Short title
1.
This Act may be cited as the Fiscal Incentives Act.
Interpretation
2.
For the purposes of this Act,
“approved enterprise” means an enterprise approved by the Minister under section 7 for the purpose of conferring a benefit under this Act;
“approved product” means a product of manufacture approved by the Minister under section 6 for manufacture by an approved enterprise, but does not include a product specified in the First Schedule or a product of an established industry;
“benefit” means any relief granted to an approved enterprise under this Act;
“Common Market” and “Member State” mean, until 1st May, 1974, all those States referred to in the Second Schedule, and thereafter such of those States as are parties to the Treaty establishing the Caribbean Common Market;
“Commissioner” means the Commissioner of Inland Revenue;
“Comptroller” means the Comptroller of Customs;
“date of construction” means the date declared in an order under section 7;
“date of production” means the date declared in an order under section 7;
“Enclave Enterprise” means an enterprise producing exclusively for export to countries outside the Common Market;
“enterprise” means any company registered in Barbados;
“established industry” means an industry which supplies more than 90 per cent of the domestic market for any product;
“factory” means any premises in which, or within the close or curtilage or precincts of which, or any place where, persons are or will be employed in any process for or incidental to any of the following purposes:
(a)
the production of an approved product;
(b)
the adapting for sale of any approved product,
being premises or any place in which, or within the close or curtilage or precincts of which, the work is or will be carried on by way of trade or for purposes of gain and to or over which the approved enterprise which employs or will employ the persons employed or to be employed therein has access or control;
“Group I Enterprise” means an enterprise in respect of which the local value added is at least 50 per cent of the amount realised from the sales of an approved product;
“Group II Enterprise” means an enterprise in respect of which the local value added is at least 25 per cent but less than 50 per cent of the amount realised from the sales of an approved product;
“Group III Enterprise” means an enterprise in respect of which the local value added is at least 10 per cent but less than 25 per cent of the amount realised from the sales of an approved product;
“industry” means a manufacturing or processing industry, and includes deep sea fishing and shrimping where they form part of an integrated processing operation, but does not include agriculture or tourism;
“local value added” means the amount (expressed as a percentage of the total sales of an approved product) by which the amount realised from the sales of an approved product over a continuous period of 12 months exceeds the aggregate amount of the following:
(a)
the value of imported raw materials, components and parts of components, fuels and services;
(b)
wages and salaries paid during the period to persons who are not nationals of the Member States;
(c)
profits distributed and remitted directly or indirectly to persons who are not resident in a Member State;
(d)
interest, management charges and other income payments or any of them, accruing directly or indirectly to persons not resident in a Member State, other than a branch or agency of banks not resident in a Member State;
(e)
depreciation of imports of plant, machinery and equipment;
“Minister” means the Minister responsible for Industry;
“national” means a person who is a citizen of a Member State, and includes a person whose connection with such a State entitles him to be regarded as belonging to, or being a native or resident of the State for the purposes of the law relating to immigration for the time being in force;
“sale” means the proceeds of sale ex factory of an approved product.
Computation of local value added
3.(1)
The local value added shall be weighted by the wages or salaries paid to nationals of a Member State expressed as a percentage of the total sales of the approved product and calculated in accordance with the formula
(2)
For the purposes of subsection (1)—
(a)
“ V ” represents the local value added expressed as a percentage of the total sales of the approved product; and
(b)
“ W ” represents the wages and salaries paid to nationals of a Member State and expressed as a percentage of the total sales of the approved product.
Determination of value of content of component
4.
In determining the value of the content of a component produced by a Member State for the purposes of paragraph (a) of the definition of “ local value added ”, no account shall be taken of any element in the cost of that component, except the value of the imported raw material content.
Non-resident
5.(1)
For the purposes of paragraphs (c) and (d) of the definition of “ local value added ”, an enterprise shall be deemed not to be resident in a Member State if it is controlled directly or indirectly by a person who is not resident in a Member State (hereinafter referred to as a non-resident).
