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Barbados

Limited Company

Barbados has been a popular jurisdiction for incorporating international businesses – especially for Canadians which enjoyed certain benefits under DTAs. However, the jurisdiction has also gone through several legislative amendments to avoid being classified as having a ‘harmful preferential tax regime’ by the OECD / EU.

Under these amendments, the International Business Companies (IBC) Act has been abolished, and the Societies with Restricted Liabilities Act has removed preferences to International Societies with Restricted Liability (ISRL).

IBCs and ISRLs licensed after October 17, 2017, have been converted to regular Barbados companies and societies, and are subject to local corporate taxation. Those incorporated and licensed before October 17, 2017, will be grandfathered until June 30, 2021 – at that point, they will need to be converted to regular Barbados companies.

Note that Barbados companies earning 100% of their income in foreign currency would be able to apply for a Foreign Currency Permit under the Foreign Currency Permits Act, 2018, to avoid capital controls under the Exchange Controls Act.

The Income Tax Act has been also amended. Since January 1, 2019, all Barbados entities, except those that are grandfathered are taxed on a sliding scale from 5.50% (for taxable income below BBD 1 million) to 1% (for taxable income over BBD 30 million). Previously, IBCs and ISRLs were subject to tax on a sliding scale between 2.5% and 0.25% and local companies were subject to tax at a 25% rate.

The insurance sector legislation has suffered notable changes as well. The Exempt Insurance Act has been repealed and the Insurance Act has removed provisions for Qualified Insurance Companies. Now, all companies providing insurance services will fall under the same legislation – which will provide three classes of licenses:

  • Class 1 for insurance companies insuring related party risks – which are taxed at 0% on taxable income
  • Class 2 for insurance companies insuring third parties risks  – which are taxed at 2% on taxable income.
  • Class 3 for brokers and managers – which are taxed at 2% on taxable income.

The International Financial Services Act has been also repealed and all financial institutions, whether dealing with local or foreign currency, will be regulated under the Financial Institutions Act. There are now four classes of licenses:

  • Class 1 for local commercial banks.
  • Class 2 for trust companies, finance companies, merchant banks and money transfer services.
  • Class 3 for financial holding companies.
  • Class 4 for foreign currency earnings banks, which will be granted an exemption from capital controls.

The International Trust Act has been replaced by the Trust (Miscellaneous Provisions) Act, removing restrictions for residents to take part. The Shipping Act has also been amended to remove ring-fencing elements. The Foundation Act is currently undergoing through several amendments as well.

Like other jurisdictions, Barbados has implemented economic substance requirements via the Business Companies (Economic Substance) Act, 2018. Companies conducting relevant activities such as financial services, insurance, fund management, headquarters, shipping, intellectual property holdings and equity holding companies, among others – will need to meet economic substance test requirements such as conducting its core-income generating activities within Barbados, having its control and management from Barbados, and having an adequate number of employees, expenditure and assets in Barbados according to their business activities.

Barbados Companies are vehicles often used for the business of making, processing, preparing or packaging within Barbados any product that is exclusively for export, broker, agent, dealer, seller, buyer or factor within Barbados of goods existing outside Barbados or of goods to be trans-shipped through or from Barbados, providing services which are to Barbados non-residents.

Barbados has implemented the OECD's Automatic Exchange of Information for tax purposes (AEoI) and is undertaking exchanges of information through Common Reporting Standard (CRS).

All in all, Barbados Companies are powerful tools for international trading and commerce, manufacturing operations and for investments in foreign subsidiaries.

Taxes

Basis – Companies are taxed on their worldwide income.

Tax rate – All Barbados entities are taxed on a sliding scale from 5.50% (for taxable income below BBD 1 million) to 1% (for taxable income over BBD 30 million). Previously, IBCs and ISRLs were subject to tax on a sliding scale between 2.5% and 0.25% and local companies were subject to tax at a 25% rate.

Capital gains - Capital Gains are not taxable in Barbados.

Dividends – Dividends received from foreign entities may be tax-exempt, provided that the Barbados company holds at least 10% of the capital of the foreign entity the shares are not held as a portfolio investment.

Interests - Interest income is subject to taxation at standard rates.

Royalties – Royalty income is subject to income tax.

Foreign-source income – Foreign-source income is taxed at standard rates.

Withholding taxes – International business companies are not required to pay withholding taxes on their remittance of dividends, royalties, interest, management fees, fees, or other income paid by IBCs to persons outside Barbados.

Losses – Losses arising from taxable income may be carried forward for 9 years. Carryback of losses is not allowed.

Inventory - Inventory valuations are generally stated at the lower of cost and net realizable value. First in first out method (FIFO) or average values may be used for book and tax purposes. Last in first out (LIFO) is not allowed for tax purposes.

Anti-avoidance rules – Barbados has not enacted transfer pricing regulations, although revenue authorities may amend assessable income of a company where they deem that the main purpose of a non-arm's length transaction is to artificially reduce its assessable income. Thin capitalization and controlled foreign companies rules are not applicable.

