The Institute of Chartered Accountants of Barbados (ICAB) has issued a formal warning that ongoing delays to a planned increase in the country’s value-added tax (VAT) registration threshold have created crippling uncertainty for local businesses, complicating long-term financial and operational planning that many firms have already locked in ahead of the scheduled policy rollout.
The policy adjustment, which would raise the mandatory VAT registration threshold from an annual turnover of BBD $200,000 to BBD $350,000, was first announced by Minister of Finance Ryan Straughn during his March 16 budget address to the House of Assembly, with an original implementation date set for October 1 this year. To date, however, the core legislation required to put the change into effect remains unfinished, Straughn confirmed to local media outlet Barbados TODAY.
In a written statement responding to queries from Barbados TODAY, ICAB Chief Executive Officer Lisa Padmore explained that the delay comes at a particularly vulnerable moment for Barbadian enterprises, many of which are already grappling with skyrocketing operational costs. “The delay creates uncertainty at a time when many businesses are already facing significant operating pressures,” Padmore said. Without confirmation of when the threshold will rise, she added, business leaders are “left unable to determine whether anticipated benefits should be incorporated into pricing, investment decisions, staffing plans or cash-flow forecasts.”
Padmore emphasized that while most businesses are capable of adapting to clear, planned policy changes, unresolvable uncertainty presents a far greater challenge. “Businesses can generally adapt to change. What is more challenging is adapting to uncertainty,” she noted.
While ICAB cannot provide an exact count of how many businesses falling in the turnover gap between $200,000 and $350,000 have already taken steps to prepare for the policy shift, the institute confirmed that it would have been entirely reasonable for these firms to conduct full impact assessments following the March announcement. The core issue, Padmore said, is that these businesses currently lack the clarity needed to make high-stakes strategic decisions with confidence.
The uncertainty hits especially hard for businesses weighing whether to pursue voluntary VAT deregistration once the new threshold takes effect. Deregistration would bring small firms relief from VAT reporting requirements, but it would also eliminate their ability to reclaim input VAT on eligible business expenses, meaning owners must carefully weigh costs against benefits to make the right choice. To do that, Padmore argued, businesses need clear official guidance on multiple key details that are currently unavailable.
“Businesses should assess the commercial implications carefully and not focus solely on the opportunity to deregister. However, there is an equally important policy consideration. For businesses to properly evaluate whether deregistration is beneficial, they need clear guidance on timing, transitional arrangements, administrative processes and the treatment of input VAT. Without that information, it is difficult to make informed decisions,” Padmore explained.
ICAB has formally called on the Barbados government to provide urgent clarity on three core areas: the current status of the draft legislation, a confirmed final implementation date for the threshold increase, and clear rules governing the transitional process for affected businesses. While Straughn has previously indicated that the legislation would be completed by the end of the current financial year, ICAB notes that this timeline is ambiguous – it remains unclear whether the minister is referencing the end of the 2024 fiscal year or March 31, 2027. The accounting institute is also seeking answers on when the legislation will be tabled for parliamentary debate, when the Barbados Revenue Authority (BRA)’s Tax Administration Management Information (TAMIS) system will be updated to reflect the new threshold, whether BRA will require a full audit of a business before approving deregistration, and whether businesses with outstanding VAT liabilities will be eligible to deregister.
The organization warned that prolonged gaps between policy announcements and implementation carry tangible costs for the private sector: affected businesses may already have spent time and resources preparing for a change that is not yet law, while holding off on other critical strategic decisions that could support growth. In the interim, ICAB has advised all businesses to continue adhering to existing VAT regulations until the new threshold is formally enacted into law.
For the immediate future, Straughn confirmed that existing rules remain in full force: any business with an annual turnover above the current $200,000 threshold is still required to register for VAT, regardless of the planned future change. “So long as your income is above a certain threshold, it is mandatory,” he said.