Online News Sources
The Nation: www.nationnews.com
www.Caribbeannetnews.com
Business Environment
The
Barbados government focuses heavily on improving the investment climate
of Barbados and on enhancing the infrastructure to support increasing
business activity. Overall, Barbados has a stable and well-organised
business environment which includes a reasonably diverse set of
professional services. There is a wide variety of corporate forms
available for most purposes and the legislative structure is flexible
and liberal.
Barbados was identified by
the OECD as one of the 35 jurisdictions considered to be a tax haven
but was taken off the list in January 2002. The OECD said that
Barbados' long standing tax exchange treaties with other jurisdictions
were sufficient for the country to be excluded from the list. Barbados
was not on the Financial Action Task list of 15 countries deemed
‘unco-operative’ in the fight against money laundering. The country was
classified by the G-7’s Financial Stability Forum as a ‘group two’
jurisdiction that needed to make changes to improve the financial
supervision of its offshore sector.
Barbados
is a member of the Caribbean Community (Caricom). The development of
the international business and financial services sector began around
1977 and now contributes significantly to foreign exchange earnings.
The offshore sector is legally separated from the onshore sector. The
legislation allows international business companies, segregated cell
companies, international banks, exempt insurance and management
companies, societies with restricted liability and ship registration.
The
International Business Companies Act 1991 (as amended by the
International Business Companies (Amendment) Act 2004) defines
companies that carries on business in manufacturing, international
trade and commerce from within Barbados. All companies wishing to
operate as IBCs must obtain a license from the Ministry of Economic Development.
Onshore insurance companies are regulated by the Insurance Act 1996
while offshore insurers are regulated by the Exempt Insurance Act.
Insurance comapnies apply for licensing with the Office of the
Supervisor of Insurance. Local insurance companies involved in
International insurance can register under domestic insurance
legislation as qualifying insurance companies (QIC). Unlike exempt
insurance companies, a QIC can be owned by residents of Barbados and
can insure a specified amount of local risk.
Offshore banks apply to the Central Bank of Barbados for
registration under the International Financial Services Act, which came
into effect on 10 June 2002. Onshore banks are regulated through the
Financial Institutions Act. Entities formed under the Societies with
Restricted Liability Act 1995 can be treated as a corporation, a
partnership or a disregarded entity for US tax purposes. A SRL can be
formed either as an exempt society or a non-exempt society. Exempt SRLs
are prohibited from acquiring or holding land leased for business
purposes. International trusts are governed under the Barbados Trustee
Act and the International Trusts Act 1995. The Shipping Act and the
Shipping Incentives Act allow the registration of ships under the
Barbados flag, and provide for their management and maintenance
including ship building. To qualify for registration, a ship must apply
to Maritime Affairs.
In the onshore sector Barbados had seven commercial banks, 14
non-bank financial institutions, 41 credit unions, nine life insurers
and 10 general insurance companies operating in 2001. While precise
figures are not available, the IMF estimates that the offshore sector
employs about 3,000 people and generates US$110 million annually in
foreign exchange. The offshore sector makes up about 40% of
government’s corporate tax revenue, with international business
companies as the main contributors. In 2001 Barbados had 4,065
international business companies, 2,975 foreign sales corporations, 180
exempt insurance companies, 30 exempt insurance management companies,
166 societies with restricted liabilities and 56 offshore banks. At the
end of 2001 offshore banks managed 800 trusts and had 298 employees. An
IMF analysis noted that some of the entities may not be active.
Anti-money laundering prevention is done through the Money
Laundering (Prevention and Control) Act as amended in 2002, the
Anti-Terrorism Act, and the Mutual Assistance in Criminal Matters Act.
The Anti-Money Laundering Control Authority is responsible for ensuring
compliance with the various acts. In May 2005 the Central Bank released
an industry consultation of new guidelines on the Prevention and
Detection of Money Laundering for Licences.
Taxes
Barbados
offers tax holidays and other incentives for manufacturing industries,
tax concessions and other incentives for information service companies.