Labor taxes – Employers and employees are required to make contributions to the National Insurance fund at 11.25% and 10.25 on employees’ monthly income, respectively, up to a maximum of insurable earnings of BBD 4,360 per month or BBD 1,006 per week.

Tax credits and incentives – A tax credit for taxes paid outside Barbados is usually available, provided that this does not reduce the company's corporate income tax rate in Barbados to less than 0.25%.

Barbados companies earning 100% of their income in foreign currency would be able to apply for a Foreign Currency Permit under the Foreign Currency Permits Act, 2018, to avoid capital controls under the Exchange Controls Act.

Personal income tax – An individual is tax resident in Barbados if spends more than 182 in Barbados in a tax year. Residents are taxed on their worldwide income, while non-residents pay taxes on their Barbados-source income.

The income tax rate is 16% on the first BBD 35,000 and 33.5% on the excess. Capital gains are not subject to taxation.

Other taxes – V.A.T. standard rate in Barbados is 17.5%. A rate of 8.75% is applied to hotel accommodation. An increased 22% applies to mobile phone services. There are several goods and services tax-exempt.

Real property tax is levied on building and lands on their property value. Tax rate ranges from 0.1% to 0.75%, being the first BBD 150,000 zero-rated. Certain transactions are subject to stamp duty. For transfer of real property is levied a 1% stamp duty.

There are no inheritance and wealth taxes in Barbados.

  • Offshore Income Tax Exemption
  • Offshore capital gains tax exemption
  • Offshore dividends tax exemption
  • CFC Rules
  • Thin Capitalisation Rules
  • Patent Box
  • Tax Incentives & Credits
  • Property Tax
  • Wealth tax
  • Estate inheritance tax
  • Transfer tax
  • Capital duties
  • 5.5% Offshore Income Tax Rate
  • 5.5% Corporate Tax Rate
  • 0% Capital Gains Tax Rate
  • 0% Dividends Received
  • 0% Dividends Withholding Tax Rate
  • 0% Interests Withholding Tax Rate
  • 0% Royalties Withholding Tax Rate
  • 0 Losses carryback (years)
  • 7 Losses carryforward (years)
  • FIFO Inventory methods permitted
  • 10.10% Social Security Employee
  • 11.25% Social Security Employer
  • 35% Personal Income Tax Rate
  • 17.5% VAT Rate
  • 44 Tax Treaties

Country details

Barbados
BBD
Bridgetown
North America
e n - B B
285653

Barbados is one of the twelve countries that form the Caribbean Antilles. Its capital and the most populated city is Bridgetown.

Located in the Lesser Antilles, it is the most easterly of the islands, lying to the east of Saint Lucia and Saint Vincent and the Grenadines.

Spain conquered the island because that was where Columbus arrived on his first voyage in the 15th century. In the seventeenth century, the English turned the place into a colony of the United Kingdom. This situation remained until 1966 when its town declared independence on the 30 of November. That year he joined the UN and the Commonwealth of Nations.

It is a constitutional monarchy, with Isabel II as head of state and Governor General Elliot Belgrave as its representative on the island. Its population exceeds 290,000 inhabitants. The official language is English and its official currency is the East Caribbean Dollar (XCD), which is pegged to the US $ at 2.7: 1 ratio.

Barbados is one of the most developed countries in the Eastern Caribbean and has one of the highest per capita incomes in America.

Although the traditional Barbadian economy was based on the production of sugar, the main export commodity, currently tourism is its main economic activity, with tourists mainly from the United States and Europe.

At present, it has partially diversified its economy with industries such as manufacturing, construction, and mining.

Barbados is a CARICOM member and has concluded trade agreements with several jurisdictions, including the U.S., Canada, and the European Union.

The international business and financial services sector are one of the most important contributors to the economy of Barbados, given its business-friendly legal framework and its low tax regime.

Tax treaties

Country Type Date Signed
Grenada DTC  1994-07-06
Finland DTC  1989-06-15
United States DTC  1984-12-31
Faroe Islands TIEA 2011-11-03
Norway DTC  1990-11-15
Panama DTC  2010-06-21
Belize DTC  1994-07-06
Switzerland DTC  1963-08-26
Greenland TIEA 2011-11-03
Mauritius DTC  2004-09-28
Colombia TIEA 2014-11-25
Iceland DTC  2011-11-03
Bahrain DTC  2012-12-03
Spain DTC  2010-12-01
Ghana DTC  2008-04-22
Austria DTC  2006-02-27
Saint Vincent and the Grenadines DTC  1994-07-06
Saint Lucia DTC  1994-07-06
Mexico DTC  2008-04-07
Rwanda DTC  2014-12-22
Qatar DTC  2012-12-06
Dominica DTC  1994-07-06
Singapore DTC  2013-07-15
Botswana DTC  2005-02-23
Trinidad and Tobago DTC  1994-07-06
Czech Republic DTC  2011-10-26
Venezuela DTC  1998-12-11
Luxembourg DTC  2009-12-01
Antigua and Barbuda DTC  1994-07-06
Cuba DTC  1999-06-17
China DTC  2000-05-15
San Marino DTC  2012-12-14
Guyana DTC  1994-07-06
Saint Kitts and Nevis DTC  1994-07-06
Denmark TIEA 2011-11-03
Sweden DTC  1991-07-01
Portugal DTC  2010-10-22
Jamaica DTC  1994-07-06
Netherlands DTC  2006-11-28
United Kingdom DTC  2012-04-26
Canada DTC  1980-01-22
South Africa TIEA 2013-09-17
Malta DTC  2001-12-05
Seychelles DTC  2007-10-19

