Some local manufacturers are ending 2016 with one major headache – how to apply and report the recently imposed National Social Responsibility Levy.
President of the Barbados Manufacturers’ Association (BMA) Jason Sambrano told Barbados TODAY the tax was perhaps the most troublesome concern of the industry this year, and that some lingering questions remained.
Sambrano said 2016 was a challenging year for local manufacturers, with high input costs coupled with the two per cent levy announced in the August 2016 Financial Statement and Budgetary Proposals, and which took effect in September.
He explained that some manufacturers remained confused as to how the levy should be applied and reported, considering the “limitations of their accounting applications”.
“I think the major concern for some of the manufacturers would be the whole application of the Social Responsibility Levy, which there is still a lot of confusion surrounding how it is supposed to be properly applied.
“And we are hoping in the coming New Year that we get some definitive guidance from the BRA [Barbados Revenue Authority] with regards to how this is to be applied to ensure that one, we are collecting the necessary taxes on behalf of the Government, but two, we are correctly applying it so that consumers are not overpaying how much should be paid in terms of a tax,” Sambrano said.
During a heated meeting at the headquarters of the Barbados Investment and Development Corporation (BIDC) at the end of September, some manufacturers openly complained that while they were not expected to pay the tax on imported raw materials, locally produced products would still attract the levy.
This, they argued, amounted to a disincentive for using local products.
A few days later Minister of Finance Chris Sinckler announced that the issue relating to the point at which the levy should be applied was resolved.
However, towards the end of October BRA, Government’s central revenue collection agency, said it had received reports that some retailers were applying the tax at the point of sale.
In a strong word of warning BRA said it was illegal for businesses to treat the levy as a sales tax.
Sambrano told Barbados TODAY this afternoon while some kinks had been worked out, the issue now was the “limitations with what some people accounting software applications can do”, especially in the way it is to be presented to BRA.
“I think that is where the challenge is because the BRA is indicating that this charge is not supposed to be shown on sales receipt. So obviously, as manufacturers we are not supposed to charge it to other manufacturers if they are using it [the imported product] as an input into their production process.
“So it is posing a challenge for some manufacturers in how to apply it properly. And given the challenges that some people face with some of the software packages that they use, they just want some guidance from the BRA as to, ‘okay, these are the challenges that I am faced with right now with regards to what my systems can do, how do we get to make sure we are applying it properly?’ This is the limitation,” he explained.
In addition to the levy, Sambrano also spoke of problems with timely clearing of goods at the Bridgetown Port, blaming inefficiencies at the port.
However, despite the lingering concerns, he said there were some shining stars in manufacturing, with some recognized for their work in export, due mainly to help from the BIDC.
He said this was proof that local manufacturers were producing quality products that could compete on the international scene.
While there has been a hive of activity for Christmas, Sambrano said he was hoping Barbadians would patronize local products, stressing a lot of local manufacturers were depending on this season for “a good sale”.
The 2016 data is not yet available for the performance of the industry.