Barbados: Offshore Financial Center 

Barbados has many of the prime tax haven attributes include low tax regimes and an expanding tax treaty network. 

Barbados is a responsible, low-tax haven. Confidentially is respected, but secrecy is not permitted. Barbados has economic stability, quality infrastructures, accessibility from the United States, a wide range of offshore incentive legislations, and a liberal and flexible corporate law. 

All the offshore incentive legislation provides effective exemption from exchange controls. Income tax rates range from 1% to 2½% There are no capital gains taxes or estate duties, no withholding tax on dividends, interest or royalties, no taxes on share transfers, no stamp duties on capital for offshore corporations. Expatriate staff serving the offshore industry can readily get work permits and are exempt from tax on up to 35% of their remunerations. Offshore companies can import free of customs duty all machinery or materials they need for their business. 

International Business Corporations (IBCs) 

An IBC is a resident corporation (or branch of a foreign company that holds annual meetings in Barbados) which (1) does not carry on a trade in buying and selling goods in Barbados, nor selling services to resident CARICOM (Caribbean Community), (2) does not have more than 10% Barbados ownership, and (3) elects not to claim a foreign tax credit for income taxes paid outside Barbados. 

IBCs pay a normal tax of 2½%, but if it is mainly an investment company there is a sliding scale downward to 1% on income over US$15,000,000. 

An IBC can be formed by a single shareholder within 48 hours. Fees and expenses vary between US$1,200 to US$2,500.

Offshore Banking Act 

The Offshore Banking Act permits banking in foreign currencies (i.e., receiving deposits, sale and placement of securities, making of loans, advances and investments). There are capital and reserve requirements, and banks must be audited annually. An annual license fee of US$12,500 and income tax rates of 2½% (up to US$10,000,000) to 1% (over US$30,000,000) apply. At the end of 1988 there were 6 licensed offshore banks with assets of US$2.3 billion. 

The Offshore Banking Act provides a total and complete exemption in respect of trust activities carried on by the licensee. 

Exempt or captive insurance companies, whose risks and premiums originate outside Barbados, and whose ownership is outside CARICOM, pay no income tax (guaranteed for 15 years). The only payment to the government is an annual license fee of US$2,5000. There are reserve requirements, and annual audits are required. At the end of 1989 there were 178 exempt insurance companies registered. 

Barbados has an important income tax treaty with the U.S. Treaties with Norway, Sweden, Finland, Switzerland, the U.K. and Canada make Barbados an important financial center for business. Reduced withholding taxes on dividends and interest under the treaties, combined with no capital gains taxes, makes Barbados and ideal location for investment management companies. By the end of 1989, the number of exempt insurance management companies operating in Barbados increased to 45. U.S. real estate investing under the Barbados-U.S. treaty provides other special benefits.

(Courtesy of New Providence Press: Tax Havens of the World).

Find the contact names, addresses, numbers and information for local government offices, banks, accountants, company formation services, investment and management companies, advisors, experts, maildrops, real estate agents and other useful local contacts in the THE OFFSHORE MANUAL & DIRECTORY.