Describing as “unfortunate and unwarranted”, the decision by commercial banks to suspend over 300 real estate-related transactions estimated at more than $200 million, Minister of Finance Chris Sinckler Wednesday accused the financial institutions of finding every practical reason to oppose the changes made to the Barbados Revenue Authority (BRA) Act.
In a stinging rebuke of the concerns of the commercial banks, Sinckler said they were all excuses for non-cooperation with Government generally, and the BRA specifically, as the state seeks to collect the tax revenue that is legally due to it.
“It is rather unfortunate that some banks and some lawyers in Barbados are hell bent on frustrating Government’s legitimate attempts to collect the tax revenue that is due to the state by their clients,” Sinckler said Wednesday in a statement from the Ministry of Finance.
“First they said it was unconstitutional, then they said they were not clear about how the law would work, now they are claiming it is delaying transactions because the BRA cannot give tax clearance certificates fast enough,” he added.
President of the Barbados Bankers Association (BBA) Donna Wellington warned Tuesday that until there was clarification on the process of obtaining a tax clearance certificate, the financial institutions would not be in a position to close any real estate-related transactions or disburse monies associated with those deals.
As of March 16, 2017, the amended BRA Act, which was also opposed by the Barbados Bar Association and the Barbados Labour Party, demands that individuals and corporations be fully paid up to all branches of the state before obtaining a tax clearance certificate.
According to the amended legislation, those wishing to obtain a tax clearance certificate to facilitate a conveyance, must pay up all tax, interest and penalties accrued under the Land Tax Act and Value Added Tax Act.
Sinckler insisted that some stakeholders in the legal and banking fraternity had not given the system time to work, “purely on the grounds that they did not want it in the first place”.
The finance minister made it clear that the law would remain in place and the Government “will not be bullied into repealing it because some people believe it should not be”.
“It is nothing short of amazing that these very actors have at times in the past sought to defend and excuse the reasons why it takes as long and costs client as much as it does to complete their work in getting mortgages and other real estate transactions done, but now are apparently determined to hold an entire country to ransom because they do not wish to cooperate with Government to halt the chronic hemorrhaging of tax revenue in Barbados.
“It is unwarranted and sad, and especially so since I am suitably advised that the BRA and the Bankers Association had agreed to a sit down meeting next week prior to this action being sprung it [the BRA] without notice,” Sinckler said.
He expressed confidence that any challenges – real or perceived – with the new system would be resolved “once reasonable people sit down and work through the issues”.
Meanwhile, in a separate statement Wednesday evening Revenue Commissioner Margaret Sivers categorically rejected the allegations by commercial banks, which she said “infer that the Authority is hampering the commercial banks’ ability to carry out their functions”.
Sivers said over the past two weeks the BRA received 316 tax clearance certificate applications, of which 73 per cent have been completed and returned to the applicants. She did not specify if they were real estate related.
“Under normal circumstances general tax clearances are completed within 48 hours once there are no outstanding tax obligations,” she explained.
The tax collector said it was premature for the bankers to make such allegations in light of a scheduled meeting on May 30.
“The Authority does not want to, in any way, prevent the taxpaying public from achieving their goals and plans. It is, however, our mandate to ensure that our taxpayers are compliant with their obligations under the laws of Barbados,” said Sivers.
This was not the first time the Government agency has had to clarify issues relating taxes here.
The introduction of the National Social Responsibility Levy last September proved to be a major headache for some manufacturers and retailers who had reported difficulty in applying the tax.
This had led to some retailers applying the two per cent levy as a sales tax, with the BRA warning that such a move was illegal.