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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 The Exempt Insurance Act has been repealed and the Insurance Act has removed provisions for Qualified Insurance Companies.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The International Financial Services Act has been also repealed and all financial institutions, whether dealing with local or foreign currency, will be regulated under the Financial Institutions Act.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.

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


Tax Residency - Companies are deemed to be resident in Barbados if its management and control is exercised in Barbados.

Basis – Companies are taxed on their worldwide income.

Tax rate – Barbados companies are taxed on their worldwide income (regardless of the source) on a sliding scale from 5.50% (for taxable income below BBD 1 million - USD 500,000) to 1% (for taxable income over BBD 30 million - USD 15 mil):

  • Taxable income up to BBD 1,000,000 (USD 500,000) - 5.5%
  • Taxable income exceeding BBD 1,000,000 (USD 500,000) but not exceeding BBD 20,000,000 (USD 10,000,000) - 3.0%
  • Taxable income exceeding BBD 20,000,000 (USD 10,000,000) but not exceeding BBD 30,000,000 (USD 15,000,000) - 2.5%
  • Taxable income exceeding BBD 30,000,000 (USD 15,000,000) - 1.0%

Capital gains - Capital gains from the sale of securities are not subject to taxation.

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 – There are no dividend withholding taxes as long as underlying profits distributed as dividends to nonresident shareholders are earned from sources outside of Barbados (i.e. the activities that have generated the profits have taken place outside of Barbados). For instance, income arising from trading goods that do not enter Barbados are considered income from foreign sources, and therefore dividends paid out of profits arising from such trading activity would not be subject to withholding tax.

If dividends are paid out of profits earned from sources within Barbados, withholding tax is 5%, unless reduced/exempted by an applicable double tax treaty.

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.

There are no controlled foreign company rules.

Interest payable on outstanding debts due to non-resident related parties, owning more than 10% of the company, will be deductible to the extent that the total amount of debt does not exceed more than one and a half times the equity of the company. Any portion of interest exceeding the above ratio is not deductible.

Labor taxes – Employers and resident 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

North America
e n - B B

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 became a Commonwealth realm with Elizabeth II as Queen of Barbados and head of state, who was represented on the island by a governor-general.

On 30 November 2021, Barbados transitioned to a republic within the Commonwealth. The first and current president is Sandra Mason, who previously served as the last governor-general.

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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