Sinckler tells promoters he will no longer tolerate their abuse of the VAT
Minister of Finance Chris Sinckler says the Value Added Tax (VAT) system has been subjected to “major abuses” by both unscrupulous promoters and some corporate sponsors over the years and he has issued a stern warning that Government will no longer be affording them any free pass.
Responding to concerns raised this week by some promoters over the Barbados Revenue Authority’s (BRA) enforcement of the 17.5 per cent VAT on complimentary tickets, Sinckler pointed out that the policy was by no means new.
However, he said promoters, who were initially granted an ease by the VAT office, which had not been strictly enforcing the rule as a sort of “developmental tool”, had turned around and abused the system to the point where tax avoidance had become “quite widespread” and Government was no longer willing to tolerate it.
In fact, Sinckler has sought to caution promoters that there was no such thing as a free ticket, especially when it comes to the payment of VAT.
“The Value Added Tax does not discriminate between what is a free ticket and what is a complimentary ticket,” he warned, while reminding promoters that “each ticket attracts VAT”.
He said while BRA was not intent on disrupting the promotion and development of the cultural industries, some level of discipline had to be brought to the system, while noting that in some instances promoters had declared as much as half of their tickets as complimentaries, as a means of escaping payment of their fair share of taxes.
“Now we know that cannot be the case because you are not putting on a show to make a loss, unless it is a free concert or something like that,” the Minister of Finance pointed out.
“You are not going to invest that type of money and then come and tell me that you printed 3,000 tickets and 1,500 or 1,700 are complimentaries that you are giving away,” he stressed.
In further detailing the problems of abuse, Sinckler said some promoters were also in the habit of declaring tickets as complimentaries and then turning around and selling them.
The Minister of Finance further explained that some corporate sponsors had also been taking advantage of the system by claiming for amounts they received in the form of complimentary tickets on their income tax returns, even though they were aware that the tickets had not been subjected to VAT.
“It may be a situation where a fellow says, ‘I’m going to give you 100,000 dollars [and] I want 50 or 100 tickets complimentary to give to staff and associates or what the case may be.
“Now some of those companies, through their corporate tax returns, claim, as part of their marketing budget, some of those sponsorships,” Sinckler explained to Barbados TODAY.
“So they get to claim back, they get the free ticket, they get the advertising, the promoter gets the money and the Government gets nothing,” he added.
However, now that BRA has been established “with a remit to ensure that it plugs all of these holes and does more collection of Government revenue”, Sinckler said “they have been focusing on these things”.
He noted that since July notifications had been sent out by the revenue authority to the promoters reminding them of the need to meet their VAT obligations and he warned that the policy would not be rolled back.
The Minister of Finance also responded to concerns raised by some promoters that the National Cultural Foundation had been exempted from paying the 17.5 per cent VAT on complimentaries.
However, he said he was not aware that was the case.
He suggested that it may instead be a situation of “an in and out” where central government was giving as subsidy or a transfer in exchange for complimentary tickets from the NCF.