Independent Senator Andrew Mallalieu is suggesting Government relook personal income tax and instead tax individuals on what they spend.
“I do hope at some point in time we would look at our overall tax regime in Barbados. It does seem disproportional that a company can pay a nine per cent tax, but the individuals who work in there may be paying 32.8 per cent or 32.9 per cent or 32.5 per cent, and those who own businesses are therefore able to structure around that,” he said.
Mallalieu was one of the few senators speaking on the Companies (Economic Substance) (Repeal) Bill, 2025, which was debated in the Senate, a day after it was passed in the House of Assembly.
He said those who were purely employees paid the higher tax rate.
“So, I actually believe, as I have suggested here before, that we may want to completely abandon the idea of taxing people on what they earn, and purely look at taxing people upon what they spend.
“That is the way other jurisdictions have approached it and I think it is one that makes sense. If you want to spend a lot of money, you pay a lot of tax. If you want to save your money, you can save your money as well without tax,” he said.
The legislation, the senator said, was completely in alignment with what Government said it was going to do, and it was welcomed that the vast majority of local companies will pay a nine per cent tax rate and no longer be subjected to the economic substance test, which “really just created a bunch of paperwork and achieved nothing”. Mallalieu said the tax system that was fundamentally for the business environment was a frustrating one. “We have to spend lots of time coming here and talking about how do we facilitate so as to avoid the frustration. Then we talk about an uncompetitive environment where we have to provide concessions.
“I do hope, in supporting this legislation, that at some point in time we can look at the overall income tax legislation and look to align it better with what our national interests are to grow
this economy, being firm craftsmen of our fate and not relying on other countries for them to tell us what we can and cannot do,” he said.
For certain companies and those in insurance, Mallalieu said the Barbados Revenue Authority should work quickly to publish the guidelines on how the economic substance rules for them would be interpreted.
“That needs to be done post-haste, because we cannot afford to lose any more of those companies. During the last few months or maybe years, while there was grave uncertainty around this, and many people have spoken about the changes coming from other places that we can’t be responsible for, we’ve lost a significant number of those companies already, and we do not wish to lose any more,” he stated.
The legislation before the Senate, reasoned Mallalieu, addressed the past and not the future, but it should be looking at how to craft a future international business relationship.
In relation to the know your customer (KYC) and anti-money laundering (AML) regulations placed upon real estate agents, he said they were “completely unreasonable”.
“Real estate agents do not handle client funds, it never passes through them, but the level of KYC and AML that they have to do, all it does is slow down business.
“It achieves nothing. It is a complete duplication without any added safeguards. Everything that a small real estate agent in Barbados might do for KYC or AML is already being done with much more competent people in the legal profession, who are the ones who are actually touching the money, who are collecting the money and disbursing the money,” Mallalieu said. ( AC)
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