Barbados VAT on foreign-supplied digital services

Since December 1, 2019, foreign suppliers of digital services to customers based in Barbados must apply, collect, and remit VAT on their digital sales.

Mar 16, 2020

Barbados follows the example of numerous tax jurisdictions worldwide by requiring foreign suppliers of digital services to register for VAT and apply the tax to their digital sales to customers based there.

Recent legislative reform in Barbados means that VAT at a rate of 17.5% must be applied to sales of digital services by foreign suppliers with customers on the Caribbean island.

A communiqué sent by the Barbados Revenue Authority (BRA) on November 22, 2019, outlined the parameters of the reform and set the implementation date as December 1, 2019, after the rules had previously been delayed from an original implementation date of October 1, 2018. 

From December 1, 2019, foreign suppliers of digital services need to register with the BRA’s Tax Administration Management Information System (TAMIS),  file VAT returns quarterly, and remit VAT to the BRA by the 21st day of January, April, July and October. There is no minimum sales threshold, the registration obligation exists from the first sale.

Invoices must also be issued to the purchaser of the digital services. 

Here is the definition of “foreign vendor” in the relevant Barbados VAT bill:

  • A “foreign vendor” means a person outside Barbados who sells goods or services online for delivery to a person in Barbados or for consumption or use by a person in Barbados and includes persons selling on platforms such as Amazon and eBay.

Such rules are also in place at the other end of the Caribbean: in the Bahamas. The archipelago introduced similar rules on cross-border supply of digital services in July 2015. This coincided with the introduction of the country’s VAT system. A VAT rate of 12% (changed from 7.5% back in July 2018) now applies to digital sales to customers in the Bahamas. In contrast to Barbados, the Bahamas have a registration threshold of BSD 100,000.

Taxamo content is created for guidance only, please consult your local tax advisor.

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