Facing a huge slump in tax revenue from the coronavirus pandemic, Government’s chief tax collector has told business accountants that “pressure” is building on the Barbados Revenue Authority (BRA) to make up the shortfall by collecting unpaid taxes.
Revenue Commissioner Louisa Lewis-Ward on Thursday put companies on notice that she won’t be afraid to enforce penalties on those who continue to fail to file their tax returns.
But even as she promised to step up the pace of paying out overdue tax refunds, Lewis-Ward declared that “on the flip side of refunds, always is the collection side”, as she spoke at the Institute of Chartered Accountants of Barbados annual tax forum.
The Revenue Commissioner pointed to a significant decline in Government’s tax revenues, linked to the economic downturn triggered by the pandemic.
Domestic Value-added Tax (VAT) collections are down 21 per cent, VAT on imports have declined by 18 per cent, land tax receipts are down 16 per cent, Lewis-Ward reported.
The tourism industry, in the grips of a year-long crisis said to be its worst ever, have seen the sharpest decline in payments to the Treasury, with tourism levies down by 75 per cent and the room rate levies declining by 66 per cent, she said.
“So on the collections end, we are under pressure to collect, we are under pressure to maintain a certain semblance of normality as we work through the pandemic period,” said Lewis-Ward.
Lewis-Ward urged firms and those who file taxes on their behalf to reach out to the Barbados Revenue Authority (BRA) if they were experiencing challenges.
But Lewis-Ward said the BRA would be enforcing its position in the upcoming tax period “to recover outstanding liabilities be they land tax, corporate tax or VAT”.
She said: “We do ask that as you go through your clients’ compliance process this year that you complete the information requested in a correct manner so that at the end of the day we know that we are in a position to be transparent, we know that we are a mature and sophisticated tax authority who can then exchange the information in an easy and timely manner.”
The BRA is required to provide tax information on companies to some of its international partners under information exchange agreements, the Revenue Commissioner said, noting an increase in the number of requests recently.
In any one month, the BRA would “handle maybe six or seven such requests for information from other jurisdictions”, she told the forum.
Lewis-Ward says: “We committed as part of the peer-review process to being able to exchange information in a timely manner. So as part of the exchange of information upon request, we sometimes have to reach out to taxpayers to say ‘we do have your tax returns for a number of years but we need to have further information, maybe bank statements, which will allow us to exchange with another jurisdiction’. In the past, we failed this criterion because we haven’t been able to exchange in a timely manner.”
She said she is encouraging the accounting body to file tax returns for all clients on time, as she served notice that penalties will be forthcoming “for those who are still on our listings who have not given any reason for non-filing”.
Lewis-Ward did not give an indication as to how much was owed to the BRA in outstanding taxes or what methods the agency was likely to use to recover these sums.
After reaching out to the taxpayers who still refuse to make tax payments, Lewis-Ward said, the BRA is able to then issue what is called a default assessment and then commence collection procedures.
The BRA can issue third-party collection orders called garnishments, by way of court proceedings to recover outstanding amounts.
In the case of VAT collection, the legislation makes provision for the naming and shaming of companies.
Lewis-Ward gave the assurance that the BRA would continue to build out a more rigorous tax system and in the process, rebuild taxpayers’ trust.
She also took the opportunity to apologize to businesses for the delay in issuing of the corporate tax return forms, adding that “the authority has committed to having the tax return forms out next year by at least January 1, so it facilitates you being able to conduct your affairs in an efficient manner”.
She also reported that the BRA spent the last few months trying “to reconcile taxpayer balances and determine how much and how far we can go to committing to refunding taxpayers in a timely manner”.
Lewis-Ward said: “We are working through two legacy systems, as well as the TAMIS system in order to reconcile those balances. But I think we are making significant headway and we will work to complete that exercise in the very near future.”
Anthony Gittens, the acting Director of the BRA’s Tax Audit and Compliance Division told the accountants that under the “two legacy systems”, a refunds project was set up for the processing and issuing of refunds.
But he said one of the problems encountered was that a lot of the contact information “is out of date”.
Gittens said: “We cannot find you by email, by telephone and sometimes by post. So we need that you update your information so that we can contact you. We also need that when the officers reach out to you for information that you return that information to us as soon as possible to allow for speedy processing of those returns.”
He also promised that the BRA would, as a “collection team, be enforcing the legislation that is available to us to ensure that our government meets its financial commitments”.
He added: “We have also established a betting and gaming unit and we will be administering the Betting and Gaming Act CAP 60. This is to bring more order and regulation to this sector and ensure that all taxes that are due from betting and gaming activities in Barbados is one, fully regulated and two, collected.”
(marlonmadden@barbadostoday.bb)
