Barbadian Mutual Funds Said To Have Unfair Tax Advantage

by Amanda Banks, Tax-News.com, London

30 November 2004

To encourage greater share ownership among Barbadians, the government should reform the $10,000 tax break for mutual fund ownership and create an equal tax incentive for the first time purchase of shares, according to a local financial expert.

Addressing the annual conference of the Institute of Chartered Accountants of Barbados, financial consultant Hilford Murrell commented that the generous tax break for mutual funds may have killed off interest in direct share ownership, and with it the link between company and shareholder.

“The idea of the $10,000 tax allowance was to allow persons who had never had a share in their life to become shareholders. What has happened now is that it has been used as a sword rather than a shield. There are many people who just invest thousands of dollars in mutual funds to get the tax break and some of them don’t even know what company their funds have been invested in,” argued Mr Murrell.

He added that investment in the Caribbean region is increasingly becoming the domain of the institutional investors and called for tax allowances to be granted when a person buys shares as well as mutual funds.

“If an individual wants to buy 400 shares in a company he should be allowed that same tax allowance until the figure reaches $10,000,” he stated.

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