Capital gains are not subject to tax in Barbados. International
business companies are tax on income on a sliding scale, from a maximum
of 2.5% to a minimum of 1%. Exemption from all withholding taxes. There
are no withholding taxes on dividends, royalties, management fees,
interest payments and other fees paid by an international business
company to non-residents of Barbados or to another international
business company. Offshore entities are exempt from exchange control
restrictions and may keep its records and financial statements in a
foreign currency. Expatriate staff can be exempted from income tax and
exchange control on up to 35% of their remuneration from an
international business company. An international company may import,
free from all customs duties, equipment, machinery or materials for use
in its business. There are exemptions from taxes on transfers of shares
and other assets.
The basic corporate tax for local companies fell by 2.5% to 37.5% in
2002 and to 30% with effect from the income year in 2005 . The rate
will be reduced further to 25% by 2006. Double taxation is generally
avoided if a double taxation treaty is in force, which allows a credit
against Barbados tax for foreign tax paid on overseas income. Dividends
from one local company to another are tax-exempt.
Offshore banks are subject to tax rates on banking profits on a
sliding scale, from a maximum of 2.5% to a minimum of 1%. There are no
other direct tax or capital gains tax on the profits or gains of the
bank, no taxation on distribution to a non-resident person or another
licensee. No taxation is levied on a licensee, its shareholders or
transferees on the transfer of its assets or securities. There are no
estate, inheritance or similar taxes on any shares, securities or
assets of a licensee owned by a non-resident person.
Non-resident insurance companies are taxed between 3% and 6% on
premium income. A company registered under the Insurance Act may be
entitled to tax concessions where at least 90% of its premiums
originate outside and at least 90% of its risks insured are located
outside Caricom. A maximum tax credit of 93% is available where
premiums originate outside of Caricom. A qualifying insurance company
(see above) is entitled to the benefit of a low effective rate of tax
(generally 2.8% after deduction of a foreign currency earnings
allowance, and exemptions from withholding taxes and exchange control.
Other offshore entities pay taxes ranging from 1% to 2.5% on profits.
An international trust is taxed at 40% on its profits earned in, or
remitted to Barbados but there are no withholding taxes or payments to
non-resident beneficiaries. A deduction is also available for 50% of
the amount expended on investment in, and creation of intellectual
property over a ten-year period.
Barbados has double taxation agreements with Caribbean Community
members, Canada, China, Cuba, Finland, Malta, Norway, Sweden,
Switzerland, the United Kingdom, the United States, Venezuela and the
Republic of Botswana (as of August 2005). Barbados' double taxation
treaty with Canada allows dividends paid out of the business income of
a Barbados-based foreign affiliate to be fully tax deductible by the
recipient Canadian-based corporation. Barbados has bilateral investment
treaties with Canada, China, Cuba, Germany, Italy, Switzerland, the
United Kingdom, and Venezuela.
Individuals pay income tax of 25% on the first B$24,200 of taxable
income and 37.5% thereafter. There is a personal allowance of B$20,000
for residents.
Stock Exchange
The
Securities Exchange of Barbados or, Barbados Stock Exchange (BSE) as it
is now known, was established in June 1987 under the Securities
Exchange Act 1982. It was subsequently re-incorporated on August 2,
2001 simultaneously with the enactment of the Securities Act
2001-13,which repealed and replaced the 1982 Act. However the BSE
remains a privately owned non- profit organization. A Securities and
Exchange Commission has regulatory responsibility for the BSE.
The
BSE has 24 local listings and a number of international companies
including 7 banks. On 4 July 2001 the BSE switched from a manual open
auction outcry method of trading to electronic trading using the order
routing method. In August 2005 market capitalization was B$10.6bn with
cross listings to other Caribbean markets capitalized at B$10.8bn.
