Barbados offers a variety of efficient, tax planning vehicles that investors and businesses can use to reduce their international tax burden. Barbados tax planning vehicles benefit from no withholding taxes on dividends, interest, royalties or management fees. Capital gains are also exempt from taxation. In addition, these vehicles are not subject to foreign exchange controls.
International Business Companies
An International Business Company (IBC) is the most popular structure used by international businesses for trade, commerce and manufacturing. This structure offers a very attractive tax rate on profits of just 2.5% which is reduced on a sliding scale all the way down to 0.5%.
Societies with Restricted Liability
A Society with Restricted Liability (SRL) is similar to a Limited Liability Company in structure. SRLs also benefit from low tax rates starting at 2.5% of profits which are reduced on a sliding scale down to 0.5%.
International Banks have low tax rates on profits of 2.5% reduced to 0.5% on a sliding scale. They handle international transactions including the acceptance of foreign deposits, the sale of foreign debt and bonds, and any other transactions involving foreign money and securities.
The minimum capital requirements are US $500,000 for banks that do not accept third party deposits. For those that accept third party deposits, the minimum capital requirement is US $2,000,000.
International trusts offer asset management and protection in a tax efficient structure. An international trust is regarded as domiciled outside of the country, so it is tax exempt. Non-resident beneficiaries of the international trust are exempt from income tax on the payments made to them from the trust.
International trusts must hold foreign sourced income that is not derived in Barbados. In addition, the beneficiary must not be a Barbadian resident at the time the trust is created and the trust cannot hold Barbadian real estate.
Barbados Insurance Companies can be registered as either Exempt Insurance Companies (EICs) or Qualifying Insurance Companies (QICs). These two structures provide a useful means of serving both captive insurance and international reinsurance needs.
Exempt Insurance Companies
Exempt Insurance Companies are taxed at 0% for the first 15 years of operation. Thereafter, they are taxed at just 2% on the first US $125,000 of income, with any additional income remaining exempt from taxation. Barbados EICs are easy to set up with a low capital requirement of just US $125,000. EICs can only insure risks and accept premiums from outside of Barbados.
Qualifying Insurance Companies
Qualifying Insurance Companies receive a tax credit on premiums that originate outside of the CARICOM region which lowers the effective tax rate to about 1.75% on profits from foreign premiums. QICs may insure risks and accept premiums from within CARICOM. However, at least 90% of the risks and 90% of the premiums accepted must come from outside CARICOM.
Barbados offers a full suite of internationally tax efficient vehicles that can benefit foreign investors and international businesses alike.
Seaside Realty has partnered with the Barbados Offshore Advisor to bring our clients the experience and professional network that they need to succeed. Please contact us to get assistance with all of your international business needs.