Barbados Praised For Tax Reform Progress
by Mike Godfrey, Lowtax.net, Washington
29 August, 2016
Barbados has been praised by the International Monetary Fund (IMF) for the considerable tax reforms it has implemented to shore up the territory's finances since the financial crisis, with tax administration reforms now said to be the priority.
In its recent annual report for Barbados, the IMF noted that the territory has implemented a number of comprehensive tax reform packages over the years to balance the territory's finances.
This began in 2010 with the increase to the value-added tax (VAT) rate from 15 percent to 17.5 percent.
More recently, the 2015-16 Budget included an increase to land tax rates; the removal of some VAT exemptions and the introduction of VAT on betting and gambling services; the removal of group relief; and a reduction to the carry forward period for tax losses from nine years to seven years. A new higher VAT rate was introduced on mobile telephone usage.
The 2016-17 Budget further introduced a National Social Responsibility Levy at a rate of two percent on imports into Barbados, except for goods used in the manufacturing, agriculture, and tourism sectors. There was also a 0.15 percent increase in the Bank Asset Tax to 0.35 percent.
The territory has also introduced a tax amnesty, which will run from September 15 until February 15, 2017.
Looking ahead, the IMF has urged Barbados to continue its reform agenda. In particular, it recommended that authorities push for the completion of the reform of the Barbados Revenue Authority, which is to merge with the Customs and Excise Department, noting repeated delays, combined with periodic labor action.
The IMF also recommended strengthening the large taxpayers unit; accelerating tax administration modernization efforts; and improvements to risk management and enforcement strategies and efforts to collect tax arrears.
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