The Government of Barbados is bringing some financial relief this Christmas by giving Barbadians a “VAT holiday” this Monday.
Consumers will be exempt from paying the legislated 17.5 per cent value added tax on goods and higher purchase sales, this Minister in the Ministry of Finance, Ryan Straughn says will be implemented on Monday 20th December. The announcement was made Saturday evening.
Straughn said the good will gesture is to provide some ease for shoppers who have been financially challenged and will allow them to stretch their budgets.
The Minister highlighted the items that will be eligible for VAT concession, goods available for sale with immediate issuance or delivery to the consumer on the day, and higher purchase sales are eligible.
However, there are goods and items that does not qualify, goods that are not in stock; credit purchases of goods on consignment; motor vehicles, guns, ammunition, cigarettes and alcoholic beverages; and the supply of accommodation.
Businesses according to the Minister are expected to file their VAT returns as usual but instead record zero-rated supplies for that day. This means that the business would enter on the VAT returns as zero-rated sales in line 105. Straughn said this would allow the revenue department to track the number of sales and VAT forgone for that day, ensuring a risk-based approach for auditing purposes.
He added: “In filing the VAT, a company must provide sales data or receipt specifically for the VAT holiday. Companies will have to issue a tax invoice to the customer with the value added tax recorded at zero per cent. As the supply is zero-rated, the recovery of input tax is permitted as the business would be allowed to recover the VAT initially paid on the items.”
The VAT free day can be considered a “win-win” for both parties, the Minister stated.
He ended by saying “Given the circumstances that we have been experiencing over the past 21 months, certainly I wish that we could do more but regrettably we still have unpaid bills to be able to settle and the extent to which we have been able to continue to provide for other matters in relation to the pandemic.