(2)
A non-resident shall be deemed to have control of an enterprise if he owns or is entitled to purchase the greater part of the ordinary paid-up share capital (not including shares which carry no voting rights) of the enterprise.
Declaration of approved product
6.(1)
Subject to
section 9, the Minister may by order declare that a product of manufacture shall be an approved product for the purposes of this Act if he is satisfied that the manufacture of the product would—
(a)
be of benefit to Barbados, both economic and non-economic considerations being taken into account; and
(b)
have a beneficial effect on employment in numbers and gross wages.
(2)
An order may be made under subsection (1) in respect of a product which is being manufactured in Barbados at the date of the order.
(3)
The Minister, before declaring under subsection (1) that a product of manufacture shall be an approved product for the purposes of this Act, shall also have regard to the following considerations—
(a)
the effect which approval would have on existing industries;
(b)
whether manufacture of the product would utilise raw materials or skills available in Barbados;
(c)
whether the existing capacity for manufacture of the product is sufficient to meet the demand for the product; and
(d)
the element of risk involved in establishing a successful manufacture of the product.
Declaration of approved enterprise
7.(1)
Subject to
section 9, the Minister, on an application made by or on behalf of an enterprise for the purpose of establishing an industry in Barbados to manufacture an approved product, or in the case of an enterprise which at the commencement of this Act is manufacturing the product declared by order under
section 6 to be an approved product, may by order declare the enterprise to be an approved enterprise if he is satisfied that the enterprise—
(a)
is or will be adequately financed;
(b)
has adequate trained personnel in its employ or is able to obtain the services of such personnel;
(c)
has access to the necessary technical information;
(d)
is able to obtain adequate raw materials;
(e)
possesses, or will possess, the necessary factory.
(2)
In an order made under subsection (1) a date shall be declared to be the date on which, for the purposes of this Act—
(a)
construction is deemed to begin; and
(b)
production is deemed to begin.
(3)
Every order made under subsection (1)—
(a)
shall specify the factory in respect of which the benefits under this Act may be enjoyed;
(b)
may declare that in its application it shall be restricted to a part of a factory or to a particular grade, quality, description, type or classification of product;
(c)
may provide for its revocation in any case of breach of or non-compliance with its requirements.
Applications for approval
8.
An application under
section 7 shall specify—
(a)
the locality or proposed locality of the factory in which the enterprise is manufacturing or intends to manufacture the approved product;
(b)
the date of construction of the factory, which shall not be later than twelve months after the date of the application, except that where a factory is already in existence, the application shall contain all information that may enable the Minister to specify the date of construction;
(c)
the date on which production is likely to begin, which shall not be later than eighteen months from the date of construction, except that where the production of an approved product has already commenced, the application shall contain all information that may enable the Minister to specify the date on which production is deemed to begin;
(d)
the approved product already being manufactured or intended to be manufactured;
(e)
all information, supported by documentary evidence, relevant to the determination of the local value added.
Objections to proposals to approve a product or enterprise
9.(1)
Before an order is made either under
section 6 or
7, the Minister shall cause the fact that he is about to be asked to consider whether for the purposes of the Act a product for manufacture should be an approved product, or an enterprise an approved enterprise, to be advertised in Barbados, and if the Minister thinks it necessary, elsewhere.
(2)
The advertisement referred to in subsection (1) shall contain such particulars as to the product or enterprise of which such approval is being sought as the Minister considers necessary.
(3)
The notice shall state the period within which the objection to the approval of the product or the enterprise shall be made.
(4)
Every objection received by the Minister within the time stipulated in the advertisement or within such extended time as the Minister allows shall be considered by the Minister before an order is made under section 6 or 7.
Minister to have absolute discretion in respect of approval
10.
The Minister shall have an absolute discretion to grant or refuse approval in respect of a product as an approved product or an enterprise as an approved enterprise.
Classification of enterprises
11.(1)
Subject to
section 21 (4), an approved enterprise may be granted benefits under this Act for a period not exceeding the period applicable thereto specified in the
Third Schedule (and hereinafter referred to as the period of the tax holiday) if it is classified into one of the following categories—
(2)
Prior to the classification of an approved enterprise as a Group I, Group II or Group III Enterprise, the local value added as calculated in accordance with section 3 shall be estimated.
