A veteran businessman hopes government would start charging Value Added Tax (VAT) on online transactions at least by April next year, to create a level playing field for local businesses.
Managing Director of major swan street store, Abed’s and former Chamber of Commerce and Industry President, Eddy Abed was responding to news that implementation of the tax would be postponed for the third time this year.
On this occasion, the delay is due to Government’s urgent need to meet the December 31st deadline to pass legislation for the convergence of local and international tax rates to bring them in line with the Organization for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) initiative, amid threats of sanctions.
The disappointed businessman said while he understood government’s rationale for again pushing back the date from December 15th, the tax needed to be introduced sooner rather than later, to ensure fairness in the local market.
“This clearly is competition that has gone on for too long without being on a level field. So I look forward to it. I think it’s important that we do it sooner rather than later, but equally I want to make sure that the mechanism is fair for all and that there is absolute clarity so there is no ambiguity,” he said.
Abed also told Barbados TODAY that while he was eager to see the tax finally implemented, he wanted it to be rolled out in a sensible manner.
“What we are keen to see is that the tax is implemented in a manner that is without any obstruction or any ambiguity, so that business flows. We’re still unsure as to the mechanism that government will use to collect VAT on these purchases and we would’ve liked the opportunity to discuss this with the ministry of finance in particular. Of course it must be done in a manner that will ultimately assist the brick and mortar businesses that are paying VAT, paying staff, paying overheads in Barbados,” said Abed.
Indicating that government’s decision to implement the tax so late in the year, would have allowed shoppers to take advantage of Christmas shopping online before the December 15th implementation date. Abed said he hoped it could be applied well before Crop Over.
“People would gear up for Crop Over perhaps two months before, so in my mind it would be somewhere around April this should be implemented, at the start of government’s new financial year.
“I cannot see any advantage to implementing it in the next three months. I’d love to see it implemented for the reasons I have explained…but the reality is that you’ve missed the largest selling period,” said Abed.
The businessman also dismissed as a “red herring”, a recent argument that the online tax would bring hardship to the country’s small businesses.
“The discussion needs to be about right versus wrong, not big versus large. We can no longer sit idly by, when our country is in such terrible financial woes, and accept that small businesses, and I am not clear what a small business is, can import goods without paying the necessary VAT and duties. That’s just unacceptable. If you’re going to operate in the retail industry in this country, then all businesses need to operate on a level playing field,” he said.
In fact, he argued that small businesses were in some cases better equipped to absorb the cost of VAT, than larger ones.
“The advantage a small business has over a larger business is that they have less overheads, and they are extremely nimble. Larger businesses have to put in orders three to six months prior to getting delivery…If it is an item that is fashionable, it may go out of fashion, and you are stuck with it. So there are advantages and disadvantages of both, but frankly an advantage of a small business cannot be that it has the opportunity to import without paying VAT. That is just unacceptable,” he said.