ICAB Disappointed with Lack of Clarity in Barbados Budget, Urges Government to Address Implementation Issues

It recalled that this year, ICAB and other service organisations asked the government to relook the treatment of pensions, as it was felt that the increase to $45 000 in 2024 was insufficient.

“ICAB welcomes an increase of $10 000 over the two-year period but is not convinced that it will be received well by all pensioners. Taxpayers who worked hard to maximise their pension benefits during their working life are still being taxed again on the income over $50 000,” the organisation pointed out.

The accounting entity also drew attention to the minister’s efforts to clarify the rate of taxation for small businesses, which he also addressed at ICAB’s Annual Tax Update in February.

It said Straughn reiterated that a small business is defined as a corporate entity that earns $2 million or less, has paid-up capital of $1 million or less, and has fewer than 25 employees.

“Small businesses would incur taxes of 5.5 per cent and would prepay taxes twice a year, as compared to those entities that incur taxes of 9.0 per cent and prepay taxes monthly. This statement made by the minister is in line with the Guidance Note 008/2025 published by the Barbados Revenue Authority earlier this year,” ICAB said.

However, the institute contended that the minister was silent on companies that are approved small businesses defined under the Small Business Development Act.

It pointed out that under the Small Business Development Act, a company does not have to meet all three criteria to be eligible. “Granted that an approved small business can still access the reduced rate of 5.5 per cent corporation tax and prepayments of twice a year, the two conflicting definitions between the Income Tax Act (which the minister represented will be updated for this newer definition) and the Small Business Development Act need to be addressed.”

ICAB noted the focus on creating a resilient Barbados, one that can recover from external economic or climate-related shocks. ICAB applauded these initiatives by the government with the repurposing of the Catastrophe Fund to create the Resilience and Regeneration Fund.

ICAB said it looks forward to the government sharing details on the structure, governance, and controls over the fund before it becomes operational.

“Finally, ICAB notes that several of the government’s proposals are to be enacted effective April 1, 2025; less than three weeks away. The removal of value-added tax on some items that have been added to the basket of goods, the change in the rate for contributions to the Resilience and Regeneration Fund, and the computation of the amount to be matched by employers are all changes that businesses will now have to contact their service providers, if that expertise is not in-house, to have made to their accounting systems.” (EJ)