Key Contacts
International Business and Financial Services Division
Ministry of Industry and International Business
Director of
International Business
Upton, St. Michael
Barbados
Tel: (246) 430-2200
Fax: (246) 228-6167
E-mail: info@barbadosbusiness.gov.bb
Internet: Ministry
of Economic Development
Barbados Investment and Development Corporation (BIDC)
PO Box 1250 ‘Pelican House’
Princess Alice Highway
Bridgetown,
Barbados,
West Indies
Tel. (246) 427 5350
Fax: (246) 426 7802
E-mail: bidc@bidc.org
Internet: www.bidc.com
Central Bank Of Barbados
PO Box 1016
Bridgetown
Barbados
Tel: (246) 436-6870
Fax: (246) 427-9559
E-mail: cbb.libr@caribsurf.com
Internet: www.centralbank.org.bb
Office of the Supervisor of Insurance
Ministry of Finance and Economic Affairs
Nicholas House, Broad Street, Bridgetown
Barbados
Tel: (246) 426-3815
Fax: (246) 436-2699
E-mail: sofi@caribsurf.com
Barbados Stock Exchange Inc
1st Floor Carlisle House, Hincks St
Bridgetown, St Michael, BarbadosTel: (246)436-9871/2
Fax: (246)
429-8942
E-mail: General Manager, marlon.yarde@bse.com.bb
Internet: http://www.bse.com.bb/
Key Stats
Population: (July 2005 est.,) 279,254
Capital: Bridgetown
Currency: Barbados dollar. Pegged at US$1 = BD$2 Barbados dollar.
Legal system: Based on the British common law system with
variations. Barbados has magistrate courts, and a Supreme Court
consisting of the high court and the court of appeals. In August 2005,
Barbados formally adopted the Caribbean Court of Justice (located in
Trinidad and Tobago) as its final court of appeal.
Government: An independent parliamentary democracy with the British
monarch as head of state and represented by the governor-general.
Barbados is a member of the Commonwealth. The bicameral parliament is
made up of the lower House of Assembly, with 28 directly-elected
members, and the Senate, with 21 members appointed by the
governor-general in consultation with government and the opposition.
Members of both houses serve five-year terms. Executive power is
exercised by the prime minister, cabinet, and other appointed ministers.
Governor general: Sir Clifford Husbands
Prime minister, finance, economic affairs and civil service: Owen Arthur
Elections: The Barbados Labour Party (BLP) was returned to a third
term in office in elections held on 21 May 2003. The BLP won 23 of 30
seats, down from the 26 seats it took in the 1999 elections. The
opposition Democratic Labour Party, led by Clyde Mascoll, won seven
seats.
Political parties: Barbados Labour Party (leader, Owen Arthur)
Democratic Labour Party (leader, Clyde Mascoll)
National Democratic Party (leader, Richard Haynes)
Economic overview (2005)
Historically the Barbados
economy had been dependent on sugarcane cultivation and related
activities. Today, the main sectors of the economy are tourism,
financial services, informatics, sugar production, light manufacturing,
and component assembly exports. The economy contracted in 2002-03
mainly due to a decline in tourism. Growth was positive in 2004 as
economic conditions in the US and Europe moderately improved. Real
Gross Domestic Product (GDP) increased by 2.3% in 2004. Sectorial GDP:
wholesale and retail trade 15.3%; financial and business services
18.9%; government services 18%; other services 16.1%; tourism 11.2%.
manufacturing 6.1%; construction 5.8%; agriculture 4.7%; utilities
3.5%; mining and quarrying 0.7%.
Inflation rate (CPI) (2003est): -0.5%
Labour force: Total labour force: about 140,000. Unemployment rate: 9.9% (April 2005).
Public holidays (2005)
New Year (1 January); 21 January (Errol
Barrow day); 25 March (Good Friday); 28 March (Easter Monday); 28 April
(Heroes' Day); 1 May (Labour Day); 16 May (Whit Monday); 1 August
(Emancipation Day); 1 August (Kadooment Day); 30 November (Independence
Day); 25 December (Christmas); 26 December (Boxing Day).
Time: GMT -4. There is no summer time clock change.
Financial Year: 1 April – 31 March
Restaurant Guide
La Terra Ristorante, Carambola, Pisces, The Cliff, The Shak Shak Restaurant, Josef’s Restaurant, La Mer.
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