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Barbados Budgetary Proposal & Financial Statement 2022 Presented Including 15% Pandemic Contribution Levy on Corporate Profits — Orbitax Tax News & Alerts

The Barbados Budgetary Proposal & Financial Statement 2022 was presented by Prime Minister Mia Amor Mottley on 14 March 2022. One of the main tax measures of the budget is the introduction of a one-off Pandemic Contribution Levy on Corporate Profits at a rate of 15%. Key points include:

  • The levy will apply for companies carrying on domestic business in telecommunications, retail sale of petroleum products by dealers, commercial banking (excluding credit unions), and general and life insurance, if their net income exceeded BBD 5 million in 2020 and 2021;
  • Where a company is subject to the 15% levy, the levy will apply on taxable income as per the company's financial statements for the fiscal years ended March 2021 and 2022;
  • The levy for the two fiscal years will be payable to the Barbados Revenue Authority in eight monthly payments commencing 15 July 2022, with the levy for the year ended in 2021 due in July to October 2022 and the levy for the year ended in 2022 due in November 2022 to February 2023; and
  • The levy for each fiscal year is payable in addition to the company's corporate tax obligation and is not deductible for tax purposes.

In addition to the levy for companies, a Pandemic Contribution Levy on Income at a rate of 1% will also apply for higher-income individuals. Beginning 1 April 2022, individuals earning income exceeding BBD 6,250 per month will be required to contribute 1% of their monthly earnings for a period of 12 months. The levy for individuals is also non-deductible for tax purposes.

Some of the other tax-related budget measures include the following:

  • The effects of rising fuel and shipping costs will be mitigated with the following measures:
    • VAT payable on gasoline will be capped at 47 cents per liter for a period of six months effective from 16 March 2022;
    • VAT payable on diesel will be capped at 37 cents per liter for a period of six months effective from 16 March 2022; and
    • Freight costs will be capped at 2019 levels of USD 7,350 per 20-foot container and USD 8,000 per 40-foot container from 15 March 2022 until 31 March 2023 for the purpose of calculating customs duties;
  • VAT on selected personal and critical care items will be zero-rated from 1 April 2022, including all sanitary towels and tampons, baby and adult diapers, antiperspirants, vitamins, and multi-minerals;
  • VAT zero-rating is proposed on a select list of items that are used primarily to assist with the control of chronic diabetes, although no specific date is given (list includes different brands of diet/protein shakes such as Ensure, PediaSure, SlimFast, etc.)
  • A moratorium on interest will be provided on outstanding national insurance (NIS) contributions with effect from 1 April to 30 June 2022, with businesses and self-employed persons required to enter into payment arrangements for the settlement of outstanding amounts due within 2 years in equal monthly installments (up to 31 March 2024 at the latest);
  • NIS ceilings will be increased to BBD 1,182 per week or BBD 5,120 per month with effect from 1 January 2023;
  • An Alternative Fuel Levy will be introduced from 1 July 2022 at a rate of BBD 25 per month plus BBD 0.02 per km over 15,000 km annually, which will apply for vehicles not powered by diesel or gasoline;
  • An Excise and VAT holiday will be provided for electric vehicles for 24 months commencing 1 April 2022;
  • Customs rates will be realigned from 1 April 2022, including a reduction in the import duty rate from 45% to 10% for used battery electric vehicles (same as for new) and for new and used fuel cell electric and solar powered vehicles, as well as a reduction in the import duty rate for vehicles powered by liquefied petroleum gas and compressed natural gas from 45% to 25%; and
  • The excise tax on sweetened beverages will be increased from 10% to 20% with effect from 1 April 2022, with the tax to be extended to products with high salt content from October 2022.

Further details on the implementation of the budget measures will be published once available.