‘Tax clearance certificate can work’

It may be facing stiff opposition locally to its insistence that taxpayers obtain tax clearance certificates to do a range of financial transactions, but the Government is getting support for the move from a senior tax consultant with one of the world’s leading accounting firms.

Partner in the local offices of the United States-headquartered audit, tax and advisory company of KPMG, Wayne Lovell, is telling Barbadians that the measure is not as bad as it is being made out to be.

The Barbados Bar Association and the opposition Barbados Labour Party (BLP) have already condemned the new policy which took effect in March under the amended Barbados Revenue Authority Act, which requires individuals and corporations to be fully paid up on all their statutory obligations in order to get a tax clearance certificate which was required for a range of transactions. Commercial banks have suspended more than 300 real estate-related transactions, with the Barbados Bankers’ Association warning that until there was clarification on the processes involved in the issuance of the certificates by the Barbados Revenue Authority (BRA), those financial institutions would not be in a position to close any real estate deals or disburse monies associated with them.

But Lovell has suggested that it is much ado about nothing.

“Generally speaking, it is another measure that the Government has embarked on. I don’t think it is as horrible as it would appear,” Lovell, who is also chairman of the tax committee of the Institute of Chartered Accountants of Barbados (ICAB) told Barbados TODAY Thursday afternoon.

“I understand that the legislation took effect from March 16, so transactions that had commenced before March 16 would not be exposed to this . . . . Maybe we should give it a little time to see if it is really as cumbersome as some people are making it to be.”

Lovell acknowledged that there needs to be more dialogue when these types of measures were being implemented.

At the same time, he said, lack of prior discussion did not detract from its usefulness.

“The Government is looking at ways and means to increase tax revenue, and the whole question of seeking tax clearance certificates is one way of doing it. We could all argue that they should be more dialogue on these matters, which may be true, and there is some merit in this.

“But we also must accept that, generally speaking, we have an aversion to anything new. If it is something in the realm of taxation, you will get this resistance,” Lovell added.

The tax expert said, though, that he believed the BRA would be flexible in applying the law when it came to demanding full payment from people suffering financial hardships.

“You may have a poor person who is owing land tax . . . and is now purchasing property and is still a poor person . . . . . You may have situations where your property is being conveyed through, let’s say, divorce proceedings, or you may have it through by someone who has passed away. Now, you really are talking about situations that are genuine and obviously deserve some consideration.

“If a property is being conveyed through death or something, and it has outstanding liabilities on it, really and truly . . . those tax obligations should come out of the estate and not from the person who is getting the property,” contended Lovell said, adding that BRA should treat these situations on a case-by-case basis.

Yesterday, economist Jeremy Stephen warned that if the commercial banks’ concern regarding the tax clearance certificates was not addressed quickly, the situation could have “quite serious” and far-reaching effects.

The BLP, which had previously described the amended Barbados Revenue Authority Act as “kicking Barbadians while they are down”, appealed to the Freundel Stuart administration to “reverse the madness” and repeal the amendments. Opposition Leader Mia Mottley suggested that be done as early as next Tuesday when Parliament meets for the presentation of the Budget by Finance Minister Chris Sinckler.

Meanwhile, Sinckler has described the banks’ suspension of real estate transactions as unfortunate and unwarranted. In a statement issued yesterday, he insisted that some stakeholders in the legal and banking fraternity had not given the system time to work, “purely on the grounds that they did not want it in the first place”.

He said that, in his view, they were finding every practical reason to object to it.

emmanueljoseph@barbadostoday.bb

20 Responses to ‘Tax clearance certificate can work’

  1. Tony Webster May 26, 2017 at 5:25 am

    ????????”Can work”; “will work”….a world of difference (sorry…indifference) Could the goodly gentleman be speaking about the drivers-license-printers at Transport Authority? Why not first have a coffee, with Mr. Leigh Trotman, who could perhaps assist in establishing a “ground zero of reality”, before launching oneself’s mouth – and credibility-into shark-infested waters?

    One more time: tek out dusty old book, read up ole-time story of how to break a donkey’s back….wid one blade of straw.

