Multimedia e-commerce giant Amazon and a host of other online international companies will soon be collecting Value Added Tax (VAT) on behalf of the Mia Mottley administration.
But the Seattle-based company and several others are still in discussions with the Government on exactly how the tax will be collected.
On Thursday night, Minister in the Ministry of Finance and Economic Affairs, Ryan Straughn sought to clear any lingering doubts on whether the VAT will be levied on online purchases and in doing so, he defended the administration’s position as he addressed reporters after the official opening of Kooyman’s megastore at Kendall Hill, Christ Church.
According to the Minister, Amazon officially registered with the Barbados Revenue Authority (BRA) in November last year after discussions with many other online-based companies.
He added that the decision for Amazon’s Web Services (AWS) to begin collecting taxes on behalf of the Government from March 2020 is just the beginning of ongoing negotiations aimed at “phasing in ‘’ all commercial activity conducted online by Barbadians. This, Straughn says is consistent with changes to the VAT Act last December.
“The web services proportion obviously speaks about the digital services part. Barbadians are obviously more concerned about the actual retailing side of it and it’s something that will obviously be phased in, because that is something that will come on stream afterward with respect to the actual retail side of it,” Straughn revealed.
The Minister’s confirmation of the pending VAT follows a firestorm of controversy which followed Barbados TODAY’s recent revelation that AWS would start collecting the tax from its customers in Barbados. The story was criticised on social media and even in some sections of the media for ‘misinforming’ the public about Government’s intentions.
In addition to confirming the development, Straughn added that the adjustment would allow the Government to collect taxes paid when visitors stay in local AirBnB properties.
But he revealed it will also allow taxes to be collected from Barbadians using popular American media service providers like HULU and Netflix.
“We have been in discussion with AIRBNB to settle the MOU for collecting the taxes and to determine how the taxes will be transmitted and the frequency and those things. There are a number of online services including Netflix, HULU, some of the gaming sites. There is quite a plethora of activity taking place in the digital space and up until now, the Government has not really looked at how it is taxed… and a lot of discretionary spending has taken place that hasn’t been focused on and unfortunately, Barbadians have been having a lot more direct taxes placed on them. So as we transition from less of a focus on direct taxation and more on indirect taxation, that is where you are going to see a shift with respect to Government’s tax policy,” Straughn explained.
Defending the adjustment, the Minister noted that currently, Barbadians are paying taxes to U.S states which ought to be entering the Barbados treasury and assured citizens that no double taxation would occur.
“I understand the concern that people may have about increased taxation but the truth is you are already paying taxes in the states that those goods are coming from and therefore all we are trying to do is to ensure that we collect the revenue that helps to support the delivery of public services in Barbados because while persons are trying to circumvent paying taxes in Barbados, they end up supporting the public infrastructure of other jurisdictions,” the Minister in the Ministry of Finance told reporters.
“I think it behooves all Barbadians to understand that we are not taxing you twice and part of the reason we want to go this route is to ensure that once goods come to the border through the various couriers that obviously all of that information is shared at once so that once it gets to the border and customs goes through the customs process, everything will be clean with respect to the data and avoid any notion of double taxation,” he added.
Straughn also gave the assurance that Government’s zero-rated goods like books and certain electronic devices which now do not attract VAT in local retail stores will also be zero-rated online.
kareemsmith@barbadostoday.bb
