It may be facing stiff opposition locally to its insistence that taxpayers obtain tax clearance certificates to do a range of financial transactions, but the Government is getting support for the move from a senior tax consultant with one of the world’s leading accounting firms.
Partner in the local offices of the United States-headquartered audit, tax and advisory company of KPMG, Wayne Lovell, is telling Barbadians that the measure is not as bad as it is being made out to be.
The Barbados Bar Association and the opposition Barbados Labour Party (BLP) have already condemned the new policy which took effect in March under the amended Barbados Revenue Authority Act, which requires individuals and corporations to be fully paid up on all their statutory obligations in order to get a tax clearance certificate which was required for a range of transactions. Commercial banks have suspended more than 300 real estate-related transactions, with the Barbados Bankers’ Association warning that until there was clarification on the processes involved in the issuance of the certificates by the Barbados Revenue Authority (BRA), those financial institutions would not be in a position to close any real estate deals or disburse monies associated with them.
But Lovell has suggested that it is much ado about nothing.
“Generally speaking, it is another measure that the Government has embarked on. I don’t think it is as horrible as it would appear,” Lovell, who is also chairman of the tax committee of the Institute of Chartered Accountants of Barbados (ICAB) told Barbados TODAY Thursday afternoon.
“I understand that the legislation took effect from March 16, so transactions that had commenced before March 16 would not be exposed to this . . . . Maybe we should give it a little time to see if it is really as cumbersome as some people are making it to be.”
Lovell acknowledged that there needs to be more dialogue when these types of measures were being implemented.
At the same time, he said, lack of prior discussion did not detract from its usefulness.
“The Government is looking at ways and means to increase tax revenue, and the whole question of seeking tax clearance certificates is one way of doing it. We could all argue that they should be more dialogue on these matters, which may be true, and there is some merit in this.
“But we also must accept that, generally speaking, we have an aversion to anything new. If it is something in the realm of taxation, you will get this resistance,” Lovell added.
The tax expert said, though, that he believed the BRA would be flexible in applying the law when it came to demanding full payment from people suffering financial hardships.
“You may have a poor person who is owing land tax . . . and is now purchasing property and is still a poor person . . . . . You may have situations where your property is being conveyed through, let’s say, divorce proceedings, or you may have it through by someone who has passed away. Now, you really are talking about situations that are genuine and obviously deserve some consideration.
“If a property is being conveyed through death or something, and it has outstanding liabilities on it, really and truly . . . those tax obligations should come out of the estate and not from the person who is getting the property,” contended Lovell said, adding that BRA should treat these situations on a case-by-case basis.
Yesterday, economist Jeremy Stephen warned that if the commercial banks’ concern regarding the tax clearance certificates was not addressed quickly, the situation could have “quite serious” and far-reaching effects.
The BLP, which had previously described the amended Barbados Revenue Authority Act as “kicking Barbadians while they are down”, appealed to the Freundel Stuart administration to “reverse the madness” and repeal the amendments. Opposition Leader Mia Mottley suggested that be done as early as next Tuesday when Parliament meets for the presentation of the Budget by Finance Minister Chris Sinckler.
Meanwhile, Sinckler has described the banks’ suspension of real estate transactions as unfortunate and unwarranted. In a statement issued yesterday, he 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”.
He said that, in his view, they were finding every practical reason to object to it.