The introduction of the E-commerce Collection Management System
Barbados VAT update
On 22 November 2019, the Barbados Revenue Authority (BRA) released a communique relating to the commencement of an E-Commerce Collection Management System in Barbados.
Deloitte has reviewed all related correspondence which was received on 19 December 2019 and provided a summary for your information below.
I. Enactment of the Value Added Tax (Amendment) Act, 2019-19 (Act)
- The Government of Barbados has enacted the Act and it now makes provision, in certain cases, for the collection of Value Added Tax (VAT) on goods and services purchased online where the goods and services are for consumption in Barbados.
- The Act is applicable to overseas merchants conducting, facilitating or participating in transactions utilizing all payments methods such as credit cards, debit cards, charge cards or prepaid cards for the purchase of goods or services for consumption in Barbados.
- The overseas merchants to whom the Act applies will be required to register on the BRA’s Tax Administration Management Information System (TAMIS).
II. The following terms and conditions were also outlined
- Overseas merchants are to comply with the requirements under the Barbados Value Added Tax Act, Cap. 87.
- Overseas merchants are required to file VAT returns with the BRA. Accordingly, they are to implement the necessary accounting systems and processes in place to account for, and complete an accurate and timely filing of VAT returns.
- Effective 1 December 2019 VAT shall be charged, collected and remitted by the overseas merchants. They must also immediately notify the BRA in writing where VAT on goods and services is wrongfully charged and collected.
- Appointment of a local agent to assist with tax matters in Barbados is not required.
- Overseas merchants who are required to undertake voluntary registration shall do so solely for the purpose of enabling the filing of VAT returns and remittance of VAT on online goods and services as provided pursuant to the Act.
- It must be emphasised that the registration relates specifically to overseas merchants with no presence in Barbados for the sole purpose of collecting VAT. Accordingly, there is no need for other tax registrations or obligations in Barbados. We understand that an overseas merchant would not be required to register with Corporate Affairs and Intellectual Property Office (CAIPO) or file corporation tax returns with the BRA.
- VAT shall be remitted to the BRA by the 21 of January, April, July and October.
III. Certain provisions to note pursuant to the Act
Collection of tax on imported goods and services purchased online
- “foreign vendor” means a person outside of Barbados who sells goods or services online for delivery to a person in Barbados or for consumption or use in Barbados and includes persons selling on platforms such as Amazon or Ebay.
- “imports” means goods and services purchased online from a place outside Barbados for consumption in Barbados and cognate expressions shall be construed accordingly.
- Where goods or services are purchased online from a vendor outside Barbados for consumption in Barbados, the tax on the supply of those goods and services is payable at the time of purchase. An electronic invoice shall be issued to the purchaser by the foreign vendor at the time of payment. the invoice shall indicate the amount of tax paid.
- Tax is also payable on goods or services of a value of BBD 20 or less sold to persons under this provision. An electronic invoice is also to be issued indicating the amount paid.
- Where the invoice issued is produced as evidence of payment, no tax will be payable on the delivery of goods and services where tax was paid online for those goods or services.
Deloitte reached out to the BRA for clarity on some of the points mentioned in the communique. They advised that an overseas merchant is the same as a foreign vendor. Further, an overseas merchant will be permitted to register in TAMIS even if the overseas merchant has no legal presence in Barbados. The BRA clarified that registration with them is solely for the purpose of remitting the VAT collected as stipulated by the Act and the overseas merchants would be given the appropriate instructions to facilitate the registration. BRA also mentioned that International Air Transport Association will handle those overseas merchants in the airline industries as it relates to international transport. However if an airline company also offers other vatable services such as accommodation, tours etc online they will need to register.
Deloitte will monitor the implementation of this new VAT collection method and provide updates in due course.
If you require any assistance in further clarifying the VAT updates, please feel free to contact our team.
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