The Revenue Authority is losing $50 million in Value Added Tax (VAT) returns because it is unable to collect taxes outside of Barbados, senators learned today.
Speaking in the Senate today during debate on the Value Added Tax Amendment Bill 2019 Senator Dr Crystal Haynes pointed out that Government was losing a substantial amount of revenue due to BRA’s limitations.
The amendment will allow Government to collect VAT on goods and services purchased online from a vendor outside of the island for use here. The legislation also empowers the Government to collect VAT on goods and services purchased online from local vendors for local – even if the transaction is processed outside of Barbados.
Senator Haynes told the Upper Chamber: “It has been estimated that we have been losing about $50 million in VAT revenues because the BRA does not have the jurisdiction to operate in terms of tax collection outside of Barbados. So one of the things which this legislation has spoken to is that it makes reference to a tax collecting agent.”
She revealed that a proposal had gone out and following applications from several tenders, a company had been selected to act as the Government’s tax collection for these online transactions.
Dr Haynes said the technology had been “tried and tested” and was currently being used by 46 US states.
But several items purchased online would be exempt from VAT, she told lawmakers.
For example, a Barbadian who bought a plane ticket to travel from Barbados would not have to pay the tax, as the service was not being consumed in Barbados, she said.
As education had always been a VAT exempt service, it would remain unaffected, and other categories, including pharmaceuticals and hospital supplies, would also be VAT-exempt, she added.
Assuring citizens that these new tax collection tentacles would not reach into the pockets of citizens travelling abroad, Senator Haynes said: “This is a tax on online transactions, so I would just like the public to remember that they won’t have to worry that when they travel to New York or travel to see family in England and you use your card that you are going to have this tax applied. It is not a tax on credit cards. It is specifically attached to close the loophole on online transactions.”