The new Foreign Exchange Fee (FXF), the two percent commission on foreign currency purchases and payments that was first announced by Minister of Finance and Economic Affairs, Christopher Sinckler during his presentation at the 2017 Statement of Estimates and Budgetary Proposals in May, will include exemptions for entities in the International Business and Financial Services (IBFS) Sector.
A guidance note issued at the end of June by the Central Bank of Barbados, which is overseeing the implementation, said that the FXF would not apply to“transactions from foreign currency accounts held by the international business and financial services sector”.
The same note outlined the timelines for the implementation of the new fee: over-the-counter purchases of foreign currency, including cash and bank drafts, and payments of wire transfers will become subject to the FXF from July 17, 2017; while the fee would be applied to foreign transactions made using personal or corporate credit cards, debit cards and pre-paid travel cards from September 1, 2017. According to the Central Bank, the staggered rollout is to allow commercial banks and other financial institutions a longer window to adjust their computer systems.
The Central Bank also provided specifics about when and how the fee will apply, notably that it will only be on foreign currency purchases and outbound foreign currency transactions and not on incoming funds, so deposits of foreign currency and foreign currency being converted to Barbados dollars will not be subject to the fee. In addition, the Bank confirmed that the FXF will be calculated on the Barbadian value of the transaction, and that it will not affect annual foreign currency allowances.
The full guidance note, along with additional information about the Foreign Exchange Fee can be found at www.centralbank.org.bb/foreign-exchange/foreignexchangefee.