There will be a VAT Holiday on goods in Barbados on Monday, December 20.
Minister in the Ministry of Finance, Ryan Straughn, made the announcement today during a virtual press conference, where he updated the public on matters of economic importance.
Explaining the VAT Holiday, Mr. Straughn said: “This will mean that on that day, consumers in Barbados will see a 17.5% reduction in prices for those goods that attract VAT, and hence will give them an opportunity to be able to stretch their budgets some more as we go into this Christmas season….
“The objective is to provide an ease for consumers who have faced 21 months of significant economic challenges, solely due to the COVID-19 pandemic.”
However, Minister Straughn, said some items would not be eligible for the VAT Holiday, as he outlined the conditions:
- Only goods are eligible for the VAT Holiday; it does not apply to services;
- Eligible goods must be available for sale with immediate issuance or delivery to the customer on the day;
- Orders for goods that are not in stock do not qualify for the VAT Holiday;
- Hire purchase sales are eligible for the VAT Holiday, to facilitate persons who may not have the ready-cash to make purchases at the time;
- Credit purchases or goods on consignment are not eligible for the VAT Holiday;
- Motor vehicles, guns, ammunition, cigarettes, and alcoholic beverages are not eligible for the VAT Holiday;
- The supply of accommodation is not eligible for the VAT Holiday.
Mr. Straughn said there were some administrative arrangements the accounts sections of businesses participating in this exercise should be aware of, and he listed them as:
a. Companies or businesses will file their VAT Returns as usual, but record zero-rated supplies for that day; i.e., the business will enter the items on the VAT Return form as zero-rated sales in line 105. This will allow the Barbados Revenue Authority to track the amount of sales and VAT forgone for that day, ensuring a risk-based approach for auditing purposes.
b. In filing the VAT, a company must provide sales data or receipts specifically for the VAT Holiday; companies will still have to issue a tax invoice to the customer with the VAT recorded at 0 per cent. The application of a 17.5 per cent discount is acceptable for the goods purchased, which achieves the same result as the zero-rating.
c. As the supply is zero-rated, the recovery of input tax is permitted as the business will be allowed to recover the VAT initially paid on the items.
Minister Straughn expressed the view that this VAT Holiday “represents a win-win” for consumers and businesses.
He continued: “Certainly, I wish that we could do more, but regrettably we still have unpaid bills to settle,” as he noted that Government was continuing to provide for citizens in other significant areas.
To read a guidance note published by the Barbados Revenue Authority on the VAT-free Day, click here.