    Reply
    • Jennifer May 26, 2017 at 5:45 am

      hahahahahahahahahahaaaaaaaaaaaaaa

      Reply
    • Carson C Cadogan May 26, 2017 at 11:53 am

      One of these days you write something that makes sense.

      Reply
    • Haskell Murray May 26, 2017 at 5:03 pm

      Tony Webster you are talking nonsense and trivializing a serious matter

      Reply
  2. Ricci Khan May 26, 2017 at 6:33 am

    WHEN I LIVED IN SEVERAL CARIBBEAN ISLANDS SOME YEARS AGO, EVERY TIME THAT I NEEDED TO TRAVEL I HAD TO OBTAIN AND PRESENT A TAX CLEARANCE CERTIFICATE BEFORE I COULD PURCHASE AN AIRLINE TICKET. WE ARE STILL A LONG WAY OFF FROM OTHER COUNTRIES.

    Reply
  3. Rechelle May 26, 2017 at 7:19 am

    Great comments Tony.

    Reply
  4. The Negrocrat May 26, 2017 at 7:25 am

    Ricci Khan, they also jail corrupt politicians in several Caribbean Islands. Let is do also do that here.

    Reply
  5. John May 26, 2017 at 7:48 am

    . . You may have situations where your property is being conveyed through, let’s say, divorce proceedings, ….Now, you really are talking about situations that are genuine and obviously deserve some consideration”

    In effect what he is saying is that the execution of a court order would be subject to consideration by the BRA.

    This is absurd.

    Reply
  6. John May 26, 2017 at 7:52 am

    “I understand that the legislation took effect from March 16, so transactions that had commenced before March 16 would not be exposed to this . . . .”

    In any event where the bank is attempting to sell a property as a result of enforcement, as the law stands now a certificate would be required from the person whose property is being sold. This in effect means that the bank’s security could be frustrated by a person who has not paid their taxes.

    A person in financial distress is likely to have stopped paying their taxes before they stopped paying their mortgage.

    Reply
  7. John May 26, 2017 at 7:54 am

    “Lovell said, adding that BRA should treat these situations on a case-by-case basis.”

    This will by definition lack transparency, and has the potential for abuse.

    Reply
  8. Greengiant May 26, 2017 at 8:01 am

    When companies are tendering for Government contracts, any awarding depends on an N I S and Tax clearance certificate. This has been the case for decades now.

    Why should the working class man continue to fill the hole in our Tax bottle when some legal, medical, Real estate, finance, technical, and other skilled professionals large and small are continuously operating outside the tax net?

    I’m not surprised the opposition is supporting the bankers, and legal fraternity with the call reverse the legislation. After all, as a government the opposition has sold the most land in this country. This current group has actually sold more than all other governments together.

    We must give credit when due, regardless of which party we support, this is a revenue efficiency piece of legislation for this country, what we should be concerned about is seeing a reduction in personal taxes on the workers, and consumers after our dept to GDP ratio is stabilized. We need all the revenue legally due to the state to achieve this. So the legal fraternity, Real Estate, Bankers, opposition and all concerned had since February – March to seek clarity from the Revenue Authority and refused. This irresponsible behavior must not be allowed. After all when the banks introduce new revenue collection schemes on us the customers, they go ahead and collect while they clarify the change. They don’t delay the implementation until the customer get clarification, so why should the government.

    Why does it appear the some sectors, professionals, and other operatives are continuously holding the government’s hand over the fire when it comes to any move to increase revenue collection whether by taxes, or direct foreign investment?

    These are negative signs for us as a small developing country with a high dept burden. It seems that some sectors have an already signed contracts for gifts, and fist loaded handshakes should the opposition assume office. We should not be returning to the system where the table of the rich is so overflowing that the crumbs are too excessive for the poor man to collect adequately, as this like in the pass will only cause spoilage, or export to the region of crumbs that we’ll never see again.

    Reply
  9. Peter May 26, 2017 at 8:18 am

    Money laundering among other acts of financial deceit and fraud are very important to a country’s economic well being. This together with tax evasion (avoidance) are detrimental too. In many wealthy, developed and developing countries, In Global clearing for example, where billions of dollars are paid, tax clearance certifications are required for many reasons some to detect corruption which is huge and IS a CRIME. Exchange transactions are made by wealthy so called investors whereby monies are paid into ghost accounts which can be ghost investments. It can be very intricate and Accountants are mainly the designers and consultants behind these moves. Many countries have tax declaration systems in place. One question on the form asks whether the applicant has reserve funds in other accounts in financial institutions anywhere worldwide, and holding companies. All directors, signatures to those accounts must be declared too. If we are talking about transparency, then the BLP is speaking with two mouths. Clarity MUST be THE MAJOR FACTOR.

