BUSINESS MONDAY: ECONOMIC REVIEW COMING SOON
IN a little over two weeks the Governor of the Central Bank of Barbados (CBB), Cleviston Haynes and an associate, will be meeting with the media to review the performance of the Barbados economy in 2019.
And one of the things of immediate interest will be the performance of corporate taxes reaching government coffers between April and December last year. The economic review is scheduled for January 29.
It will be a key assessment of that revenue stream following the decision by the Government in 2018 to adjust the tax system that sees corporation taxes falling from 25 per cent to a range of between five per cent and one per cent, and what can be anticipated for the full fiscal year ending March 2020.
Those tax changes came about through what is known as the Base Erosion and Profit Sharing (BEPA) initiative, in the wake of what seems to be a continuing assault the international community is waging on small international offshore jurisdictions.
The Bank had stated that the Organisation for Economic Co-operation and Development (OECD) had deemed that Barbados’ International Business sector was ring-fenced from the domestic sector and that the associated tax regimes were harmful to international tax competition.
This had led to Barbados being blacklisted by the OECD and the European Union.
As a result, the CBB said that Government amended 11 pieces of legislation and repealed five others governing that sector and integrated their governance and regulation in harmonised Acts for banking and insurance.
According to Haynes, those revenue measures “announced in the latter part of 2018, will have a full year impact in Fiscal Year 2019/2020 as Government strives to achieve its targeted primary surplus of six per cent of GDP”.
He suggested too that the Government must continue to manage its expenditure to avoid any shortfalls in its targeted goals.
Last September Haynes reported in the Bank’s nine-month review that corporate taxes had brought in approximately $124.1 million (for the period April to September), compared to $161.7 million for the same period a year earlier.
He said that corporate taxes had contracted, “partly spurred by reported losses arising from the domestic debt restructuring by several domestic financial institutions”.
The amount of corporate taxes for April to December 2018 was $187.0 million.