How VAT works for Barbados shops

Value added tax (VAT) is the tax most Barbadian shops deal with every day. It looks complicated from the outside, but the idea is simple: you collect VAT on what you sell, you pay VAT on what you buy for the business, and every return you hand over the difference to the Barbados Revenue Authority (BRA).

This guide walks through how it works for a typical shop. It isn't tax advice — your accountant and the BRA have the final word on your business — but it should make the conversations with them shorter.

The rate

The standard rate of VAT in Barbados is 17.5%. Most goods and services a shop sells carry it. Some supplies are zero-rated (VAT is charged at 0%, and you can still claim back the VAT on what you bought to sell them) and some are exempt (no VAT is charged, and the VAT on related purchases generally can't be claimed back). A few services have their own rates. Check the BRA's lists for anything you're unsure about, and set each item up once.

Do you need to register?

You must register for VAT once your taxable sales pass the registration threshold. For years the threshold has been BBD 200,000 in a twelve-month period, and changes to it have been proposed, so check the current figure with the BRA before you rely on it. Businesses under the threshold can often register voluntarily, which can make sense if most of your customers are VAT-registered businesses that claim the tax back.

Once you're registered, you charge VAT on taxable sales, keep proper records, and file returns for the periods the BRA gives you.

Charging VAT at the till

Most shops in Barbados show prices with VAT included, so the shelf price is what the customer pays. Your receipt then shows how much of the total is VAT. For business customers, a proper VAT invoice must show your VAT registration number, the customer's details, and the VAT separately.

In Aurient, each item carries its tax rate. The till works out the VAT on every sale, receipts and invoices show it the way you choose, and zero-rated items are simply set to 0%.

Claiming back the VAT you pay

When you buy stock, pay rent or buy equipment for the business, your supplier charges you VAT. That's your input VAT. You can generally claim it back against the VAT you collected (your output VAT), as long as you have a valid VAT invoice and the purchase was for taxable business.

This is where many small shops lose money: invoices go missing, or a supplier's bill is entered without the VAT split out. Enter every supplier bill with its VAT and keep the invoice — a photo attached to the bill is enough for your own records.

The VAT return

For each period, the return comes down to:

VAT you charged on sales (output VAT)	add
VAT you paid on purchases you can claim (input VAT)	subtract
The difference	pay to the BRA, or claim as a refund

Most registered businesses file every two months. The BRA sets your periods and due dates, and returns are filed and paid through its online system (TAMIS). Filing late or paying late costs penalties and interest, so put the due dates in the calendar the day you register.

In Aurient, the VAT return report adds up the VAT on every sale, return, credit note and supplier bill for the period, so the figures you enter on the BRA's form come straight from it.

Five habits that make VAT painless

1. Set every item's rate once. Zero-rated and exempt items set up correctly at the start save corrections later.
2. Record returns properly. A refund or credit note takes the VAT back out of your output VAT; a cash refund handed over without one doesn't.
3. Enter every supplier bill with its VAT. Unclaimed input VAT is money left on the table.
4. Close the till every day. Cash and card totals that match the till mean the sales — and the VAT — are right.
5. Keep records for as long as the BRA requires. Aurient keeps every sale, invoice and bill; attach the paper invoices as photos.

Where to check

• The Barbados Revenue Authority for rates, the threshold, zero-rated and exempt lists, and your filing dates.
• Your accountant for anything specific to your business.

If you'd like to see how Aurient handles VAT from the till to the return, start free for 14 days or read more on our Barbados page.