Below is the Barbados section of EY's Caribbean Tax Update Newsletter for the period ending April 2024. This is part of a series of publications produced by EY, aimed at providing their clients and relations with regular updates on tax matters in various Territories throughout the Caribbean where EY operates.

Read EY's Caribbean Tax Update Newsletter in full:

Barbados Corporate Tax Reform

  1. Barbados Revenue Authority Issues Policy Note on Tax Payable by Associations of Underwriters

The Barbados Revenue Authority (BRA) issued a policy note expanding on the insurance premium tax payable by associations of underwriters.

The policy note explains that according to the Insurance Act L.R.O. 2007 Cap. 310, an association of underwriters is "an association of individual underwriters organized according to the system known as "Lloyd's", whereby every underwriting member of a syndicate becomes liable for a separate part of the sum secured by each policy subscribed to by that syndicate, limited or proportionate to the whole sum thereby secured.

Secondly, in accordance with section 20 of the Income Tax Act L.R.O. 2002 Cap. 73, the business of underwriting policies of insurance carried on by an association of underwriters is to be regarded as a separate business carried on by a separate person. The assessable income of such a separate person is 30% of the total gross premiums (other than re-insurance premiums) derived from Barbados and payable in the income year on policies of insurance underwritten by that person. The BRA further noted that the applicable tax rate is 30% of the taxable income of that person for the particular income year.

Lastly, the policy note stated that a broker or agent in Barbados who places insurance business with an association of underwriters is required to deduct, withhold and remit the tax otherwise payable by the association of underwriters, to the Revenue Authority. The person settling this withholding tax obligation must file a withholding tax return.

  1. Tax Authority Publishes Guidance Notes on Recently Announced Tax Exemptions

The Tax Authority has issued guidance on new VAT exemptions for certain utilities and equipment for homes.

Guidance Note OOGC No. 03/2024 details a VAT reduction on domestic electricity from 17.5% to 7.5% for the first 250 kilowatt-hours, starting 1 April 2024, until 30 September 2024. This applies only to certain consumer tariffs with the Barbados Light & Power Company Limited.

Guidance Note OOGC No. 04/2024 extends the duty and VAT waiver on home generator and transfer switch purchases and installations for two more years, until 31 March 2026.

Lastly, Guidance Note OOGC No. 05/2024 announces a VAT exemption on water tanks, septic tanks, and electrical pumps for residential properties, also effective 1 April 2024, to 31 March 2026. The Tax Authority suggests separating VAT-taxable services from exempt ones in contracts involving new home construction.

These notes follow the tax exemptions presented by the Prime Minister in the official 2024-2025 budget speech.

  1. House of Assembly Tables Legislation to Implement Corporate Top-Up Tax for Qualifying Entities

The House of Assembly has introduced the Corporation Top-Up Tax Bill 2024 and Income Tax (Amendment) Bill 2024 to propose a supplementary 15% tax for specific large multinational groups earning over EUR 750 million in at least two of the past four fiscal years as well as to make provision for the reform of corporation tax in Barbados and other related matters respectively.

The Corporation Top-Up Tax Bill 2024 outlines how to apply the top-up tax, calculate relevant income or losses, and determine the effective tax rate.

The bills are currently still under consideration by our House of Assembly and any progress will be delayed until at least our Parliament reconvenes on 23 April 2024.

EY Caribbean Tax Offerings

Our regionally coordinated EY Caribbean Tax Advisory professionals offer connected services across all tax disciplines to help you thrive in an era of rapid change.

The combination of our exceptional knowledge and experience with the right people and tailored technology platforms make us the organization of choice for all tax-related needs.

Our teams bring together regional competencies (and international subject matter resources where needed) in business tax, international tax, transaction tax, indirect tax, tax accounting, people advisory services, compliance & reporting and law.

It should be noted that this information is of a general nature only and should not be regarded as an advice in respect of any specific situation. Should you have any questions and/or comments regarding the above and/or require more information, please do not hesitate to contact one of our EY professionals.

Ernst & Young Services Barbados