The Business Barbados Fast Facts Guide

Societies with Restricted Liability (SRL) Act possesses the flexibility to be treated as a corporation, a partnership or a disregarded entity for US tax purposes. A SRL can be formed either as an international society or a regular society. International SRLs are used mainly for international transactions and are prohibited from acquiring or holding land in Barbados, other than land leased for business purposes.

A SRL has the characteristics set out below:

• Limited liability

• Perpetual duration

• The rights, powers and privileges of an individual

• Stipulation that the transfer of quotas in a society will not confer on the transferee the right to become a member or participate in the management of the society without the written consent of all the members.

An International SRL has the following benefits:

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

• Exemption from withholding taxes on dividends and interest payment

• Tax credit in respect of taxes paid outside of Barbados, in so far as it does not reduce tax payable to less than 0.25%

• Re-domiciliation provisions

• No capital gains tax

• Exemption from all import duties on machinery or equipment for use in its business

• Freedom from exchange control.

Criteria for operation of an International SRL

The International SRL must be organized in Barbados and is required to have and continuously maintain a registered office and agent in Barbados.

ORGANISTAION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (“OECD”) CONSIDERATIONS

In October of 2017 the OECD, through its Forum on Harmful Tax Practices (“FHTP”) required Barbados to revise or abolish the international business regimes outlined above. As a result, these regimes in their current form will be closed on December 31 2018. The Barbados government is participating in ongoing discussions with the OECD to conclude on the nature of the changes to the current regimes.

Taxation

Companies and individuals who are resident and domiciled in Barbados for tax purposes are subject to income tax on their worldwide income whether or not the income is remitted to

Barbados. Individuals who are resident but not domiciled in Barbados are taxed on their income derived from Barbados and on any overseas income remitted to Barbados. Non-residents are taxed only on income derived from Barbados.

Corporations are taxed on their profits at an annual rate of 30%, whereas individuals are subject to income tax at the rate of 16% on taxable income up to and including $35,000 and a rate of 33.5% on taxable income between $35,000 and $50,000 and a rate of 40% on taxable income exceeding $50,000. Individuals earn the first BB$25,000.00 (US$12,500.00) of their annual income tax free.

There are no capital gains taxes levied in Barbados, and gift, inheritance, and estate taxes are not applicable. Property transfer tax applies to the transfer of property situated in Barbados at a rate of 2.5%. This includes real estate as well as certain leasehold interests and shares. Stamp duty is also payable on instruments executed in Barbados, which relate to any property situated in Barbados or to any matter or thing done or to be done in Barbados. Generally stamp duty at the rate of approximately 1% is applied to instruments executing the sale of real estate.

Value Added Tax (VAT)

Barbados introduced a value-added tax on January 1, 1997. Generally, value-added tax is levied at the rate of 17.5% on all goods and services supplied in Barbados, and on goods imported into Barbados. However, there is provision for specific zero-rated and exempt goods and services that would not attract the value-added tax. VAT is included in the final price the consumer pays for goods and services. Hotel accommodation, and certain supplies related to tourism, enjoy a lower VAT rate of 7. 5%. However, the supply of mobile services of voice, data, and text messaging attracts an enhanced VAT rate of 22%.

DOUBLE TAXATION/INVESTMENT TREATIES

Barbados has entered into double taxation and bilateral investment treaties with the countries as indicated in the table below.

The Double Taxation Treaty (‘DTA’) with Ghana, Rwanda await ratification while Slovak Republicc are awaits ratification date.

In January 2-----017, Barbados signed on to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Sharing (“MLI”). The country must now complete the necessary domestic ratification procedures and determine the application of the MLI to its existing DTAs.

Countries indicated with an asterisk (*) are also signatories of a Bilateral Investment Treaty with Barbados. This combination of double taxation, investment treaties and tax incentives makes Barbados unique within the Caribbean and particularly attractive to foreign investors.

As indicated in the following table, in addition to its extensive network of DTAs, Barbados also has bilateral investment treaties