Banks and the Government of Barbados have found themselves at an impasse.
The issue surrounds a recent amendment to the Barbados Revenue Authority (BRA) Act. The amendment deals with the requirements for the legal transfer of property. It requires that all entities, natural or juridical, obtain a “Tax Clearance Certificate” from the BRA as evidence that all taxes payable (Excise Tax, Income Tax, Land Tax and Value Added Tax) to the state have been fully paid, or that an agreement has been reached with the BRA for the payment of taxes owing.
The Barbados Bankers Association argues that other than Land Tax, taxes due under the other Acts were not charges against land “and ought not to be treated as such” and listed a number of negative consequences the amendment would have on the efficient conveyance of property.
Commercial banks have since reported that obtaining the tax clearance certificate has caused significant delays in the disbursement of mortgages, impacting approximately 330 transactions valued in excess of $220mn.
The Minister of Finance, Chris Sinckler is the view that the fault lies with the financial institutions and not the tax system, claiming that the delays were ‘unwarranted and unfortunate’.