With the Value Added Tax (VAT) on online transactions – nicknamed the Amazon tax – finally becoming law last week, merchants and shippers find themselves on opposite sides of the debate on the levy.
While a prominent business leader is hailing the move as a levelling of the playing field, some facilitators of online shopping through the provision of US shipping addresses are bracing for severe fallout.
For the former head of the Barbados Chamber of Commerce and Industry (BCCI), Eddy Abed, the new measure means retailers and wholesalers can compete with their external counterparts.
Abed told Barbados TODAY: “I as an importer and as a retailer and as a member of the Chamber of Commerce will tell you that this now makes for somewhat of a level playing field for the retailers in Barbados. Long we have said that we had unfair competition from goods being imported from huge retailers. These goods were coming in free of taxes and this absolutely makes it more even-handed and equitable for those retailers in Barbados.”
Many have argued that courier firms will be hardest hit by the online tax, as small packages will no longer be able to slip through the cracks of Government’s revenue collection.
A manager of one shipper told Barbados TODAY that he feared that business is going to decline significantly as a result of the VAT.
The manager, who did not want to be identified, said: “This is going to make shopping online a very expensive enterprise overnight. We don’t clear packages individually, so because we clear in bulk, the small packages do not usually get flagged for duties by customs. So, these packages will now incur VAT. To make matters worse we already have a two per cent online tax that has been in existence for some time. We have to wait and see it the customers still see it as worth their while to shop online.”
But Abed contended that “the discussions need to be about fair and equitable and not big business versus small business. So, if it [the law] is fair for all importers then all importers need to abide by it and compete at that level. You can’t have one section of importers having an advantage over another”.
He also pointed out that based on his interpretation of the VAT legislation, which was passed late last Friday night, Barbadians consuming goods and services while overseas will not be affected.
He told Barbados TODAY: “From my understanding of the bill that has just been passed, it speaks to goods and services provided by an external source where the VAT would be collected by that vendor and remitted to the Barbados Revenue Authority (BRA). It also specifically only speaks to goods and services being consumed in Barbados. So, if I am in New York and go out to have dinner and I use my credit card, I should not be charged.”
Abed had previously expressed cynicism about the logistics of the Government’s revenue collection mechanism to collect VAT from online transactions. But this morning the fabric merchant told Barbados TODAY that he is still waiting to see the details of how the April 1 rollout of the online tax is going to work.
“I am still not convinced that it is going to be as seamless as persons think it is going to be, but I am prepared to give the requisite time to work before I pass judgement on it,” he stressed.