Parliament today approved an amendment to the Value Added Tax Act to close a loophole that allowed some people to get waivers to which they were not entitled.
Minister of Finance Chris Sinckler, who introduced the amendment, disclosed that over the last 18 months to two years, VAT on imports was declining even as import duties and excise taxes increased.
“We saw this anomaly in the system where import duties were going up or holding steady, excise taxes were going up or holding steady, but the VAT was going in the opposite direction on the same item. We knew that something had to be wrong. So we invited the new Barbados Revenue Authority (BRA) along with the Customs Department to look into it to see why it was occurring,” he said.
It was discovered during the investigation that people were getting waivers not intended for them.
“Across the plethora of waivers . . . given to various entities outside of those that specifically give the waiver of the VAT, it was discovered that within the VAT Act itself, working in collusion with other pieces of legislation –– for example the Customs Duty Act –– a clause within the Act at Section (31) allowed for a certain degree of automaticity in the waiving of the VAT once that waiver was given for customs duty,” Sinckler explained.
He said that officials at the revenue collecting agency recognized that such a loophole could not have been intended by the draftsmen of the legislation and it was therefore being corrected.