Government is facing a $115 million reduction in corporate tax revenue, as about 27 companies cease doing business in Barbados and leave the island.
That anticipated fiscal blow is disclosed in a Quarterly Central Government Fiscal Operations Report produced by the Fiscal Risk Unit of the Ministry of Finance, which detailed an overall $213.6 million, or 44 per cent, decline in revenue from traditional corporation tax in the first three months of Government’s 2026-2027 fiscal year.
The ministry indicated that this decrease in Barbados’ corporate tax base was not enough to put a dent in Government’s earnings between April 1 and June 30. When the first quarter of the new fiscal year ended on June 30, total revenue was $1.38 billion, an increase of $77.5 million over the same period in the previous year.
A major contributor was the $370.4 million earned from the Qualified Domestic Minimum Top-up Tax (QDMTT), which relates to the 15 per cent global minimum tax coordinated by the Organisation for Economic Cooperation and Development (OECD).
The Ministry of Finance, noting that the information in the report was provisional and subject to revision, said it was published in fulfilment of Structural Benchmark 4 of the International Monetary Fund Stand-By Arrangement, which requires publication of quarterly central government fiscal data covering revenue, expenditure, financing and debt.
The Ministry of Finance explained that “two developments account for the fall in corporation tax”.
“First, about 27 companies were expected to leave the jurisdiction, and their prior filings suggest a combined reduction of about $115 million, of which $95 million is final corporation tax and the remainder prepayments,” it reported.
“Separately, one large multinational group had recorded exceptionally high liabilities for income year 2024 that were not expected to recur, a further $113 million. Together, those two items total about $228 million against a fall of $213.6 million; growth across other multinational and local groups accounts for the difference.
“The top-up tax . . . receipts were $370.4 million, all of it in June 2026. Deducting that from the published total leaves corporation tax, other than the top-up tax, at $271.4 million for the quarter, compared with $485 million a year earlier, when no top-up tax was in force. That is a fall of $213.6 million, or 44 per cent,” the report added.
Minimum effective rate
It reminded that the QDMTT “seeks to bring qualifying multinational groups to a minimum effective rate of 15 per cent and took effect for the first fiscal year starting after January 1, 2024”.
“Where a multinational enterprise (MNE) group becomes liable for the QDMTT, its first payment date is 18 months after the fiscal year-end, and subsequent payments are due 15 months after the fiscal year-end,” the Ministry of Finance stated.
“In this first instance, MNE groups with a fiscal year-end of December 2024 were liable to pay in June 2026.”
The top-up tax revenue boost is from “liabilities relating to more than one income year”.
“While targets were mostly achieved for those MNE groups that remitted the QDMTT, the [Barbados Revenue] Authority is currently awaiting OECD feedback regarding additional MNE groups and their potential liabilities,” the ministry said.
Meanwhile, the report from the Ministry of Finance pointed out that Government’s revenue and spending “are not evenly distributed throughout the year. Revenue is concentrated in the first quarter because corporation tax falls due in June, and expenditure in the fourth quarter”.
The “key fiscal messages” from the first quarter of the 2026-2027 fiscal year included:
• Government recorded an overall surplus of $347.3 million.
• The primary surplus of $537.8 million was $353.8 million above the Barbados Economic Recovery and Transformation 2026 programme floor of $184 million.
• Revenue grew by $77.5 million to $1.38 billion, and the composition changed.
• Expenditure rose by $149.2 million, or 16.8 per cent, to $1.03 billion. Goods and services accounted for $63.6 million of the increase.
• Gross financing requirement fell by $728.2 million.
• Gross public sector debt stood at $15.15 billion at June 30, 2026, 93.7 per cent of GDP. The stock rose by $127.6 million over the year, while the ratio fell by 3.1 percentage points.
• Measured against the preceding quarter, revenue rose by $336.7 million. (SC)