,500 earned by all workers in Antigua and Barbuda will be free of the Personal Income Tax. Income from XCD3,501 to XCD15,500 will be taxed at a rate of 8 percent instead of 10 percent. While income above XCD15,500 will continue to be taxed at 25 percent.

A further 14,000 persons that comprise the lower to upper middle class would see their monthly taxes reduced by an average of 20 percent.

"Even the high income earners will see a reduction in their taxes, so everyone benefits." Lovell said.

The changes are projected to result in a XCD9m reduction in tax revenue. However the Finance Minister said rather than increasing other taxes, or cutting social programs, as proposed by the ALP, the UPP Administration will make this up by improving compliance across all tax types, but more particularly Property Tax in respect of high-end properties.

Lovell noted now that the Citizenship by Investment Programme is up and running, the Government projects an increase in revenue from stamp duties on land transfers and other related fees that will help to offset the revenue loss associated with the adjustment in the Personal Income Tax.

Minister Lovell also announced that the UPP Administration has decided not to increase the Antigua and Barbuda Sales Tax (ABST) rate as proposed by the Tax Policy Review Task Force.

"Such an increase would serve to make our tax system more regressive by placing an even greater tax burden on those who can least afford it. An increase in the ABST at this time would increase the cost of living and the Government does not consider this to be an acceptable outcome." Lovell said.

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