Antigua And Barbuda Unveils Stimulus Package

by Amanda Banks, Tax-News.com, London

15 July 2011

Antigua and Barbuda's Finance Minister has unveiled a stimulus package which will provide a series of business incentives and tax concessions for targeted sectors and groups.

Harold Lovell made the announcement at a July 12 press conference, officially launching several of his Budget 2011 measures. Lovell said that the government has been holding consultations with the business community, in order to design this package. The measures are intended to be revenue neutral, at minimum, but Lovell acknowledges that some revenue may be lost. Nonetheless, he argued that the overall intention is to stimulate economic activity through job creation and increased business turnover. In addition, he anticipates that an increased tax yield from greater business activity will be enough to offset up front tax concessions.

These tax concessions are specifically targeted at various sectors of the economy. In the first instance, the manufacturing sector will benefit from three measures. Effective August 1, import duty will be waived on all raw materials, packaging material and machinery in respect of manufacturers. The recovery charge on such items will also be waived. These incentives will be reviewed after six months. A 'bonded warehouse regime' will also be introduced, which will allow manufacturers to defer payment of the Antigua Barbuda Sales Tax (ABST) while materials are warehoused. Lovell said that the government will continue to work with stakeholders to produce a new strategy for sustainable growth and development, fiscal incentives, trade policy measures and infrastructure development.

Small and medium-sized enterprises will be the next to benefit. A Credit Guarantee Scheme will be available from August 1, which will enable authorized businesses to access credit facilities from authorized financial institutions. The guarantee will be 80% of the approved loans, up to a maximum of XCD20,000 (USD7,400), with the guarantee period covering the life of the loan, from the first drawdown date. Up to XCD2.5m has been guaranteed by the Antigua Barbuda Development bank for the project. In addition, the scheme will target a series of priority areas, namely agro-processing and related services; health and wellness (indigenous spas and alternative therapies); indigenous craft; art and cultural activities; tourism related services (tours and new attractions); software development, and manufacturing.

The tourism sector will benefit from the extension of a set of incentives first introduced in 2008. These provide for certain customs duties exemptions for items relating to the refurbishment and furnishing of hotels. The sales tax for hotels will be increased from 10.5% to 12.5%, but Lovell insisted that this has been agreed in cooperation with industry representatives, and the revenue will be used solely for marketing and promotion.

Lastly, the government has launched the Construct Antigua Barbuda Initiative. This will offer duty free concessions on locally purchased construction materials, reduced mortgage rates and discounts from contractors and suppliers who register under the scheme.

Lovell said that the government will elaborate further on additional aspects of the country's Economic Action Plan over the coming weeks.

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