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Barbados Budget Unveiled

August 2011 - Tax & Private Client. Legal Developments by Hassans.

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'Uncertain economic times' have led the Barbadian Finance Minister to introduce a Budget full of new tax measures, as part of a plan to drive down the deficit and stimulate economic growth.

Minister of Finance and Economic Affairs, Chris Sinckler, delivered the 2011 Financial Statement and Budgetary Proposals on August 16 in the House of Assembly. He ran through figures explaining the state of the Barbadian economy, which contracted 4.7% in 2009. In contrast, the economy grew by 0.2% last year, with growth of between 2%-2.5% expected this year. 2010's deficit was 8.8% of GDP, up from 8.5% the previous year. The government is aiming for a deficit of 5.2% for 2011. Total revenues reached BBD2.3bn (USD1.15bn) for the 2010/11 financial year, a fall of BBD3.6m (0.2%) from the previous period. In particular, while corporate tax receipts dropped by 20.4%, income tax revenue increased by 7.9%.

the Budget Sinckler tabled included the following key measures:

  • Land tax assessment bands will be adjusted. The tax-free threshold will be increased from BBD150,000 to BBD190,000; the threshold on the next band (on which a 0.1% tax is payable) will be increased from BBD400,000 to BBD500,000; a 0.45% tax will be payable on property to a value of BBD1.25m (previously BBD1m), and the rate charged over this threshold will be 0.75%.
  • A land tax rebate of up to 50% will be available from next year for properties where it can be proven that the owner has engaged in the manufacturing of solar energy equipment.
  • All rebates will be granted within the year in which the tax is due, and will be applied only at the time of payment.
  • Those in the hotel sector and stand alone restaurants will be permitted to pay land tax bills during the last quarter of the fiscal year without losing access to discounted rates.
  • From the current tax year, the energy conservation and renewable energy allowance will be increased from BBD5,000 to BBD10,000 for individuals and to BBD25,000 for small businesses.
  • Late filing penalties will go up from BBD100 to BBD500. This is part of the government's effort to assuage fears of international agencies and the country's tax agreement partners over the low levels of tax filing and information available.
  • There will be a separation of business and employment income for the computation of tax payable with effect from tax year 2011.
  • The government will finalize changes to the Income Tax Act to reduce the effective rate non-doms are charged on their foreign income.
  • 150% of costs associated with conversion to alternate energy will be written off over five years for those businesses with up to date filings and arrangements in place for settling arrears.
  • The introduction of a 100% waiver of interest and penalty charges on outstanding tax due if a payment of 80% is made in full by a one-off cash payment.
  • A reduction of the taxes paid by businesses on remittances to insurers based outside Barbados who provide global insurance cover, applicable from the 2012 financial year.

The government believes its plans will reduce the fiscal deficit, facilitate business operations and development, and lay the groundwork for sustainable growth.


For more information please visit www.gibraltarlaw.com

 

 

HASSANS - international law firm