background image

Barbados Issues Policy Notes on Implementation of 2022 Budget Measures Including the One-Off Pandemic Contribution Levy — Orbitax Tax News & Alerts

The Barbados Revenue Authority has issued policy notes on the implementation of certain measures announced as part of the Budgetary Proposal & Financial Statement 2022. These include:

  • the 15% Pandemic Contribution Levy for companies based on the fiscal years 2020 and 2021 (Link);
  • the monthly 1% Pandemic Contribution Levy for individuals for 12 months beginning 1 April 2022 (Link);
  • the VAT zero-rating on selected personal and critical care items and items that are used primarily to assist with the control of chronic non-communicable diseases, particularly diabetes with effect from 1 April 2022 (Link); and
  • the increase of the excise tax on sweetened beverages from 10% to 20% with effect from 1 April 2022 (Link).

With respect to the one-off Pandemic Contribution Levy for companies, the main points of the policy note include the following:

---

Commencement

The commencement date of the Pandemic Contribution Levy for companies is July 1, 2022.

Scope

The Pandemic Contribution Levy is:

1. applicable to:

  • telecommunications companies;
  • life and general insurance companies;
  • majors engaged in the sale of fuel; and
  • commercial banks

where a subject company has net income of $5 million or more in either fiscal year 2020 and/or fiscal year 2021. Thus, if a company has net income of $5 million in either year, the levy still applies in respect of both years.

2. The levy shall not apply to

  • a credit union;
  • a trust company;
  • a public entity; or
  • a qualified person who has been granted a foreign currency permit under the Foreign Currency Permits Act, 2018-44.

Expiration Date

The Pandemic Contribution Levy will expire on March 31, 2023.

Applicable Rate and Method of Calculation

The applicable rate of the Pandemic Contribution Levy is 15%.

The Pandemic Contribution Levy is calculated on net income recorded in the company's financial statements as prepared in accordance with IFRS or GAAP for the fiscal years 2020 and 2021. Therefore,

  • on July 15, 2022 the company is required to pay 3.75% of its net income in respect of fiscal year 2020.
  • on August 15, 2022 the company is required to pay 3.75% of its net income in respect of fiscal year 2020.
  • on September 15, 2022 the company is required to pay 3.75% of its net income in respect of fiscal year 2020.
  • on October 15, 2022 the company is required to pay 3.75% of its net income in respect of fiscal year 2020.
  • on November 15, 2022 the company is required to pay 3.75% of its net income in respect of fiscal year 2021.
  • on December 15, 2022 the company is required to pay 3.75% of its net income in respect of fiscal year 2021.
  • on January 15, 2023 the company is required to pay 3.75% of its net income in respect of fiscal year 2021.
  • on February 15, 2023 the company is required to pay 3.75% of its net income in respect of fiscal year 2021.

Conditions

1. This levy is payable in addition to the company's corporate tax obligations and is not deductible for tax purposes.

2. The Barbados Revenue Authority is responsible for the collection of the levy and the administration and enforcement of any law enacted to facilitate same.

3. The expiration of the levy does not nullify the obligation to pay and therefore sums subsisting thereafter continue as a liability until the amount due and owing is fully satisfied.

Administration

Companies will be required to file a return to be known as a Pandemic Contribution Levy Return. This return shall be filed on or before the prescribed payment dates between July 15, 2022 to February 15, 2023 inclusive as set out above.

Payment of the levy can be made in the form of cash, cheque, debit card, credit card or via online payment services. Corporations are encouraged to utilise online payment services where possible.

Penalties and Interest

In circumstances where a company

  • fails to pay; or
  • pays after the prescribed payment date; or
  • fails to deliver the return

a penalty of $500 will be imposed in each instance, in addition to interest at the rate of 1% calculated for each month during which any part of that amount was not paid on the largest amount of levy and penalty that was due and unpaid at any time in that month.