Controversial Foreign Exchange Levy in Barbados Delayed

Acting Governor of the Central Bank Cleviston Haynes delivered the news via a press release yesterday.

 

BRIDGETOWN, Barbados, Thursday June 29, 2017 – Barbadians have got a temporary reprieve from Government’s implementation of the controversial two per cent levy on foreign exchange transactions.

The tax, which was announced among a series of measures outlined in the May budget presented by Finance Minister Chris Sinckler, was scheduled to take effect on July 1.

However, in a statement issued yesterday, 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 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. For example, 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 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. 

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