Barbados

Barbados is situated in West India, and exists as a continental island-nation, a part of the Lesser Antilles. Its closest island neighbors are Saint Lucia and Saint Vincent & the Grenadines. The country received independence from the Great Britain on the 30th of November of 1966. Now Barbados functions as a constitutional monarchy with the Queen of the Great Britain as head of state represented locally by the Governor-General.  

Official language — English.

Currency — Barbadian dollar (BBD).

Main sources of income — tourism, sugar production, informational technologies, financial sector, offshore companies.

The International Business Companies Act 1982 was based on English common law and is a main legislative act regulating Barbados companies’ activity.

Existing types of companies:

• Limited liability companies;
• Companies with no authorized capital (for charity);
• Mutual insurance companies.

Most of offshore deals in Barbados are made through the companies with limited liability. According to the legislation rules (including also The International Business Companies Act 1991, and The Foreign Trade Corporations Law 1984, and Financial Services Act) such companies then obtain “an offshore company” status.

International Business Company (IBC) is most often used for offshore business activities in Barbados. “IBC” status (commonly called “offshore”) obtains to the companies working in the fields of international production, international trading or commerce. In general such companies’ activities must be carried out in Barbados, but export of goods or services must be exercised to the countries situated out of the Caribbean Community territory to other IBCs, or privileged insurance companies, or foreign trade corporations (i.e. other offshore companies).

Resident companies pay tax on their worldwide income, but nonresident companies pay tax only on Barbados source income.

The general rate of Value Added Tax (VAT) in Barbados for most goods and services is 15%, with a reduced rate of 7.5% applying to hotel accommodation. Exports and certain goods and services are exempt from Value Added Tax.

Legislation grants licenses to IBCs which meet the following criteria:

• A company must be a resident of Barbados (a company is deemed to be resident if it is centrally managed and controlled in Barbados; registered foreign companies – “overseas” – are considered to be residents);
• Not more than 10% of the company assets can be accumulated till liquidation in favor of the shareholders and the owners of borrowed funds who live in the countries of the Caribbean Community;
• Not more than 10% of payments on percentages and dividends can be made in favor of natural persons living in the countries of the Caribbean Community.

The title of IBC in Barbados must end with one of the following words or abbreviations: Limited, Corporation, Incorporated.

Licenses are necessary for companies with the following names:

• Bank
• Insurance, Assurance
• Re-Insurance
• Trust
• Trustee
• Savings
• Royal
• Asset management
• Fund Management
• Building Society
• Municipal
• Chartered  

The titles which mean any connection with local authorities, governmental bodies or ministry (administration) of the country are prohibited as a rule.

Registration of IBC in Barbados

IBC in Barbados is registered according to the Companies Law by providing the following documents to the Company Register: memorandum and articles of association, notification of directors and a registered address, filled application written on the name of the Company Register. The Company Register issues Certificate of Incorporation, and IBC is considered to be active starting from its Certificate of Incorporation issue date. The Memorandum of the company sets forth allowed types of activities which the company may run, and The Articles of association show the rules of managing the company inside. It is also necessary to apply the Ministry of Finance in Barbados to get an IBC license. The application must be filled in just after the company is registered.

Shareholders: minimum number of shareholders allowed is one; it can be either a natural person or a legal entity. Information about the beneficiary owners and shareholders is confidential.

Authorized capital: there is no strict requirement on the minimum sum of the authorized capital. Standard authorized capital amount is USD 50,000. Minimum number of shares allowed is one share of nominal value. Issued shares must be fully paid. It is possible to issue registered and bearer shares, privileged shares, shares with or without the right of voting, and shares which could be a subject to be canceled. Company can buy out its stocks, or reduce its stated capital on the result of the company’s paying capacity.

Directors: minimum number of directors allowed for IBC registration in Barbados is one, legal entities are possible. Information about directors is closed. There are no requirements on directors’ residency.

Registered address and secretary: to register IBC the company must have a registered address in Barbados. The copies of Memorandum and Articles of association and Certificate of Incorporation must be kept at the place of the company’s registered address. A copy of Register of directors must be also kept at the place of the IBC’s registered address. Register of directors is closed for public success. IBC in Barbados must have a secretary; it can be either a natural person or a legal entity.

Taxation policy

Barbados Corporation Tax for International Business Company (IBC)

The Minister can allow IBC another tax rate but the rate cannot be less than 1%. Foreign capital tax exemption is applied in the case when the tax rate is more than 1%.

IBC registered outside Barbados which then passed registration in Barbados pays taxes for its onshore income only. IBC is free from stamp duty if it is obtained by other IBCs or non-residents; the companies are also free from exchange control, exempted from customs fees for goods and materials imported for international business needs, and for any payments made to other IBCs or non-residents.

The Minister can grant partially exemption (usually reducing one third) from income tax for the salary of IBC workers or associate contractors who are of essential needs for the IBC activity and are difficult to be engaged or kept to the positions held.   

Dividend tax exemption makes IBC in Barbados particularly attractive for the Canadians, because the dividends paid out by “active” IBC to its Canadian mother company are also free from taxation as the profit is considered to be a part of tax free undistributed profits of the mother company. And in accordance with the Canadian Law undistributed profits is an active income of a foreign subsidiary which runs its business in such country as Barbados. 

Audit and Financial reports: IBC financial reports must be audited if the size oftotal assets or income exceeds USD 500,000. Each IBC must provide a tax declaration yearly. Company is required to keep its financial statements which must express its financial provisions.

Meetings: there are no requirements about annual meetings of directors and shareholders. But in case it is necessary, any meeting can be held outside Barbados, by phone or with the use of other telecommunication services. As alternative variant, directors and shareholders may vote by proxy.

Standard package of the documents:

• Memorandum and Articles of Association
• Apostilled set of copies of the documents
• Share Certificate
• General Power of Attorney under apostille (if using nominal director)
• The company’s seal

Registration of IBC usually takes 7 business days, but it can take up to 10 business days if legalizing the documents and sending them by DHL.

You can either register a new IBCor buy a ready company in Barbados. It is possible to open accounts in Barbados banks or international banks on your choice.