Central Bank Governor Cleviston Haynes. (FILE)
Government’s planned introduction of value added tax (VAT) on online transactions has been delayed again.
The authorities were to have started collecting this revenue from May 1, but Central Bank Governor Cleviston Haynes yesterday revealed that following some “teething issues” the measure had been pushed back by “two to three” more months.
Speaking during his half-year press conference, Haynes also said the VAT write-off Government is giving the business community had not been part of the bank’s revenue expectations.
Regarding VAT on online transactions, he said: “My understanding is that there are still some teething issues in relation to the online tax, which they are trying to resolve and they envisage that this should be resolved in the next few months . . . and therefore the implementation of the tax has been delayed.
“There is a broader issue which seeks to address not only spending by Barbadians but also spending by non-residents into Barbados. I think those are some of the issues which we are trying to resolve at this point in time.”
Haynes also said that based on credit card information, “I don’t think I have seen any perceptible increase in use of the credit cards for online activity”.
Government’s VAT write-off policy has generated controversy in recent weeks, with Opposition parties criticising the move.
Haynes said: “Government has examined taxes that it was owed, it has obviously come to the judgement that collecting some of those taxes was going to be difficult and therefore it has taken a decision to write those taxes off.”
“Those are not part of our expectation for the revenue for 2019/2020 and beyond, they have not been built in and if one had received them they would be sort of like surplus to what was being forecast at present,” he noted.
“So, in a sense, it’s an administrative decision which the Government has taken in terms of some of the very old taxes that was on the books, and made a decision that it would not pursue those taxes.”
He also explained that Government could gain revenue from the process.
“Now one spin-off of that, I believe, is that to the extent that firms now have to write-back those taxes onto their books,” he said.
“In other words, they had a liability on their books which they now have to write-back. It will increase their taxable income, so some improvement for Government will come through the improved corporate taxes which they would now collect.” (SC)