Extension of period of benefit contingent upon new investment by approved enterprise
11A.(1)
Notwithstanding
section 11, an approved enterprise that satisfies the Minister that it has, in relation to the production of an approved product, engaged in new investment in plant, equipment technology or innovative methods of production and management of $1.0 million or more during the period of 3 years preceding an application shall be entitled to a grant of an additional period of 5 years of benefits.
(2)
An approved enterprise that is desirous of obtaining an extension of benefit referred to in subsection (1) shall submit an application, together with evidence of the investment undertaken during the relevant period.
Extension of period of benefit based on production of new products
11B.(1)
An approved enterprise that is or has been the recipient of benefits under the Act shall be entitled to a new regime of benefits where the enterprise provides proof to the Minister that it intends to manufacture, or is engaged in the manufacture of, a new product that qualifies for approval in accordance with
section 6.
(2)
The product shall not be disqualified for approval as a new product by reason only that the producer had enjoyed benefits under an existing or previous classification in respect of a product that fell within the same generic category.
Expiration of tax holiday not a bar to grant of additional period
11C.
An enterprise that had been declared an approved enterprise under
section 7 and whose period of the tax holiday has expired on or before the date of the commencement of this Act shall be eligible to apply for an additional period of tax holiday of 5 years where the enterprise meets the requirements set out in
section 11A or
11B.
PART II
Provisions relating to Income Tax
Exemption from income tax
12.
Notwithstanding the
Income Tax Act, Cap. 73 but subject to
sections 24 and
27, an approved enterprise shall be entitled to relief from income tax from the date of production in respect of profits and gains accruing to it for the period of the tax holiday.
Benefits for enterprise engaged in highly capital-intensive industry
13.(1)
Where an approved enterprise is engaged in a highly capital-intensive industry, the Minister may by order grant it any benefit under this Act for a period not exceeding that for which a benefit may be granted to an Enclave Enterprise in accordance with the
Third Schedule.
(2)
For the purposes of this section and section 27, “highly capital-intensive industry” means an industry the capital investment in which is not less than $50 000 000 Barbados Currency.
Depreciation allowance
14.
In computing the profits of an approved enterprise for the purposes of relief from income tax under
section 12, allowance shall be made for any depreciation in value which would but for the exemption be claimable in that year.
Deduction for capital expenditure
15.
The provisions of the
Income Tax Act, Cap. 73 shall apply to an approved enterprise from the first year of income following the year of income during which the period of the tax holiday ends, except that a deduction as an initial allowance for capital expenditure shall only be in respect of expenditure incurred after the expiration of the period of relief from income tax.
Set off
16.
Any loss incurred by an approved enterprise during the period of the tax holiday may be set off in accordance with
section 17.
Losses carried forward for purpose of set-off
17.(1)
Notwithstanding section 23 of the
Income Tax Act, Cap. 73, on the expiration of the period of the tax holiday, the net losses incurred during that period may be carried forward for the purpose of set-off in computing the profits of an approved enterprise for the 9-year period following the period of the tax holiday.
[2001-6]
(2)
Where the order declaring an enterprise to be an approved enterprise is revoked under section 25, such enterprise shall, for the purposes of carrying forward net losses incurred prior to the revocation of the order, be deemed to be an approved enterprise.
(3)
For the purposes of this section, “net losses” means the excess of all losses over all profits made during the period of the tax holiday.
Dividends
18.(1)
Subject to subsection (2), dividends and other distributions from profits accruing to an approved enterprise as a result of the manufacture of an approved product during the period of the tax holiday shall, when paid to shareholders or their nominees, be exempt from the payment of income tax.
(2)
Where a shareholder is not resident in a Member State, the exemption referred to in subsection (1) shall apply to so much of the tax as exceeds the tax liability of the shareholder in his country of residence.
Interest
19.
