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Banking impasse hits Barbados commerce

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Lawyers are threatening to take the Barbados government to court if an amendment to the Revenue Act is not repealed, in the latest turn of events after a protest by commercial banks that halted real estate business.

This amendment to the act that became effective in March demands that persons wishing to conduct business transactions involving their property must have a clearance certificate showing that all due taxes were fully paid up, or that an arrangement to pay has been worked out with the Barbados Revenue Authority.

Government officials said the change is a measure to close loop holes in tax collection and bring in much needed revenue that is anyhow due to the Treasury.

But after commercial banks last week halted some 330 real estate transactions valued at an estimated Bar$221 million (Bar$1 = 50 cents US), the Bar Association a few days later issued an ultimatum giving government by June 09 to revoke the amendment or face the court.

The banks claimed that the amended law was unclear on how they can conduct future real estate-related business and argued that demanding a tax clearance certificate from each client takes too long, and the lawyers supported this view.

“Several members of the bar, who in fact are integral to every land transaction completed in Barbados have reported significant challenges with obtaining the clearance certificates and consequently are unable to conclude property transactions on behalf of their clients,” the Nation newspaper this week quoted Bar Association President, Liesel Weekes.

When banks had halted their attempts to process real estate transactions the Bankers Association issued a statement asserting, “the association further advises that until such clarification is obtained, commercial banks will not be in a position to close real estate related transactions and disburse monies associated with same.”

This stoppage in real estate business transactions comes while the Barbados economy continues to wilt under a recession characterized by generally slow commerce, low foreign exchange earnings and government struggling with a high deficit.

The Opposition Barbados Labour Party did not miss a beat on this matter, dispatching a press release after the Bankers Association statement reminding government that the BLP had vigorously opposed the amendment in Parliament.

Opposition Leader, Mia Mottley, stated, “when this amendment was introduced by the government two months ago, the BLP took the position that this action would be the death knell of business in Barbados.”

She contended, “the amendment to the Barbados Revenue Authority Act would cause total and complete chaos in the lives of citizens and businesses, conducting ordinarily routine transactions. The Barbados Revenue Authority simply does not have the institutional capacity to undertake the role of issuing this volume of Tax Clearance Certificates in acceptable timelines required for commercial transactions in Barbados.”

But Finance Minister Chris Sinckler, who had brought the amendment to Parliament described the action by banks as ‘unfortunate and unwarranted.’

In a statement of his own, Sinckler charged that bankers never wanted the process in the act to be applied, adding, “it is rather unfortunate that some banks and some lawyers in Barbados are hell bent on frustrating government’s legitimate attempts to collect the tax revenue that is due to the state by their clients.”

Hoping for a resolution, bankers have scheduled a meeting with the Barbados Revenue Authority for month end, but if there is not agreement an already tilting economy stands a chance of going much lower.

Updated 3:05 am, July 10, 2018
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