Disclaimer: The views and opinions expressed by this author are their own and do not represent the official position of the Barbados Today Inc.
Let me start by saying that I know ignorance of the law is no excuse, but I obviously missed the memo last year that TAMIS was going to enforce the prepayment of personal income tax for self-employed persons. I am not in public life, but I will be transparent about our finances in this article for the sake of appealing to the powers that be on behalf of small business and property owners.
When I prepared my husband’s tax return for him this year, I noticed that there was a requirement for prepayment of personal income tax. I thought it was strange because I had never seen it before and to tell the truth, I couldn’t believe it was real because having just come out of the COVID-19 shutdown where no one, except essential services, was earning money, I figured it would not be enforced.
However, my horrified husband showed me an email from TAMIS this week saying that he had not paid his personal income tax pre-payment and was now also subject to a penalty and interest as well. I’ve since discovered that if 25 per cent or more of your income is from a business or property, you have to prepay personal income tax. The reason it was not an issue before was because he was employed by another company up to February last year and would not have fallen into this category.
Here is the irony. The government is trying to get people to start businesses because everyone knows that entrepreneurship is the key to economic growth. So there is the Building Blocks program, the Trust Loan fund to help people fund their business ideas and other programs to stimulate entrepreneurship. However, it is obvious that the Ministry of Small Business, Entrepreneurship and Commerce and the Ministry of Youth, Sports and Community Empowerment didn’t sit down with TAMIS in the Ministry of Finance to discuss the effect on a small business of prepaying taxes on income that is not yet earned.
Furthermore, coming out of an unprecedented historical event, a global shutdown resulting in billions of dollars of lost revenue, I can’t believe that TAMIS would still try to enforce this requirement and then add penalties and interest for non-payment.
My husband has a small rental property (I’m sharing all our business) but the tenant was unable to pay rent for four months, April to July, because of COVID-19. We really couldn’t turn them out because we knew that everyone was suffering. However, he is still expected to prepay tax on what will be reduced income for 2020.
In addition to paying taxes in April, he is supposed to prepay 25 per cent of that tax in June, again in September and then in December!
Unbelievable! I tried to call BRA today to see if they were serious and if some arrangement could be made, but after calling four different numbers and getting no answer, I gave up and decided to write this article.
I understand that the government is suffering as much as anyone else because of COVID-19 and added to that, the revenue from corporation tax being reduced is a huge blow to the treasury. However, it doesn’t make sense to shoot yourself in the foot by crippling the same businesses that can help to stimulate the economy.
I’m sure that many people have rental properties and don’t declare the income, but here we are, doing our civic duty by declaring all our income and paying our taxes, and we end up being punished for our honesty. This kind of harsh taxation policy would cause people to evade (not avoid) taxes, and we need as many people in the tax net as possible.
Another quarrel I have is with the corporation tax prepayment. In the 2018 income year, my company was required to prepay taxes, but in 2019, the revenue decreased and the tax payable was less than the prepayment. However, when the prepayment was applied, TAMIS did not refund the overpayment of tax! So not only do businesses have to make prepayments, adding to the pressure we are already under, but there is a possibility that if our prepayment exceeds our tax liability for 2020, we will not be refunded the overpayment.
I am so tired of one-sided, unfair practices by the government. If you’re late paying VAT, PAYE, Corporation tax or any other taxes you suffer penalties and interest. Don’t talk about the usurious Domestic Annual Return with penalties of $10 a day! However, the government can owe you VAT or taxes from 2016 and they don’t pay a cent in interest. That is just plain wrong!
My preference is to see the prepayment of personal income tax removed altogether, but if the government is not willing or able to do that perhaps the payment can be spread over the nine months rather than having to make three large payments which can cripple the cash flow of a business. Anyone who runs a business knows that cash flow is king.
I really appeal to the Commissioner of Inland Revenue to look into this and see what can be put in place to ease the burden on small businesses and small property owners in the country. If our businesses fail, there will be no taxes to collect. Let us work together for the benefit of all.
Donna Every is an author, international speaker, and trainer. Visit her website at www.donnaevery.com or email her at donna@donnaevery.com.
