The brouhaha surrounding the requirement by the Barbados Revenue Authority (BRA) to request a tax clearance certificate as part of closing a property transaction seems to have gone the way of the day 7-day news cycle. The issue was brought to a head when the Barbados Bankers Association flexed its not too considerable influence by taking a decision to suspend the processing of ALL loans involving the transfer of property. It should be noted that three of the banks in Barbados are Canada based and the other two Trinidad.
The decision by the Barbados Bankers Association triggered a torrent of of public commentary. The government spokes-persons led by Minister of Finance Chris Sinckler took careful aim at those critical of the decision to amend the Barbados Revenue Act. To quote Sinckler, “It is rather unfortunate that some banks and some lawyers in Barbados are hell-bent on frustrating government’s legitimate attempts to collect the tax revenue that is due to the state by their clients”. The Barbados Labour Party (BLP) shared the view that “the Act would cause total and complete chaos in the lives of citizens and businesses conducting ordinarily routine transaction”. The Barbados Bankers Association to support its decision indicated that there was “a lack of clarity on the process that are required in order to comply with the Act. As such commercial banks have been experiencing significant delays in disbursement of mortgages and other credit facilities that require security over real estate…”.
Of interest to BU is the position taken by the Barbados Bar Association (BBA).
All issues debated in Barbados these days are expected to take a predictable turn and with a general election on the horizon the political rhetoric has been cranking up. It is one of the peeves of the BU household that a society which claims to be well educated is always inclined to distil issues through a political lense. Maybe we are not that educated after all.
The Barbados Bar Association was very clear in its review of the amendment to the BRA Act i.e. that the requirement to seek a tax clearance certificate labels debts owned to the government as first charge on land. The uncertainty comes whether the amendment addresses the potential for challenge as it relates to the transfer of land. The general public is not expected to appreciate that there are four Acts affecting this issue; Excise Tax, Income Tax, Land Tax and VAT Act. The BBA’s opinion is that only taxes due under the Land Tax Act suit the definition of a first charge on land. According to lawyers trained in contract law the other three Tax Acts do not list a similar provision.
The objective of this blog is not to blind readers with the technical. It is to ask why did this matter have to become contentious.
Those of us who listened to the the 2017 Financial Statement and Budgetary Proposals delivered by Minister Chris Sinckler would have had to listen carefully to hear when he mumbled that representatives of the BRA and Bankers Association met and agreed changes will be made to allay the concerns of the bankers. The BU household has been patient to wait for details coming out of the meeting.
The public deserves to be told why this matter was allowed to become contentious. Why did commercial banks take the decision to suspend property transactions totalling over two hundred million dollars and as a consequence cause emotional and financial stress on Barbadians. Was the draft amendment to the BRA Act widely circulated before being proclaimed? What is the role of the media to inform an ignorant public.
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