Gov’t delays implementation of foreign exchange levy

There has been a slight delay to Government’s implementation of the controversial two per cent levy on foreign exchange transactions.

Last month, Minister of Finance Chris Sinckler announced that the tax would take effect here from July 1 as part of a package of austerity measures.

However, in a statement Wednesday, the Central Bank said the measure would now be implemented in two phases beginning with its application to cash, bank drafts and wire transfers on Monday, July 17, 2017.

“Credit, debit and travel cards will become subject to the fee from September 1,” it added.

Acting Governor Cleviston Haynes, whose organization will oversee the rollout of the fee, said the additional two weeks “will give us the opportunity to educate Barbadians about the foreign exchange fee (FXF), so that they are clear on what types of transactions it relates to and how it will be applied.

“This will help to ensure that there is a smooth and orderly introduction of the FXF,” he added in the wake of concerns expressed by various sectors about how the levy would be applied.

Haynes revealed that the extended lead time for credit, debit and travel cards was to allow commercial banks and other credit card providers a longer window to adjust their computer systems.

“We have been in consultation with the Barbados Bankers Association and, based on their feedback, we will provide them with additional time to complete the work that needs to be done, so that cardholders will be able to clearly identify what portion of their payment for foreign purchases is due to the FXF,” the Acting Governor said.

He further explained that the levy would be applied to the Barbados value of the foreign currency transaction. Therefore, persons buying US$500 in cash at a rate of 2.02857 will pay $1,034.57 instead of $1,014.30, he said, adding that “all persons conducting purchases of foreign currency will be required to pay the FXF, except residents and non-residents making payments from their foreign currency accounts, including entities in the International Business and Financial Services (IBFS) sector.

“The FXF is also not applicable to foreign currency sales related to the settlement of transactions for the bulk purchase of petroleum, diesel or jet fuel, where documentary evidence has been provided to the authorized dealer,” Haynes said. 

2 Responses to Gov’t delays implementation of foreign exchange levy

  1. Epaphras D. Williams
    Epaphras D. Williams June 28, 2017 at 10:32 pm

    Untold suffering is about to be unleashed on a people who were promised an ease in the cost of living by the DLP administration. Much of what has been counted as upward mobility is funded by debt. People wont be able to adequately service their debts and meet the increased tax demands simultaneously. Massive job losses are imminent. Government needs to find ways to put money back in the system, especially at the lower end. When the poor has elbow room an economy flourishes.

    Reply
  2. nanci June 29, 2017 at 11:06 am

    it still not clear if you have a foreign debit card and you pay for something with it, if the tax will be added on.

    Reply

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