Government has asked the International Monetary Fund and the World Bank to helps reforming its indirect tax system, Drector of Finance and Planning Ian Carrington has disclosed.
The multilateral lending agencies have been invited to advise on how to bring indirect taxes into balance corporate taxes, he said.
IMF tax officials were currently here examining the Value Added Tax, income tax, stamp duty, and betting and gaming taxes among other indirect taxes, Carrington revealed.
He said the officials were holding talks with the acting Revenue Commissioner, the Comptroller of Customs and all of the Government ‘s revenue agencies, along with the private sector and the Small Business Association.
Carrington said: “The reason Barbados has to reform the system is because we have made changes to our corporate taxes, as a result of seeking to be compliant with the European Union and the OECD. We have removed the ring fence between the international business companies and the domestic ones by reducing their corporate tax rate down to the maximum of five per cent.
“As a result, this creates the opportunity for individuals to corporatize, that is, set up themselves as a business to seek to pay a lower level of taxes by making themselves appear to be a business.”
As Barbados continues in an IMF programme, Government had to make sure there were no deficiencies in revenue collection, the government’s senior civil servant on the economy said.
Carrington continued: “The result is to bring both the direct and the indirect taxes back into balance. Therefore, we are pressing ahead to reform the indirect tax system by the next financial year [which starts in April], and so the IMF tax team has to get back to Government with its suggestions before the end of this financial year.”
He added that the World Bank will give technical help to the government to implement policy changes and ensure that its systems and procedures were correct.