Interest in whatever form on loan capital and any other moneys borrowed by an approved enterprise, whether in the form of overdraft, debenture or otherwise, when paid to the recipient, shall not be exempt from the payment of income tax.
PART IV
Provisions relating to Customs Duty
Licence to import
21.(1)
If the Minister is satisfied that any plant, equipment, machinery, spare parts, raw materials or components thereof are not available in the Common Market at prices and qualities and in adequate quantities for export, comparable to those available from an area outside the Common market, he may issue a licence to an approved enterprise to import such articles or any of them from an area outside the Common Market.
(2)
On receipt of a licence issued under subsection (1), an approved enterprise may import plant, equipment, machinery, spare parts, raw materials or components thereof free from customs duty from an area outside the Common Market for the appropriate period of relief referred to in section 12 or section 27(3) or (4), if the Comptroller is satisfied that the plant, equipment, machinery, spare parts, raw materials or components thereof are required
(a)
for constructing, altering, reconstructing or extending the approved enterprise; or
(b)
for use by the enterprise in the manufacture of an approved product.
(3)
Where subsequent to the issue of a licence under subsection (1) there is a change in the circumstances contemplated by that subsection, the Minister shall
(a)
revoke the licence; or
(b)
alter the licence so as to exclude any of the articles in respect of which the change exists.
(4)
Notwithstanding subsections (1), (2) and (3) of this section, an Enclave Enterprise may, until such time as it ceases to be an Enclave Enterprise, import any article mentioned in those subsections without obtaining a licence under subsection (1).
Record and inspection of articles
22.(1)
An approved enterprise which
(a)
imports into Barbados from a country outside the Common Market; or
(b)
purchases within the Common Market,
any article in respect of which it has been granted relief from customs duty under section 21(2) shall
(i)
keep a record of the articles so imported or purchased in such form and containing such particulars as the Comptroller requires;
(ii)
cause the articles to be marked in such manner as the Comptroller requires;
(iii)
permit the Comptroller or a person authorised by him for the purpose, to inspect at reasonable times such record, and to have access to any factory or warehouse under its control for the purpose of examining any such article which the Comptroller has reason to believe to be therein, and of satisfying himself of the accuracy of the particulars contained in the record.
(2)
An approved enterprise which contravenes any of the provisions of this section is guilty of an offence and liable on summary conviction to a fine of $1 000.
Restriction on disposal of articles
23.(1)
An article imported by an approved enterprise under
section 21(2) shall not be sold or otherwise disposed of by the enterprise except
(a)
to the transferee, in the case of a transfer of ownership of a factory belonging to the enterprise; or
(b)
where the approved enterprise pays or gives security to the satisfaction of the Comptroller for the payment of an amount equivalent to the amount of customs duty which but for
section 21 (2) would have been payable on importation of such article, and the article was so imported by the enterprise;
(c)
after the expiration of five years from the date of purchase of the article.
(2)
An approved enterprise which contravenes any of the provisions of this section is guilty of an offence and liable on summary conviction to a fine of one thousand dollars.
Delay of construction or manufacture
24.(1)
Where an approved enterprise fails or neglects—
(a)
to commence construction of a factory on or before the date of construction; or
(b)
to commence manufacture at the factory of an approved product in marketable quantities, on or before the date of production,
the Minister may issue a notice in writing requiring it within thirty days of the date of such notice either—
(i)
to commence construction of the factory or the manufacture of the approved product in marketable quantities, as the case may be, or
(ii)
to prove to the satisfaction of the Minister that the failure or neglect is attributable to a cause beyond its control and that there is a reasonable prospect of its commencing construction or manufacture, as the case may be, within such time as the Minister considers reasonable.
(2)
Where an approved enterprise satisfies the requirements of sub-paragraph (ii) of subsection (1), the Minister shall by order substitute for the date of construction or the date of production, as the case may be, some other specified day, and thereupon the provisions of this Act shall take effect as if the day specified in such order was the date of construction or the date of production, as the case may be, specified in the order made under section 7.
