Antigua and Barbuda abolished income tax

Hon. Gaston Browne, Prime Minister and Minister of Finance or Antigua and Barbuda. Abolishment of income tax was one of his major promises during the electioneering in 2014.

Prime Minister and Minister of Finance Gaston Browne was elected in 2014 and one of his campaign promises was to scrap the tax, which was introduced in 2005.

The implementation of the promise will cost the government XCD37 million in lost revenues. According to Browne, however, this loss will be partially recouped by raising the Revenue Recovery Charge, a levy imposed on the gross value of most imported and locally manufactured goods – it will increase from 10 to 13 per cent, bringing in an extra XCD20 million in revenues. The charge has the advantage of being easy to collect, unlike income tax which, he says, is expensive to collect and difficult to enforce fairly.

We met with Mr. Romell Tiwari, the Local Agent for Antigua & Barbuda Citizenship by Investment Programme to ask him about the upcoming tax abolishment in the island nation. 

What impact will the removal of personal income tax have on the economy of Antigua & Barbuda? 

Romell Tiwari: The removal of Personal Income Tax was one the major manifesto promises of the new Antigua and Barbuda Labour Party (ABLP) when elections were held in June 2014. The ABLP has always expressed the view that an indirect taxation system was better for the economic development of Antigua and Barbuda in a similar manner to the Bahamas and other no/low jurisdictions. Prime Minister and Minister of Finance Gaston Browne has repeatedly stated that the removal of Personal Income Tax (PIT) will result in having more disposal income in the hands of tax payers. More disposal income in the hands of taxpayers will increase spending and economic activity. With the multiplier effect in the cyclical flow of income within an economy, it is expected to have a positive impact on the economy. 

Removal of Personal Income Tax (PIT) will result in having more disposal income in the hands of tax payers and positively affect the economy activity.

What effect will this measure have on the economic citizenship industry in Antigua and Barbuda?

RT: In January 2014 the then United Progressive Party (UPP) Government passed a revision to the PIT Act to exclude persons, who become citizens under the Antigua Citizenship by Investment Act, from personal Income Tax on their worldwide income derived outside of Antigua. That meant that once the income is not derived within Antigua and Barbuda, then the citizen under the CIP would not be subject to PIT. With the impending removal of PIT in its entirety in April or early May 2016 that means that if the new citizen under the CIP intends to earn income within Antigua and Barbuda, then that person will not be subject to PIT on income earned within Antigua and Barbuda.

As mentioned previously, such citizens were already exempted from PIT on their worldwide income and would only be subject to PIT if they derive income from within Antigua and Barbuda. The impending removal of PIT will now mean that such persons will not be subject to PIT if they choose to earn income within Antigua. This could encourage new citizens to invest in business opportunities within Antigua and Barbuda knowing that their earned income will not be subject to PIT. This, in turn, could have a positive impact on the economic growth of the country. However, this does not mean that the citizen would be exempt from Corporate Income taxes and other payroll related taxes.

Romell Tiwari FCCA, MBA has held senior accounting and financial administration positions for more than 25 years and operates a financial services company that provides accounting, taxation and wealth management consultancy s