Tax treaties Map

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Services

We can help you incorporate a Limited Company in Barbados for $7,950.


Description


Barbados Limited Company – USD 7,950.00 (All included)


We pride ourselves in providing the best possible professional service which includes our honest hassle-free “No Hidden Fee” policy. Your incorporation package includes:



  • All Applicable Registration and Government Fees

  • Certificate of Incorporation

  • Memorandum & Articles of Association

  • Appointment of Company Director(s)

  • Director(s) Acceptance Letter

  • First Board Resolution

  • Register of Members

  • Register of Directors

  • Share Certificate(s)

  • Registered Office & Registered Agent Service including all fees for the calendar year

  • Corporate Documents’ Courier Delivery


Time to form: 3 to 4 weeks.


All our incorporation services include a yearly consulting session, a dedicated account manager and access to our global network of trusted business services, including introductions to accountants, financial, tax and legal advisors at no cost.


Bank Account Opening Support Services (Optional)


Bank Account Options*:



  • Barbados Bank Account (Remotely) – USD 500.00

  • Offshore Bank Account** (Remotely) – USD 300.00

  • Bahamas Bank Account (Remotely) – USD 500.00

  • Labuan (Malaysia) Bank Account (Remotely) – USD 500.00

  • Curaçao Bank Account (Remotely) – USD 500.00

  • Mauritius Bank Account (Remotely) – USD 600.00

  • Singapore Bank Account (In-person) – USD 900.00

  • Hong Kong Bank Account (In-person) – USD 1,200.00

  • Cayman Islands Bank Account (Remotely) – USD 900.00

  • Cyprus Bank Account (In-person) – USD 1,200.00

  • Armenia Bank Account (Remotely) – USD 1,200.00

  • New York (US) Bank Account (Remotely/In-person) – USD 2,000.00

  • Cook Islands Bank Account (Remotely) – USD 600.00


For Private Wealth Structures, we have further options available in large financial centers. Please contact us for more information.


*This accounts’ schedule of fees are for trading, service and holding companies whose activities are not regulated and are considered low-risk by financial industry standards. If you conduct regulated activities such as financial services or gaming, or you operate in a high-risk industry such as cryptocurrencies, precious metals, adult, dating. Please also contact us for more information relating to these industries.


**Offshore Bank Accounts: Belize, Puerto Rico, Nevis, Antigua, Saint Lucia.  Other bank account options may be available depending on business profile and turnover.


Our Bank Account Opening Support Service includes:



  • Introduction to the Bank Manager

  • Bank Account Opening Process Management

  • Assistance and advice in filling out Business Questionnaires, KYC Forms and Bank Account Application Forms.

  • Certified Copies of Constitutional Documents with Apostille

  • Corporate Seal


Our banking service is not just a mere introduction to the bank. We assist you in filling out the business plan forms appropriately and help you understand and provide business details, commercial information and purpose/use of the bank account that a given bank wants to know in order to approve your account application.


Banks want certainty and clarity on how the account will be used. Everything must be watertight. We will work with you to make sure there is minimal ‘back and forth’ and a smooth account opening process.


Annual Fees (2nd year) – USD 3,900.00


Including:




  • Preparing and filing license renewal



  • Government fee for license renewal



  • Registered agent & registered office fee



Additional Services




  • Audit fees  –  from USD 7,000.00 to USD 20,000.00 per year



  • Tax compliance  –  from USD 1,500.00 to USD 4,500.00  per year



  • Independent local resident director –  USD 3,000.00 per year






Click here to incorporate your Barbados LTD.

Incorporate now

Disclaimer

Although we use our best efforts to keep the information of this site accurate and up-to-date, we make no representations or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents of this website. We disclaim any warranties expressed or implied, merchantability, or fitness for any particular purpose. We shall in no event be held liable for any loss or other damages, including but not limited to special, incidental, consequential, or other damages. The contents of this website are just for illustrative purposes and are NOT to be considered as a legal opinion or tax advice and should not be relied upon as such. Far Horizon Capital Inc., and any associated company, is not engaged in the practice of law or tax. If you wish to receive a legal opinion or tax advice on the matter(s) in this website please contact our offices and we will refer you to an appropriate legal practitioner. Use of our websites FlagTheory.com, Incorporations.io, Residencies.io, Passports.io, is subject to our terms and conditions.

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