The Business Barbados Fast Facts Guide

be established by either residents or non-residents without a license or other authorisation, unless one is seeking to obtain certain benefits as an International Business Company, International Society with Restricted Liability, Exempt Insurance Company, Qualifying Insurance Company or as an Offshore or International Bank. There is a minimum of one director required. The names and addresses of the directors must be filed at the Corporate Registry. There is no limit on the amount of authorised share capital and shares are without par value. A company can carry on any type of legal activity, unless its articles of incorporation specifically provide otherwise.

Incentives For International Businesses

The Government has established a separate Ministry to facilitate the development and expansion of the international business sector. Several concessions have been granted to entities carrying on international business from Barbados. These include a reduced tax rate of between 2.5% and 0.25%, exemption from withholding tax on dividends, interest, royalties or other income paid to nonresidents, and an exemption from exchange controls. Additionally, a percentage of the remuneration of qualified foreign employees working in IBCs, International Banks, International Societies with Restricted Liability, Qualifying Insurance Companies and Exempt Insurance Companies can be paid free of Barbadian income tax and in any foreign currency as follows:

(a) on amounts not exceeding $150 000 – 35%

(b) on amounts exceeding $150,000 but not exceeding $500,000 – 50%

(c) on amounts not exceeding $500,000 – 60%.

International Business Companies

The International Business Companies Act of 1991 defines an International Business Company (IBC) as a company that carries on business in international manufacturing, international trade and commerce from within Barbados.

All companies wishing to operate as IBCs must obtain a licence from the Ministry of International Business. On application, there is a fee of US$125 and a license fee of US$500. The license must be renewed annually at a fee of US$500 in order to be valid. A company ceasing to transact business as an IBC or ceasing to satisfy the requirements of the Act must notify the Minister in writing.

In order to operate an IBC in Barbados, the company must be incorporated in Barbados, or registered here as an external company. In addition, the company must be financially capable of carrying out the business and comply with all conditions.

Benefits of the IBC Act along with other relevant features are:

• Tax on income on a sliding scale, from a maximum of 2.5% to a minimum of 0.25%

• Exemption from all withholding taxes

• No capital gains tax

• Tax credit in respect of taxes paid outside of Barbados is allowable but only insofar as it does not reduce the tax payable in Barbados to less than 0.25%

• Freedom from exchange control

• Audited financial statements, where required, must be filed with the Ministry

• Tax concessions for specially qualified persons

• Bearer shares are not permitted

• An IBC can keep books and records in a foreign currency

• Imports of equipment and machinery free of customs duty, consumption tax and stamp duties

• May apply for a guarantee that all or any of the benefits and exemptions in the Act will be valid for 15 years

• An IBC, which is solely owned by an Offshore Trust under the management of a licensed Barbados International Bank, is exempt from tax if its activities are restricted to buying, holding or managing securities.

Exempt Insurance Act

The Barbados Exempt Insurance Act (1983) states that for a company to qualify as an Exempt Insurance Company it must be incorporated or registered in Barbados with a minimum capital of BB$250,000 (US$ 125,000). Exempt Insurance Companies cannot insure risks originating in Barbados or risks of local residents. The resident director may not own shares in the company. Exempt Insurance companies are taxed on their profits at the rate of 0% for the first 15 years and thereafter 8% on the first BB$250,000 (US$125,000) of profits. They are exempt from withholding tax and exchange control restrictions. Tax concessions are made for specially qualified persons and convention expenses are allowed by US authorities. There is an application fee of BB$500 (US$250) for an Exempt Insurance Company, and an annual licence fee of BB$20,000 (US$10,000) which is applicable during the first 15 years of operation.

Qualifying Insurance Companies

A 1998 legislative enactment allows companies involved in international insurance business to register under the domestic insurance legislation as Qualifying Insurance Companies (QIC) on the condition that at least 90% of its premiums originate outside Barbados and at least 90% of its risks insured are located outside CARICOM. A maximum tax credit of 93% is available to a QIC where premiums originate outside of CARICOM. As a result, a QIC is entitled to the benefit of a low effective rate of tax (generally 1.75%) in respect of general insurance business and 0.35% in respect of life insurance business after deduction of the foreign currency earnings allowance. QICs are also entitled to exemptions from