Revocation of order
25.(1)
The Minister may, having regard to all the circumstances of the case, if he thinks it expedient so to do, by order revoke an order made under
section 7, where an approved enterprise—
(a)
contravenes any of the provisions of this Act or the regulations; or
(b)
fails to comply with the requirements of a notice issued under
section 24.
(3)
Notwithstanding subsection (2), the Minister may, if he thinks that the payment of any such sums would cause undue hardship, or if for any other reason he deems it expedient to do so, remit the whole or part of any such sums payable by the enterprise.
(4)
All sums payable under this section may be recovered as a civil debt before a magistrate for District A.
Restriction on use of factory
26.(1)
Subject to subsection (3), no factory belonging to an enterprise which is being used or is intended to be used for the manufacture of an approved product shall, during the period of the tax holiday, without the prior approval of the Minister, be used for purposes other than the manufacture of the approved product.
(2)
An enterprise which contravenes the provisions of subsection (1) is guilty of an offence and liable on summary conviction to a fine of one thousand dollars, and in the case of a continuing offence to a further fine not exceeding two hundred dollars in respect of each day or part thereof during which the offence continues after conviction thereof.
(3)
This section shall not apply to an enterprise which ceases to be an approved enterprise and in respect of which all sums payable to the Commissioner and the Comptroller in respect of income tax and customs duty have been paid.
Appraisal of performance of enterprise
27.(1)
The Minister shall—
(a)
at the expiration of three years from the date of production; and
(b)
thereafter at intervals of two years until the cessation of all benefits under this Act,
appraise the performance of an approved enterprise other than an Enclave Enterprise for the purpose of determining whether any change in its classification is necessary.
(2)
Where on an appraisal under subsection (1) an approved enterprise—
(a)
fails to maintain its classification and cannot be reclassified into any of the other Groups specified in the
Third Schedule, the enterprise shall with effect from the date of the notice of the decision of the Minister under subsection (5) be no longer treated as an approved enterprise for the purposes of
sections 12,
20 and
21 (2);
(b)
maintains its classification or is re-classified into any of the other Groups specified in the Third Schedule, the enterprise shall continue as an approved enterprise, and paragraph (b) of subsection (1) shall continue to apply.
(3)
Where as a result of the re-classification of an approved enterprise into a lower Group, the period of the tax holiday exceeds the maximum period permitted in that Group, the Minister shall by order reduce the period so as not to exceed the maximum period permitted in the lower Group to which the approved enterprise has been re-classified.
(4)
Where an approved enterprise is re-classified into a higher Group, the Minister may by order increase the period of the tax holiday so as not to exceed the maximum period permitted in the Group to which the approved enterprise has been re-classified.
(5)
The Minister shall as soon as practicable after an appraisal under subsection (1) serve notice of his decision on the approved enterprise.
(6)
This section shall not apply to a highly capital intensive industry.
Transfer of status of approved enterprise
28.(1)
The Minister may by notice published in the Official Gazette transfer the status of an approved enterprise to another enterprise where—
(a)
an approved enterprise merges with or is taken over by another enterprise, or forms part of an enterprise’s reconstruction; or
(b)
in his opinion it is equitable or in the public interest to do so.
(2)
Prior to the issue of a notice under subsection (1), the Minister may require the enterprise to which the status of an approved enterprise is to be transferred to comply with such conditions and to give such undertakings and assurances and in such form as he considers desirable having regard to the public interest.
(3)
On the issue of a notice under subsection (1), all rights, privileges, benefits, immunities, duties and obligations conferred or imposed by or under this Act on the former enterprise may be transferred to the latter enterprise.
Regulations
29.
The Minister may make such regulations as he thinks necessary for giving effect to the provisions of this Act.
Publication in Official Gazette
30.
All orders made by the Minister under this Act shall be published in the Official Gazette.
Savings
31.(1)
Subject to subsection (2), the Minister may not, after the commencement of this Act, declare—
(2)
Where prior to the commencement of this Act an application for approved status was made under any Act referred to in subsection (1) and the application is at the commencement of this Act pending, the application shall be treated as if it were made under this Act, and the provisions of this Act shall apply accordingly. 
