Retailers told to stop charging two per cent tax
Government’s newly-introduced two per cent National Social Responsibility Levy (NSRL) is proving to be a headache for more than just this island’s manufacturers.
Less than a month after manufacturers demanded an immediate review of the levy on the grounds that they were still too many ambiguities surrounding the tax, it now appears as though some local retailers are just as clueless about the tax and how it should be applied.
This prompted the Barbados Revenue Authority (BRA) to issue a strong word of warning today that the tax was not to be applied by retailers at points of sale.
In fact, BRA Commissioner Margaret Sivers sought to make it clear that “the National Social Responsibility Levy was not a sales tax” and therefore it was “illegal” for businesses to treat it as such.
However, while roundly condemning the practise, Sivers did not identify any of the offenders by name or give any indication as to how widespread the problem was.
She only confirmed that “the Authority has been receiving reports that some retailers have been adding a tax to customer purchases at the cash register and attributing the receipted charge as NSRL.
“This practise is inaccurate and quite frankly illegal,” the Revenue Commissioner said.
“Businesses should not show the levy on sales invoices or receipts and the levy therefore should not be paid by the consumer. It is to be treated no differently from import duty. The only line item which is shown on sales invoices and receipts is the Value Added Tax (VAT) information,” she stressed.
However, recognizing that the levy was still very new, she said Government was really seeking to “clarify” the matter at this point “so that retailers do not fraudulently tax their consumers”.
During his August 2016 Financial Statement and Budgetary Proposals, Minister of Finance Chris Sinckler had explained that the new tax was to be applied on the customs value of all imports, with the exception of goods for the manufacturing, agriculture and tourism sectors, in order to avoid double taxation.
However, the two per cent levy was met almost immediately with opposition, as some manufacturers openly complained that while they were exempted from paying the tax on imported raw materials, locally produced products would still attract the levy.
This, they argued, amounted to a disincentive for using local products in their production.
That point was forcefully made during a heated meeting at the headquarters of the Barbados Investment and Development Corporation on Harbour Road last month at which BRA officials were bombarded with questions.
During that meeting, the CEO of Robert’s Manufacturing, Jason Sombrana, had beseeched Government not adopt a heavy handed approach to entities not yet in full compliance with the tax, which took effect on September 1, while arguing that the ambiguities of the levy had left many on an unsure footing.
The CEO of River Bay Trading, Ian Pickup, had also made his concerns known about the levy. In fact, he had suggested that instead of introducing the contentious measure, Government should have considered raising the VAT, which is currently applied on goods and services at a rate of 17.5 per cent, to 19.5 per cent.
However, since that meeting there have been no further concerns expressed publicly by the manufacturers, even though the tax, which is expected to rake in about $142.1 million annually for Government, and go towards assisting in the “offsetting” of the cost associated with financing public health care, is still widely unwelcomed.
When contacted today, the President of the Barbados Chamber of Commerce and Industry (BCCI) Eddy Abed told Barbados TODAY that he had not received any reports of retailers adding the two per cent at points of sale.
However, he expressed surprise that retailers were still unclear about the levy, pointing out that several meetings were held and numerous pieces of correspondence sent out “explaining, clarifying, showing examples and going through step-by-step as to how the NSRL is to be applied and how it is to be calculated”.
“I would be extremely surprised that at this stage people are still ambiguous as to how it is being done,” said Abed.
However, he said: “I don’t think anybody is trying to profiteer from it, I think it is a straight case of just being unaware or unsure and figuring that, ‘if I am going to falter, let me falter on the side of being over-conservative’.
“I can’t see anybody trying to profiteer from it. The law is extremely explicit. The vast majority are importers in this country and it is paid at points of entry. The few manufacturers that exist are charging it when they sell it to their customers and VAT is not to be calculated on it. It is only on the cost of the item. This has gone out several times,” Abed stressed.