Barbados Companies

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General Introductory and Offshore Tax Information

Very often confusion tends to arise on whether or not a jurisdiction should be given tax haven status in spite of provisions for taxing offshore business entities. As with many other jurisdictions, there may not exist an entirely tax free fiscal regime for ring-fenced offshore activities but the tax incentives and investment programs that create a friendly business climate for international investors and business operations make the boundary between a tax haven and special or low tax regime almost seamless.

Plus, most business entities existing under the laws of these jurisdictions are so flexible in that they can be used for both domestic and international or offshore operations, which make the imposition of certain taxes the only distinguishing factor between these jurisdictions and fully fledged offshore tax shelters.

There are tax exemptions given to offshore businesses as will be discussed further on, but all Barbadian offshore entities are liable to a tax on profits and gains which is payable to the Commissioner of the Inland Revenue. Unlike other tax havens where except for registration renewal fees that are due yearly, the corporate tax imposed on offshore companies operating from within Barbados is structured in the following manner:

  • 2.5 per cent on all profits and gains up to $10,000,000
  • 2 per cent in all profits an gains in amounts exceeding $10,000,000 but not exceeding $20,000,000
  • 1.5 per cent on all profits and gains in amounts exceeding $20,000,000 but not exceeding $30,000,000

In spite of the foregoing, Barbados offshore entities enjoy tax exemptions on capital gains and income tax on services provided from within Barbados. Also, there are no taxes imposed on dividends or interests earned by offshore entities, as well as no tax, duty or other obligation imposed on the appreciation in value of property or assets situate in Barbados of a licensee except if these assets are passed on to anyone residing in Barbados.

Barbados Offshore Business Entities:

  • Barbados Foreign Sales Corporation (BFSC)
  • Barbados International Business Company
  • Barbados International Trust
  • Barbados Exempt Insurance Company
  • Barbados Exempt Society with Restricted Liability (Srl)
  • Barbados Offshore Banks

Barbados Foreign Sales Corporation (BFSC)

Features:

  • Foreign sales corporations are regulated under the Companies Act of Barbados and may take the form of any juridical structure
  • Any business entity can be incorporated as a BFSC as long as it meets the prescribed requirements under the law
  • BFSCs are mainly organised for conducting overseas business operations in an approved location, particularly by US export corporation
  • Companies which export from the US are tax exempt from corporate tax on a certain amount of profits earned if using a BFSC
  • A BFSC must not have shareholders who reside locally or within the Caricom region
  • Despite provisions within the Income Tax Act, a BFSC does not have to withhold any amount of the interest, dividend or returns to be paid to a member on his or her securities, shares, or liabilities of the company
  • There are no exchange controls against a BFSC

Barbados International Business Company

Features:

  • Barbados international business companies are regulated by the International Business Act
  • The services of an IBC can only be provided to people residing outside Barbados and the CARICOM
  • An IBC can be formed with one member
  • A local secretary and registered agent must be used for incorporation services
  • General meetings in can be held at any location
  • Audited accounts must be filed with the government authorities if the IBC’s profits are in excess of US $500,000
  • Tax benefits and exemptions are guaranteed for 15 years
  • A Barbados IBC may transfer out of Barbados if it so desires
  • Licenses are renewable annually on or before December 31st
  • Financial statements and returns are to be filed yearly for tax purposes
  • Audited accounts must be submitted if the revenue and profits of the company exceed US $500,000

Barbados International Trust

Features:

  • The trust property is separate and identifiable from the trustee’s personal property
  • Trust property is held in the trustee’s name or in that of another person appointed by the trustee
  • In the trustee is invested the capacity to dispose, administer or use the trust’s assets as prescribed in the trust Deed and by law
  • At least one trustee must be a resident of Barbados
  • The settlor is not a resident of Barbados upon establishing the trust
  • Trust property must not be located in Barbados
  • An interest in trust property must not be situate in Barbados
  • Resident beneficiaries are liable to pay taxes on any income earned or obtained by the trust
  • Trusts are exempt from exchange controls

Barbados Exempt Insurance Company

General Insurance Business

  • Insurance business including financial insurance, product liability, general liability, marine, aviation and transit insurance, property insurance, employer’s liability insurance, motor vehicle insurance, professional liability, workmen’s compensation insurance, accident and sickness insurance

Long-Term Insurance Business

  • Insurance business including bond insurance, industrial life insurance and ordinary life insurance

Company Management

  • Management services offered in Barbados entail processing claims for exempt insurance services, brokerage and underwriting services and administrative services.

Barbados Exempt Society with Restricted Liability (Srl)

Features:

  • The Barbados exempt society with restricted liability has features that are very similar to the US LLC
  • For taxation in the US may be treated as a disregarded entity, partnership or corporation
  • Srl’s are governed by the Societies with restricted Liability Act, which makes provisions for an Srl to be either exempt or non exempt
  • Exempt Srl’s may only do business with non residents
  • This offshore business entity is a legal person whose rights and powers are separate and distinct from those of its members
  • The liabilities and obligations of members are limited
  • Bearer shares and quotas similar to shares cannot be issued
  • A locally authorized and registered agent must be appointed
  • Tax benefits are guaranteed for a 30 year period
  • Barbados exempt Srl’s have a limited duration of 50 years
  • Financial statement and annual returns must be submitted on or before January 31 yearly
  • Registration renewal fees to be paid annual

Barbados Offshore Banks

Features:

  • Barbados offshore banks may not provide banking services to people residing in Barbados
  • Both the Offshore Banking Act and the International Financial Services Act govern offshore banks in Barbados
  • Offshore banks may accept foreign money deposits, sell or place foreign notes, bonds, securities and debt obligations
  • Foreign funds may be used for investments, loans, advances or purchasing bonds and securities
  • Trust services can be provided for non residents with regard to movable or immovable property, cash and securities
  • Barbados offshore banks must submit an audit and financial statements annual
  • Quarterly statements of assets and liabilities must also be filed with the Central Bank
  • Applications for offshore bank licensing are filed with the Central Bank of Barbados for appraisal, official approval is granted by the Minister of Finance and licenses are issued by the Director of Bank Supervision
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