Here are some highlights from the Barbados 2024 Budget speech as they pertain to digital.

In early 2024, the Barbados government announced a digital transformation tax credit during Prime Minister Mottley's 2024 Budget Address that has the potential to revolutionize the local business landscape, increase competitiveness, and drive economic growth. However, as the year draws to a close, this crucial initiative remains unimplemented, leaving our businesses at a disadvantage.

Despite the promise made by the government, it would appear that little action has been taken to implement this transformative program, nor to consult with or advise the business community of what would qualify for the proposed tax credit. This lack of progress, and private sector engagement is holding back the growth and competitiveness of our local businesses at a time when digital transformation is more crucial than ever.

We, as digital professionals, business owners and members of the Barbadian community, believe in the immense value that this tax credit holds for our economy. By encouraging the adoption of digital tools, supporting local talent, and strategically investing in transformative projects, we can position Barbados as a leader in the Caribbean's digital economy.

Join us in urging the government to take immediate action to implement the recommendations outlined in the attached policy paper. Your voice matters, and by signing this petition, we can collectively create a better future for our businesses, our workforce, and our country.

This petition is for the digital professionals, business owners, stakeholders, and concerned citizens of Barbados who believe in the power of digital transformation to enhance the competitiveness of our economy. It is also directed at government officials, policymakers, and public servants who have the influence to take action and implement meaningful changes for the benefit of our business community and society at large.

If you are passionate about seeing our local businesses thrive, ensuring our workforce is equipped for the digital future, and making Barbados a leader in the Caribbean's digital economy, then this petition is for you. By signing, you are adding your voice to a growing call for action, urging our government to make good on its promise to provide the digital transformation tax credit that our businesses need to succeed.

Policy Proposal for Digital Transformation Tax Credit Implementation in Barbados

Executive Summary

This policy proposal advocates for the timely and effective implementation of the digital transformation tax credit, announced at the start of 2024 but still not enacted. As the 2025 budget approaches, this credit could profoundly benefit local businesses and the economy if implemented thoughtfully. Drawing from international examples of successful digital transformation programs, this paper outlines recommendations to help Barbados prioritize local talent, provide impactful advisory support, and address critical challenges in digital transformation.

Introduction

1. Background

The Barbados government announced a digital transformation tax credit at the beginning of 2024 to support local businesses in adopting and implementing innovative digital solutions. However, with the end of 2024 fast approaching and the 2025 budget soon to be considered, the implementation of this credit has been delayed, leaving businesses unable to benefit from its intended incentives. This proposal aims to reinvigorate the conversation about the tax credit and provide actionable recommendations for its swift and effective implementation.

2. Purpose

The purpose of this policy paper is to provide actionable recommendations for the Ministry of Finance and the government of Barbados to ensure that the digital transformation tax credit is implemented in a way that maximizes benefits for local businesses and the broader economy. By shaping the program to prioritize local talent, provide effective advisory support, and focus on strategic initiatives, the credit can accelerate digital transformation in Barbados.

Context

Dennis Augustine, the author of this paper, is the founder of the DX Alliance and a member of the Barbados Chamber of Commerce and Industry’s (BCCI) Digital Societies Committee. His advocacy is grounded in extensive engagement with Barbados’ private sector. The recommendations in this paper are informed by practical experience and insights from colleagues who have consulted the Canadian government on digital transformation programs such as SR&ED, IRAP, and CDAP.

Recommendations

1. Prioritize Local and Regional Talent

The digital transformation tax credit should be structured to incentivize Barbados businesses to prioritize local talent first, followed by regional talent, before considering options outside the region. This approach aims to address the issue of a “leaky bucket”—where investment in digital transformation leaks out of the country through hiring foreign talent instead of building local capabilities. Retaining tax dollars within Barbados ensures that the investment strengthens the local workforce and economy.

International examples, such as Canada’s SR&ED program, provide an example of how prioritizing local innovation and talent can create sustainable growth. By incentivizing businesses to tap into the local talent pool, Barbados can build a more resilient and capable digital workforce that can not only serve domestic needs but also attract international clients.

2. Appoint Digital Transformation Advisors

To ensure the success of the tax credit, the government should appoint experienced digital transformation advisors to guide businesses in designing and executing transformative projects. These advisors would work with businesses applying for the tax credit to ensure that their projects align with the overall goals of digital transformation, providing meaningful improvements rather than superficial upgrades.

Advisors could, for instance, help businesses avoid using the credit for initiatives like simple hardware replacements, which do not qualify as true digital transformation. Instead, the focus should be on projects that lead to substantial and sustainable changes. The Canadian IRAP and CDAP programs offer useful models, wherein advisors play a crucial role in helping applicants structure projects for maximum impact, and members of the North Guide team have consulted on these initiatives to help shape their success.

3. Define and Guide Strategic Digital Initiatives

The program should prioritize strategic digital initiatives that address the unique challenges and opportunities faced by Barbados businesses. Key focus areas include:

 E-commerce Capability Development: Enable local businesses to compete with international e-commerce giants like Amazon, which now delivers to Barbados for free. By building strong e-commerce capabilities, Barbados businesses can compete more effectively in the domestic market.

 Export of Cultural Goods: Develop digital platforms to facilitate the export of Barbados’ cultural products. Digital transformation should empower local artisans, creators, and entrepreneurs to access international markets and grow their businesses.

By guiding businesses to focus on these strategic areas, the tax credit program can foster a more competitive and digitally savvy business environment in Barbados.

4. Commence Tax Credit Period with Support in Place

The tax credit period should begin from the day when detailed guidance and enabling services, such as digital transformation advisors, are fully established. This ensures that businesses have the support they need from the start to successfully execute impactful projects.

Implementation Strategy

1. Collaboration with the Private Sector

A committee has been proposed to engage with the government on this matter. It is essential that the government formally acknowledge and collaborate with this subcommittee to ensure private-sector insights are considered in the implementation process. Leveraging the expertise of  consultants who have worked on SR&ED, IRAP, and CDAP will also support effective program design. Public-private engagement is crucial for shaping these programs and ensuring alignment with initiatives like the upcoming Business Barbados department.

2. Program Structure

 Eligibility Criteria: Clearly define what qualifies as a digital transformation project to ensure that the tax credit is used effectively. Eligible projects should be transformative in nature, such as process automation, integration of digital tools, and the creation of new digital platforms, rather than simple hardware purchases.

 Training and Support: Offer workshops led by digital transformation advisors to educate businesses on the types of projects that qualify and how to execute them effectively.

3. Monitoring and Evaluation

Establish a framework for monitoring and evaluating the success of projects funded through the tax credit. Metrics should focus on the level of innovation, impact on business growth, and contributions to the Barbados economy. By tracking these outcomes, the government can ensure accountability and demonstrate the return on investment for public funds.

Conclusion

The digital transformation tax credit has the potential to be a game-changer for Barbados if implemented thoughtfully and effectively. By prioritizing local talent, appointing experienced advisors, and focusing on strategic digital initiatives, the government can create a program that supports the digital evolution of Barbados businesses and strengthens the national economy. Collaboration between the government and the private sector will be essential to ensure that this tax credit delivers meaningful impact.

References

International examples of digital transformation programs, such as Canada’s SR&ED, IRAP, and CDAP, have been referenced to provide context for best practices and recommendations.