Barbados’ leading accounting firms have generally welcomed Government’s latest budgetary proposals, but are keen for clarity and more details on a number of the measures intended to facilitate business, stimulate investment and provide taxation certainty.
This was the position outlined in separate analyses from Deloitte, EY, KPMG, and PricewaterhouseCoopers.
At the same time, Business expansion specialist Tricor Caribbean Limited said it was waiting on government legislation and details on some of the measures which had implications for investor confidence.
They were all reacting to the 2024 Financial Statement and Budgetary Proposals delivered last Monday by Prime Minister Mia Amor Mottley in her capacity as Minister of Finance, Economic Affairs and Investment.
Deloitte Barbados managing partner and tax leader Ikins Clarke, observed that “during the past year Barbados has withstood some strong economic headwinds and there is still the ever present sense of caution that any extravagance by the government could render these small victories useless in short order”.
“We therefore expected that the measures outlined in this year’s Budget would be geared towards managing inflation, reducing the fiscal deficit and championing the twin challenges of business facilitation and investment,” he said.
“In addition, developing a pragmatic approach to dealing with the constant challenges emanating from the Organisation for Economic Cooperation and Development (OECD), while keeping the ever important international business sector alive, continue to be the top priorities.”
In its Budget commentary, Deloitte said the formation of Business Barbados coupled with a revamped digital registry and a modern Companies Act “should significantly reduce bureaucratic hurdles for businesses of all sizes”.
“Targeted support through legal services and easier access to financing will empower Barbadian entrepreneurs, injecting dynamism into the local economy and creating new investment opportunities,” it stated.
The firm also noted that “the tightening of the tax breaks and the introduction of an oversight process should close gaps of lost revenues and drive accountability”, and that “the introduction of the monitoring and enforcement unit to work with the other relevant ministries and agencies to ensure compliance should serve to strengthen the governance around the process”.
Deloitte added, however, that “success relies on a streamlined reapplication process, competitive concession packages, and effective enforcement to achieve long term benefits like a stronger tax system and strategic economic growth.”
EY’s Marilyn Husbands, tax partner, Barbados and La-Tanya Phillips, associate partner, Barbados & Jamaica, said that “given a Budget of no new taxes, several new tax credits and a restriction on available tax concessions, the effect of the Budget appears to be in pursuit of a long term strategy which to some extent may result in delayed gratification”.
“We celebrate the resolute pursuit of success for Barbados and the creation of a larger, sustainable pie for all to share. In that celebration, we also look forward keenly to the detail,” they added.
EY said on Business Barbados that the “devil was in the details”.
“The integration of previously separate systems and administration will require structure and transparency to effectively streamline all business facilitation services. Having said this, the introduction of technology in processes and multiple kiosks to support businesses should have the desired effect of increasing the ease of doing business in Barbados,” it commented.
On the issue of new tax credits and incentives, EY said that “the question arises as to the incentive value of these credits for investors faced with a relatively low corporation tax rate”.
The firm also said regarding tax concession reform that “when considering the impact of the restrictions and the enforcement provisions, one wonders what details and mechanisms may be put in place for objective audit reviews and to address investor concerns on the transition of concessions and timeline of review so that no gaps in benefits arise”.
“Continued commitment to agility, modernisation, business facilitation and stakeholder engagement will augur well fora bright future as a world class jurisdiction of choice,” EY said.
KPMG’s position was that “while the proposed tax credits are positive measures for companies who qualify and whose projects are approved, further analysis will be required when the specific criteria for granting of the credits, and approval of the projects, become known”.
Government’s move to reform the tax concessions, KPMG, observed, “will provide order and control to the granting of concessions and rebates”.
“It will also result in the creation of a consolidated database providing information on who receives concessions and what concessions were given. As such it can be an effective tool in future tax expenditure management, may increase jobs, training and improve the country’s foreign exchange position,” it stated.
PwC’s East Caribbean tax engagement leader, Sophia Weekes’ view is that this year’s Budget was not dissimilar to last year’s.
“As the country has emerged from the numerous serious crises faced since 2018, and is now in a state of relative economic calm, it is not surprising that the plan for the future is now focused on envisioning where Barbados will be in the next five to ten years,” she said.
PwC stated in its Budget review that the new intellectual property (IP) regime intended to incentivise research and development “could attract IP businesses to relocate to Barbados”. “It will, however, be important for Barbados to develop or attract people with the necessary skill sets to satisfy the needs of these businesses,” it said.
PwC also pointed out that Barbados’ adoption of the global minimum tax “is a significant unknown” economically speaking.
The company welcomed the launch of Business Barbados.
“The global business sector is Barbados’ second largest industry. Ease of doing business is therefore vital to Barbados’ ability to retain and maintain its reputation as a respected and attractive domicile for global business. This initiative is both welcomed and ambitious as there are several challenges to be addressed,” it said.
“The Prime Minister did not specify the timeline for the establishment and implementation of Business Barbados,but it is hoped that improvements in business facilitation will be top-of-mind, particularly in the light of the proposed corporate tax reforms.”
PwC experts also acknowledged that “the comprehensive list of tax credits proposed has been designed to stimulate and foster economic growth, enhance public services, improve infrastructure and manage resources effectively for the betterment of the Barbadian society and economy”.
However, they added: “We eagerly await further details on how these credits will be applied in practice as the distinction between refundable and non-refundable tax credits is quite important.”
Tricor Caribbean Limited also commented on the tax credits, asserting: “We await the governing legislation which would provide details in relation to these tax credits.”
On the new rules for tax concessions, it said: “We await the governing legislation and detailed guidance from the Ministry of Finance regarding the full list of concessions affected, as well as the reapplication process.”
Tricor Caribbean further commented that “the last two Budget presentations engender a sense that Barbados is in a holding pattern”.
“In the absence of any significant and detailed tax incentives once again, Barbadians may still feel a level of apprehension as to when the hammer will finally fall, as the island looks for sources of income to reduce its indebtedness and stimulate exponential growth of the economy, beyond what is currently projected,” it said.
“In the meantime, we wait. We wait to understand the fullness of Barbados’ Global Anti-Base Erosion Model (GloBE) rules and the new tax regime already in effect. We are waiting for transfer pricing legislation.
“We wait to understand the changes to the economic substance regime now that Barbados is no longer a low tax jurisdiction having indicated its intention to introduce the required nine per cent tax rate under the aforementioned OECD GLoBE rules.
“For many years, we have waited for business facilitation to be made a priority, not just in word and research, but also in deed. It is therefore hoped that the introduction of the new Business Barbados initiative would see Barbados move to world class standards in this area,” Tricor Caribbean said.
It added: “We note with interest the Prime Minister’s stated intention to also improve the time within which land transactions are completed and the overall mortgage landscape. Improvements in this area will certainly be welcomed and may result in improved investor confidence for those who seek out real estate investments.”
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