Barbados Tax Rules for Airbnb and Booking.com Rentals

Digital platform and online marketplace operators in the hospitality sector, primarily those offering short-term rental accommodations to tourists, will face new tax collection and reporting requirements in Barbados. Under the proposed Tourism Levy Amendment Bill, digital platforms such as Airbnb,  Booking.com, or Expedia will be liable to collect and remit the Shared Economy Levy directly to the Barbados Revenue Authority.

Impact on Digital Platform and Taxable Persons

The Tourism Levy Amendment Bill (the Bill) defines online marketplaces as online travel agencies or digital platforms, including any mobile app or website, that enable or facilitate transactions relating to tourism accommodations or direct tourism services between suppliers and consumers, and which allow consumers to pay for the services provided. The Bill also introduced the term marketplace facilitator, which refers to individuals or businesses that operate online marketplaces.

Under the new rules, small property owners providing short-term rental accommodation to tourists through digital platforms will no longer be required to file bi-monthly tax returns. Under the amendment Bill, the liability for collecting and remitting the 10% Shared Economy Levy will be transferred to online booking sites. Digital platforms must include the amount of the Shared Economy Levy in any advertised or displayed prices and final price charged to consumers. 

Notably, the Shared Economy Levy only applies to tourism accommodation provided by persons not registered for VAT. Also, hotels are excluded from the application of the Shared Economy Levy. Additionally, if property owners do not offer tourist accommodations or direct tourism services through a platform or online marketplace, but instead through their website or directly to consumers, they remain liable for collecting and remitting any due levy.

Those who fail to meet these requirements, whether on digital platforms or as individual property owners, face the risk of incurring a USD 10,000 penalty.

Conclusion

In addition to having VAT rules and regulations in place, Barbados has implemented a special set of tax rules for the tourism sector. Therefore, the tourism levy, which includes the stated Shared Economy Levy and Room Rate Levy, applies. While the Room Rate Levy applies to most accommodations, where the applicable rate depends on the type of accommodations, the Shared Economy Levy applies only to short-term tourism rentals listed on digital platforms or rented privately.

Source: Tourism Levy Amendment Bill