Barbados Tax & Business Guide - Deloitte

/Home/A-B Countries/Barbados (Country Code 1 +246)/Barbados Tax Resources

Basic facts
Population 273,000 Inflation 7.3% (2006)
Main languages English GDP per head US$18,400 (PPP)
Currency Dollar (BBD) GDP growth 3.5% (2006)*
Economic communities WTO
GDP sources 6% agriculture, 16% industry, 78% services
*Economist Intelligence Unit estimates.
Political environment

Barbados is a parliamentary democracy. Queen Elizabeth II of England is the head of state, and is represented by a governor-general.

The ruling Barbados Labour Party (BLP), led by the prime minister, Owen Arthur, has been in office since 1994. The BLP won its third consecutive election in 2003. The next general election is due by September 2008.
Foreign trade and investment
Exports US$441.2m (2006)* Imports US$1.6bn (2006)*
*Economist Intelligence Unit estimates.

Major exports: Manufactured goods, chemicals, rum and sugar.

Main trading partners: The Caribbean Community (Caricom), the US and the UK.

Sugar is the most important commodity export, but its significance is diminishing. BarbadosÌs other main merchandise exports are electrical goods and other manufactures.

The government welcomes foreign investment, and provides a range of incentives such as tax holidays and training grants.
Business and financing
Business forms International business company, limited liability company

A wide variety of corporate forms are available and the legislative structure is liberal. The international business company (IBC) is the most widely used vehicle for offshore operations. Other company forms that can be used are the limited liability company, company without share capital, mutual insurance company and external company.
Labour environment
Unemployment rate 8.7% (2006)* Minimum wage Under consideration
*Economist Intelligence Unit estimate.

Barbados has set minimum wage rates for specified categories of workers, for example household domestics and shop assistants. The minimum wage in these jobs is BBD 5 per hour. The working week is 40 hours and 5 days.

The level of unionisation is low.

Work permits for foreigners are issued readily if it can be proved that there is no suitably qualified Barbadian.
Taxation
Corporate tax
Main rate 25%

Resident companies pay tax on their worldwide income; non-resident companies pay tax on income derived from Barbados. The corporate tax rate is 25%. Branch profits reinvested in Barbados are exempt from the 10% branch profits tax that applies to the after-tax profits of non-resident companies.
Individual tax
Rates rise progressively to 35%

Tax is generally chargeable on the worldwide income of resident individuals and the income of non-residents derived from Barbados. An individual is resident if the individual spends more than 182 days in Barbados in the year, or if the individual is regarded as Ïordinarily residentÓ. Special rules apply to individuals who are resident but not domiciled in Barbados. The top income tax rate of 35% applies to income over BBD 24,200. For income up to BBD24,200, income tax is applied at a rate of 20%.
Capital gains
Gains are generally not subject to tax

Barbados has no specific rules on the taxation of capital gains; regular gains on the disposal of real property may be taxed as business income. Gains on the disposal of land may be subject to land development duty, in addition to income or corporate tax.
Indirect tax
Standard rate 15% Other rates 7.5%, 0%

Value-added tax (VAT) applies to most transactions, with a lower rate of 7.5% applying to hotel accommodation. A zero rate applies to exports, basic foodstuffs and international freight services. Exemptions include some financial services and sales of real property. Registration is compulsory for businesses with annual turnover above BBD 60,000. Voluntary registration is possible.
Tax administration and compliance
Tax year Corporations: year of assessment is year following accounting period; Individuals: calendar year

Companies make an advance tax payment (amounting to 50% of tax paid in the previous year) by September 15th in the tax year (December 15th where the companyÌs accounting period ends between October 1st and December 31st). A second advance payment is made on March 15th of the following year, and the tax return must be submitted by that date. Any remaining tax is payable by September 30th of the year following the relevant accounting period. Individuals carrying on a business or profession must make three quarterly advance payments of tax, amounting to 25% of the previous yearÌs liability. Emoluments are taxed by withholding.
Additional tax information
Withholding taxes Dividends 15%, Interest 15%, Royalties 15%.
Tax treaties Sixteen treaties.
Dividends 12.5% withholding tax on dividends to resident individuals.
Revenue protection There is transfer-pricing legislation.
Groups There is no provision for group taxation.
Incentives International business companies; insurance; exports.
Other taxes Betting and gaming duties, Land tax, Shipping fees, Customs and excise duties, Stamp duty, Tax on bank assets, Professional trade, business and licence fees, Training levy, Property transfer tax, Land development tax.