Barbados Seeks New Revenues In 2015 Budget
by Mike Godfrey, Lowtax.net, Washington
18 June, 2015
Barbados has published its 2015/2016 Budget, which aims to further reduce the territory's deficit with a raft of changes to the VAT regime and cuts to allowances and deductions.
In the 2015/2016 tax year, the Government intends to make a number of changes to the value-added tax (VAT) regime. These changes include:
- Expanding the VAT (at the standard rate of 17.5 percent) to all betting and gaming services;
- Increasing the VAT registration threshold from BBD80,000 (USD40,000) to BMD200,000 from January 1, 2016; and
- Removing the VAT exemption from various food items no longer considered as basic foods of high nutritional value from September 1, 2015. All other food items will be subject to the headline rate.
The following changes will be introduced for companies:
- For deductions for contributions to special funds, etc., the applicable claim will be reduced from 150 or 120 percent where applicable to 100 percent;
- Group losses will no longer be allowed and losses will be allowed to be carried forward for a maximum of seven years;
- A 25 percent reduction in business license fees for many sectors including wholesalers, retailers, restaurants, and clubs.
The following charges will be made to personal income tax regime:
- The 17.5 percent personal income tax rate will be reduced to 16 percent;
- The 35 percent personal income tax rate will be reduced to 33.5 percent;
- Personal income tax allowances will be reduced; deductions will now be limited to personal allowances, contributions to trade unions and statutory associations, one-off donations to charities including the church, and energy audit retrofits.
Land tax brackets will also be reformed to boost revenues by BBD44m.
The Government is also to undertake a comprehensive review of the Companies Act and insolvency legislation to bring them into line with international best practices, paying special attention to minority investors and the treatment of related party transactions. In addition the Government announced it was shortly to enact new financial services legislation covering foundations, private trusts, Limited Liability Partnerships (LLPs), and mutual funds.
The Government reported that the fiscal deficit for last year stood at 6.6 percent of GDP, down from 11.8 percent in the previous fiscal year.
See all of today's news