Having unified and slashed corporate tax rates, the Barbados government proposes to next year overhaul the overall tax system with a shift from direct to indirect taxes.
This was outlined by the minister of international business and industry Ronald Toppin as the Barbados House of Assembly passed the International Companies Repeal bill.
The bill withdraws the preferential tax rates given to the so-called off-shore companies and instead sets a blanket maximum tax rate of five percent for all companies operating in Barbados. Currently the maximum company tax rate is 35 percent. The convergence of corporate tax rates is to comply with mandates of the international financial services watch dog grouping called the OECD.
The OECD had given Barbados until December 31st to change its tax laws or face being black-listed – a move that government says would have severely harmed the international business sector.
But Mr. Toppin says Barbados’ tax laws will be further overhauled next year in a shift from direct taxes on companies and individuals to indirect taxation based on consumption.
Mr. Toppin was explaining the reason for and intent of the tax changes after opposition leader Bishop Joseph Atherly expressed concern that it seemed the new low corporate tax rates shifted the tax burden from companies to “the small man”.