Jun 2012 Financial News

Budget at a glance (Barbados)

Jun 27, 2012

Budget at a glance (Barbados)

• The VAT rate of 17.5% will remain in place until further notice. The VAT has proven to be a most effective and efficient instrument in our efforts to increase revenues and help close for fiscal deficit.

• imposition of a 50% increase in the Excise Tax on Gasoline and Diesel remains in place

• as of August 1st 2012, an increase in the tax threshold from 24 200 to 30 000 and adjust the effective tax rate at the bottom from 20% to 17.5 %. This will effectively mean that all those persons earning between $24 200 and $30 000 will pay 17.5 % on the amount between $24 200 and $30 000 and those earning more than $30 000 will pay 17.5 % on the assessable income up to $30 000 and will continue to pay the upper rate of 35% on anything above $30 000.

• All ministries to adjust their expenditure budgets downwards by 2 per cent for their 2012 allocation appropriated by this House in March.

• the introduction this income year of an “ounce of prevention tax credit” for up to $750 dollars on a comprehensive annual medical examination for persons 40 years and over. The allowance can be claimed at filing time and should be accompanied by an electronic copy of a certificate verifying the procedure was done and signed by a registered medical practitioner.

• that the International Business Companies Act Cap 77 and the Societies with Restricted Liabilities Act be amended to change the tax rate on the highest band for taxable income for income years 2012 and 2013;

that the tax schedule in Section 10 (1) of the International Business Companies Act be amended to read as follows:

2.5% on all profits and gains up to $10,000,000;

2.0% on all profits and gains exceeding $10,000,000 but not exceeding $20,000,000;

1.5% on all profits and gains exceeding $20,000,000 but not exceeding $30,000,000; and

0.5% on all profits and gains in excess of $30,000,000.

that the lower band of 0.5% apply for income year 2012 and that this be changed to 0.25% for income year 2013;

that the changes apply to legislation for Societies with Restricted Liabilities as well as offshore Banks;

that the range of services eligible for the Foreign Currency Earnings Credit be expanded to include exploration, extraction and other mining, oil and gas activities, licensing and sub-licensing of intellectual property and shipping services

• it is proposed to increase the rate of rebate in order to compensate for the increase in the tax demanded which came about from the increases in the land values. Therefore the level of rebates for pensioners can be raised from the 50% to 60% or as is appropriate.

• an amnesty will be offered to all tax payers for amounts owing from 1981-82 to 2011-12 with the attached conditions:

The proposed amnesty will be for thirty (30) days commencing July 2, 2012 and ending July 31, 2012

The amnesty will allow for 100% waiver of both the penalty and interest dependent on the full amount of principal being paid in a one-off payment for the respective year due. This will allow persons to take advantage of multi-year payments even if they were not in a position to pay off the full amounts.

There will be no extensions of the amnesty.

• Increase the chargeable value on new vehicles from $45,000 to $55,000 with a review after one year.

• Lower the Excise tax by 25% with a review after one year.

• with immediate effect that the excise tax rate of 9.31% for locally manufactured cars should be removed from the Act thereby applying the same rates of 20% to 120% to various categories of motor vehicles whether imported or not by registered manufactures. By continuing to have a local rate, the revenue loss in some cases would be approximately 100% of the excise taxes on each vehicle.

• a national greening levy be imposed on the salaries of Barbadian workers as follows: Persons earning up to 25,000 per year 0%, Persons earning between 25,000- 50, 000 per year 0.1%, Persons earning between 50,000 and 100,000 per year 0.15%, Persons earning above 100,000 per year 0.25%.

• increase the fees for re-entry applications and approvals for re-entry applications to $300 dollars.

• Over the next five years Agro businesses will have access to $20 million in financing from the proposed “Hotel Refurbishment, Energy Efficiency and Food Production Fund.

• Increase in the rebate for returning idle lands into production
It is proposed that the current rebate for returning idle lands into production to be increased from $500 per hectare to $1, 000 per hectare;

• $3.0 Million to facilitate the re-establishment of the Tractor Cultivation Scheme to be managed by the BADMC;

Increase of rebates by 100% to farmers who utilize the Services under this Scheme

• A rebate of $500 for each gilt that is raised to breeding stage. 1000 gilts will be drawn from the programme to increase pig production. This will cost Government an additional 500,000.

• A rebate of 50% up to a maximum of $4,000 per animal imported to for the purpose of improving livestock quality.

• inject an additional $400.000 into the Micro Enterprise Grant Scheme to also assist the Ministry to deal with the flood of very solid requests that has come in since the initiation of this programme two years ago.

• removal the Property Transfer Tax when shares are transferred during a corporate reorganization of a group of companies and with no change of beneficial ownership. This should become effective from August 1st.

• Amendment of the VAT Act to: Exempt BARP from the payment of VAT on supplies made by the Organisation, supplies mean the provision of goods, services, real property or any other thing in any manner and includes a sale transfer, barter, exchange, gift, lease, rental, hiring, letting, licensing or deposition.

Amend the Income Tax Act to exempt BARP from the payment of corporation tax on income.
• establishment a temporary child support assistance fund to help parents to carry some of the load of maintenance while the state aggressively pursues the delinquent parents to recover the amounts owed.

• Government will provide financial assistance of $100 million in the form of low-interest loans over a eight (8) year period to tool and capitalize the industry, and to provide improved credit to the consumers of RE and EE products produced locally.

• Building materials and supplies for construction of a facility dedicated to the generation and sale of electricity from a renewable source shall be duty free and VAT free;

• Establish a “Hotel Refurbishment, Energy Efficiency and Food Production Fund” as part of its investment portfolio. The fund will initially be capitalized with $18million of the NIS surpluses. For the next twelve months, in every month where the NIS earns a surplus of more than $10M, $1M of that surplus will be directed to further capitalization of the fund.

• Establishment of a “Tertiary Education Fund.”

• A 50% reduction in the interest rate on loans from the Student Revolving Fund for training in the following Technical & Vocational areas:


Mobile and Web Applications Development; (Writing Apps for Ipads, Cell phones and so on)
Information Systems Security;
Network Technologies;
Animation;
Videography;
Nursing and Health Care;
Criminal Justice and Security;
Photovoltaic and Wind Generation Electrity Generation systems installation and maintenance.
- Undertake an Initial Public Offering of 30% of the shares of Grantley Adams International Airport Inc, the Oil Company and Barbados Port Authority, and the listing of these companies on the Barbados Stock Exchange.


Source:
Barbados Advocate
Wednesday June 27, 2012

http://www.barbadosadvocate.com/newsitem.asp?more=business&NewsID=25557