Barbados 2016 Budget Delivers Small Tax Increases, Tax Amnesty
by Mike Godfrey, Lowtax.net, Washington
18 August, 2016
Barbados's Minister of Finance and Economic Affairs, Christopher Sinckler, has delivered the island's 2016/17 Budget.
Among the proposed tax measures are an increase in the Bank Asset Tax, a tax amnesty, the introduction of a National Social Responsibility Levy, reduced withholding tax on withdrawals from retirement plans, and the creation of duty-free zones.
The Bank Asset Tax is proposed to be increased from 0.2 percent to 0.35 percent with immediate effect for assessment periods starting from April 1, 2016.
A tax amnesty for VAT, income tax, and land tax will be offered from September 15, 2016, through to February 15, 2017. To benefit from the amnesty, a taxpayer must pay the outstanding principal on or before February 15, 2017. The Barbados Government has said this is the last amnesty it will be offering for a considerable period of time. Thereafter, the Barbados Revenue Authority will aggressively pursue persons who have not taken advantage of an amnesty.
Effective September 1, 2016, a National Social Responsibility Levy will be imposed to assist in offsetting the costs associated with financing public health care service provision in Barbados. The levy will be applied at two percent on the customs value of all imports at the border with the exception of goods for the manufacturing, agriculture, and tourism sectors as covered under existing primary legislation.
Amendments will be moved to allow individuals to withdraw an amount from their Registered Retirement Plan: Annuity Contract not exceeding 15 percent of the total value of the savings which they have accumulated. Withholding tax will be payable on withdrawals at a reduced rate of 16.5 percent, down from the current rate of 25 percent.
The Government has been researching the possibility of creating duty-free zones. These zones would occupy particular geographic spaces and would allow duty-free shopping for Barbadians and visitors alike. A Special Committee is being established to review the initiative.
Going forward Sinckler said that the principal concerns for Barbados include reducing debt levels that are currently too high, addressing the fiscal deficit, and creating "fiscal space" to unleash growth.
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