Barbados is the easternmost of the Caribbean islands, about a three-hour flight from Miami by direct flight. The island is 166 square miles in size and has a population of approximately 260,000. Barbados is known for the friendliness of its people and that, along with its beautiful beaches and wonderful climate, have made it one of the most popular tourist destinations in the Caribbean.
In 1966, after nearly 350 years of British rule, Barbados became an independent nation. The political, economic and social stability that characterized its colonial past continues today.
Barbados’ legal system is based on English common law and has been supplemented by modern legislation. The courts exist on the English model and the final appeal is to the Privy Council in London.
The official language of Barbados is English. Its currency is the Barbados dollar which has a fixed exchange rate of 1.99 “Bajan” dollars for each US dollar. Barbados is a member of Caricom, the common market of the Caribbean.
Since 1965, when it first enacted enabling legislation for international business companies, Barbados has allowed companies that do not trade locally to establish a presence on the island. The original legislation has undergone periodic amendments and the current statute is the International Business Companies Act (IBC Act), which was enacted in 1991.
International business companies (IBCs) or offshore companies benefit from significantly reduced tax rates that can be as low as one percent on profits exceeding US$15 million. (VBIs may negotiate higher tax rates with the Ministry of Finance, in circumstances where that would be advantageous.)
Interest, rent, management fees or royalties paid by one IBC to another IBC, or to a person who is not a resident of Barbados, are also exempt from withholding tax. No tax or fee applies to the transfer of shares of an IBC, by a non-resident person or another IBC, to another non-resident person or IBC.
IBCs also allow duty-free importation of plant and equipment for commercial purposes.
IBCs are exempt from exchange control regulations and books and records may be kept in any currency. They may also provide services to other IBCs or companies operating under similar “incentive” legislation.
The exemption from withholding tax for dividends makes Barbados IBCs especially attractive to Canadians, as dividends that an “active” IBC pays to its Canadian parent company are also not subject to tax in Canada, as they are part of the parent’s exempt surplus. Under Canadian law, exempt surplus is the active business income of a foreign affiliate that is conducted in a listed country, such as Barbados. US citizens and others can also benefit from the tax treaties that Barbados has with many countries, including the United States. More than 3,000 offshore companies (IBCs) are registered in Barbados.
To establish an offshore company (IBC), an international business company license must be applied for from the Barbados Ministry of Finance. This request should be made as soon as possible after the incorporation of a company.
To apply for an IBC license the following information must be provided:
- Company Name
- Incorporation date
- Copy of the articles of incorporation.
- Address of registered office
- Name and address of shareholder(s)
- A profile/curriculum vitae of each director and shareholder in English (please note that this information is treated as confidential by the authorities and is not for public consumption)
- Brief description of the business to be carried out
- Declaration to the Minister of Finance that the company qualifies for recognition as an international business company
The application for an IBC license must be accompanied by the license fee.
RESTRICTIONS
An offshore company (IBC) must comply with the following restrictions:
- Local or resident Caricom shareholding must be limited to 10% or less.
- You must not conduct a trade of buying or selling goods and services in Barbados or originating in Barbados.
- Trade in the sale of services originating in Barbados must be for non-Caricom residents.
- Manufactured products must be exclusively for export outside the Caricom region.
- You must pay an annual license fee.
OFFSHORE COMPANY SERVICES
Barbados offshore company (IBC) services must include:
- Supervise the constitution of the IBC
- Arrange for the services of a Barbados resident director (if required)
- IBC license application and renewal
- Arranging for the appointment of a Barbados auditor
- Serving as a registered agent in Barbados
- Holding meetings of shareholders and directors
- Maintenance of company records.
- Submission of all required Barbados elections, reports and declarations
DIRECTORS
As part of our normal administration fee, we provide the services of a director. However, in many cases, particularly where the IBC wishes to take advantage of Canada’s exempt surplus rules, an independent Barbados resident, who must be a professional person of good repute, will be appointed as the independent director.