    Reply
    • Leroy May 26, 2017 at 9:09 am

      Clarity MUST be THE MAJOR FACTOR.

      Yes, however, the DLP should not allow the political environment to dictate their good governance. This legislation is a direct result of the dlp looking around for a loan to rescue the economy(in time for elections) and I suspect this legislation is necessary for such Loan(see CDB or IMF lastest press releases on loans and bds economy), however, it was rolled out fast and miserably bc the DLP are running out of time.

      As you know in politics, politicians will milk a situation whether they agree or disagree, even if they agree they will still find the smallest detail to object to win political points, so all politicians speak with 2, 3 or even 4 mouths, so nothing new in BLP doing here.

      This legislation is surely needed but we can see in this one issue both sides are destroying bds with political agenda.
      This legislation needs to be carefully examined and presented, and believe you me, this will be challenged in law court as lawyers wont sit idle and have their earning held up in this fiasco with the banks.

      Reply
  10. Leroy May 26, 2017 at 8:31 am

    Does this tax certificate have anything to do with CDB Loan,

    Dr Warren Smith, head of the Barbados-headquartered regional institution, said yesterday the CDB was “quite prepared to provide a policy-based loan to the Barbados Government. “In fact, we have been in discussions for some time, but we don’t think the conditions are right just yet to be able to finalise that policy-based loan, but it is part of the arsenal of responses that we will bring to bear if the Government of Barbados [is ready]”.

    Reply
  11. Bajan First May 26, 2017 at 8:44 am

    Rechecked if we identify all of them and jail them we might find this we don’t have a parliament. We might have to create new parties comprising persons who are presently unknown to the public!

    Reply
  12. Milli Watt May 26, 2017 at 9:45 am

    aversion to something new stupse you mean aversion to paying TAXES but want to access every possible social services and complain when they run down. This is a class a people who think they are untouchable. PAY YOUR TAXES!!!!!!!!!

    Reply
  13. Ernesta Catlyn May 26, 2017 at 10:42 am

    The tax expert said, though, that he believed the BRA would be flexible in applying the law when it came to demanding full payment from people suffering financial hardships.

    Really? How did you arrive at this “believe”, Mr Lovell?

    Reply
  14. Carson C Cadogan May 26, 2017 at 11:58 am

    As a result of the Barbados Labour Party trying to protect the RICH from paying their fair share of taxes, I WILL NOT BE VOTING FOR THE BARBADOS LABOUR PARTY at the next general elections.

    And I encourage others not to vote for the BARBADOS LABOUR PARTY either.

    Reply
  15. Haskell Murray May 26, 2017 at 5:10 pm

    Wayne Lovell is right with one exception and I quote

    “You may have a poor person who is owing land tax . . . and is now purchasing property and is still a poor person .

    There is no poor person who can purchase land and is still poor, maybe he knows something that I don’t know about poverty and I would like him to explain what he means.

    Reply
  16. sam clarke May 28, 2017 at 10:01 am

    IT IS TIME THAT THEY SHOW THAT THEY HAVE PAID THEIR TAXES. IMAGINE PEOPLE SELLING AND BUYING PROPERTY, AND NO ONE HAS PAID THE GOVERNMENT THE TAXES DUE? YET THEY ARE KILLING THE WORKERS WANTING TO INCREASE INCOME TAXES? THERE IS NO WAY IN THE WORLD THAT YOU CAN DO A CLOSING ON PROPERTY, AND CUTTING A CHECK AT THE CLOSING FOR ANY TAXES OWED.
    THE WEALTH HAVE BEEN DOING THIS FOR TOO LONG, AND LEAVING WITH THE MONEY, ONLY FOR HARD WORKING TAX PAYERS SADDLE WITH THEIR DEBT.
    MAKE THEM PAY.

    Reply

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