Business
Barbados Prime Minister Hints at Possible Change in Local Corporate Tax Rate Following Global Minimum Tax Introduction
Prime Minister Mia Mottley has indicated that Barbados will have to adapt to the planned 15% global minimum corporate tax rate by making changes to the current low tax rate for local companies. Mottley expressed concern about the risk of losing businesses and emphasized the need for investment to drive growth.
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Originally published by barbadostoday.bb (opens in new tab)
Local corporate taxpayers have been put on notice by Prime Minister Mia Mottley that they can expect a change in their corporation tax rate, after what seems to be a failed case against the planned introduction of a 15 per cent global minimum corporate tax rate for multinational corporations.
Effective January 1, 2019, the corporation tax rate in Barbados was lowered from 25 per cent to a sliding scale of between one and 5.5 per cent.
This means that companies making less than $1 million in taxable income were paying the 5.5 per cent, companies making more than $1 million but less than $20 million were paying three per cent, companies making more than $20 million but less than $30 million were paying a tax rate of 2.5 per cent, and companies making more than $30 million were paying one per cent.
Since the announcement by the Organisation for Economic Cooperation and Development (OECD) for a planned 15 per cent global minimum corporate tax rate, Barbados has been putting forward a case to see what approach could be taken, as officials expressed concern about the risk of losing businesses.
But in a clear indication that Barbados – who signed on to the international tax regime two years ago along with more than 130 other countries – will have to adapt the global minimum tax rate, Mottley also strongly hinted that changes will have to be made to the current low tax rate for local companies.
“What we were able to do is to create a bounty for all of the corporate tax [payers], small and larger companies in this country, and you got it at the very time you needed it the most – during COVID. So, you had some buffer there because of reduced payment on corporate taxes,” Mottley told the 84th Barbados Labour Party annual conference on Saturday evening.
“We cannot guarantee that going forward because of the global circumstances, and it will mean that if we try to do things that were too risky and too flashy, we will get blacklisted again,” she said.
“I will simply say this, if I have a disappointment it’s that our domestic corporate tax payers have preferred to keep their money more in the banks, and may well have to do with COVID coming in and people believing that now is not the time to invest. But if we don’t invest, we cannot grow and keep growing, and therefore I will speak to the country in full on that,” she promised.
Mottley, who recently visited Canada to discuss several matters with officials there, said the global business sector was a topic of discussion, as she acknowledged that most of Barbados’ global businesses are from that market.
