Barbados International Business
Barbados has committed itself to further modernizing its international business and financial services sector, already a key contributor to the national economy.
Prime Minister David Thompson says this is a key component on the way to fashioning Barbados into a First World economy.
The way he envisions it, the plan will include “a mature international business and financial services centre”, as well as the island becoming a regional hub for Pan-Caribbean commercial enterprises.
The Barbados proposal will be based on a newly-developed action plan, which the government describes as “a blueprint for the development and implementation of strategies which would impact our social partnership and the strengthening of the consultative process, public sector reform, monetary policy and enhanced competitiveness for major sectors, including international business.”
Barbados has already spent 40 years developing an attractive regime of major concessions to lure International Business Companies (IBCs).
Development of the international business and financial services sector began in earnest around 1969 and today it contributes significantly to the island’s foreign exchange earnings.
Low tax rates, double taxation agreements and exchange of information treaties, have provided Barbados with an ideal environment for attracting international investors to set up IBC’s, offshore banks and captive insurance companies.
Concessions to these companies include:
» Reduced tax rates (from a high of 2.5% to a low of just 1%)
» Exemption from withholding tax on dividends, interest, royalties or other income paid to non-residents and exchange controls.
Additionally, 35% of the remuneration of qualified foreign employees working in IBC’s, International Banks, International Societies with Restricted Liability, Qualifying Insurance Companies and Exempt Insurance Companies can be paid in any foreign currency, free of Barbadian income tax.
An application for an IBC license must be preceded by incorporation of the proposed entity under the Companies Act of Barbados. The application must include a brief description of the intended business of the company, the name and address of the proposed shareholders and the percentage of shares to be held. The application fee is US$425.
To keep enhancing the local climate for offshore companies, Barbados has negotiated a series of bilateral double taxation agreements. At last count Barbados had agreements with:
» Cuba and its CARICOM neighbors
Coupled with the incentives, Barbados boasts a high degree of political and social stability, excellent communication infrastructure and easy availability of skilled expertise.
The government has also introduced a Barbados Shipping Act that allows the registration of foreign ships under the Barbados Flag. It is intended primarily for trade between ports outside of the CARICOM region, to or from, but not within, the states of the CARICOM. Ships that are more than twenty years old do not qualify for registration.
The Barbados International Business Association (BIBA) speaks for the island’s offshore sector. The association groups offshore companies of various types, including the IBC’s, banks, trusts and insurance entities.
Author: Brett Callaghan