BARBADOS INTERNATIONAL BUSINESS
Barbados is a leading International Business jurisdiction offering low tax rates, expansive tax treaty networks, a variety of offshore company structures and skilled management services. This combination of factors makes it a very attractive offshore center for businesses that want to reduce their tax burden to better compete on a worldwide scale.
Barbados has built a strong reputation by focusing on regulation, transparency and tax information exchange. This approach has led to international recognition by world bodies such as the Organization for Economic Co-operation and Development (OECD) which has placed the island on its international "white list" of tax compliant jurisdictions.
Very Low Tax Rates
Barbados offers very low taxes for international businesses starting at just 2.5% of net income. These taxes can be reduced even further to only 1% as income increases. Sweetening the deal is the complete withholding tax exemption on dividends, capital gains, interest payments, royalties and management fees paid to non-residents.
Barbados Expansive Tax Treaty Network
In Barbados there is a large and continually expanding tax treaty network which facilitates improved business and trade relationships with partner countries by preventing double taxation. This network gives businesses a clear understanding of how international profits will be treated by the various governments involved as they are transferred around the globe.
Barbados currently has Double Taxation Treaties with 34 countries in place. Additional treaties are presently under negotiation to further expand the treaty network.
The island's strongest tax treaty relationship is with Canada. As such, Canadian businesses make up the largest group of international investors in Barbados, with Barbados serving as their international business jurisdiction of choice. The strength of this relationship can be seen in the island's financial centers where RBC, Scotiabank and CIBC dominate the banking landscape as some the island's major players.
Barbados Offshore Company Structures
The most popular type of Barbados offshore company structure is the International Business Company (IBC) which is used by businesses involved in international trade and commerce, as well as manufacturing. Since most businesses that register on the island do so in order to benefit from tax savings on their international sales and transactions, the IBC is the perfect structure to serve their needs.
Another type of offshore vehicle available is the Society with Restricted Liability (SRL) which is very similar to the IBC but has the added benefit of allowing U.S. citizens to claim disregarded entity status for tax purposes.
International Trusts can be opened for non-resident beneficiaries who are seeking asset management, asset protection and confidentiality while remaining exempt from taxes. Offshore Banks can also be registered on the island.
Exempt Insurance Companies (EICs) and Qualifying Insurance Companies (QICs) serve captive insurance and international reinsurance needs for efficient offshore vehicles with low annual fees, complete tax exemption and low capital requirements.
The Barbados work force is well-educated and highly qualified which means that managers, attorneys, auditors and accounting staff can be hired locally to fulfill most offshore companies' human resource needs. This local work force performs a superb job allowing businesses to mostly eliminate the high cost and trouble of relocating management and staff from a foreign country to the island.
Barbados has first class international attorneys who specialize in international tax law and can offer sound advice about structuring an offshore company to minimize its tax burden. The world's leading audit firms all have offices on the island.
In addition, there are many offshore management service providers who offer a full suite of management, administrative and accounting services to run the Barbados International Business. These managers provide the "mind and management" needed by the Barbados office, fulfilling key criteria involved in qualifying the international business for tax benefits.
The United Nations Human Development Index ranks the island in third place in the Americas after only the U.S. and Canada. The small state now has the distinction of being regarded as a "Developed Country" making it one of the few independent offshore centers to have sustained such an advanced level of development.
Is Barbados a Great Place for Business?
Barbados is the ideal international business location that offers it all. Strong regulation and a large tax treaty network offer businesses an important legal framework through which to operate, expand and thrive. The island's high level of development provides businesses with the necessary infrastructure to function in today's connected world while highly qualified managers, attorneys and accountants are able to provide the leadership and decision making skills needed to gain a competitive edge. Finally, the low tax rate and variety of company structures means that businesses can lower their cost of capital and their international tax burden to maximize returns.
This article was provided by the Barbados Offshore Advisor. The Advisor provides management, accounting and administrative services to International Business Companies and offers free advice for setting up offshore.