• Barbados Tax System

  • TAX RESIDENCY

    Tax Residency

    A company is considered to be tax resident in Barbados if its management and control is exercised in Barbados.

    Taxable Basis

    Barbados tax resident companies are taxed on their worldwide income.

    Non-Barbados tax resident companies are taxed on income generated in Barbados.

  • TAX ADMIN

    Taxable Period

    The taxable period for a company in Barbados is its accounting year.

    Tax Returns

    Every company needs to file an annual tax return.

    The due date depends on the company's accounting year-end as follows:

    • On 15th of March of the following year if the company's year-end is between 1st January and 30th September.
    • On 15th of June of the following year if the company's year-end is between 1st October and 31st December.

    Group tax returns are not allowed in Barbados (however, group relief for tax losses is available - see below).

    Tax Assessments

    There is no fixed date for the issue of assessments.

  • CORPORATION TAX

    Corporation Tax

    The following rates apply to taxes on corporate income:

    Type of Entity Rate
    Regular Companies 25%
    Small Companies 15%
    International Business Companies (IBCs) 0.25% - 2.5%
    International Societies with Restricted Liability (ISRLs) 0.25% - 2.5%

    Small Companies

    Small Companies are taxed at the reduced rate of 15%.

    Small Companies are those companies that satisfy the following 3 criteria:

    • at least 75% of their shares are owned locally
    • their share capital is less than B$s$1m
    • their annual sales are less than B$s$2m
    • they have less than 25 employees

    International Business Companies (IBCs) and International Societies with Restricted Liability (ISRLs)

    IBCs and ISRLs in Barbados are taxed between 0.25% and 2.5% depending on their taxable profits as follows:

    Taxable Profit Rate
    Under B$10,000,000 2.5%
    B$10,000,000 - B$20,000,000 2%
    B$20,000,000 - B$30,000,000 1.5%
    Over B$30,000,000 0.25%
  • DIVIDENDS

    Dividends from Foreign Investments

    Dividend income from foreign investments is exempt from tax in Barbados if the Barbados resident company holds at least 10% of the capital of the overseas company and the shares are not held as a portfolio investment.

    Dividends from Local Investments

    Dividend income from local investments is exempt in Barbados.

    Withholding Tax on Dividends

    Dividends paid to foreign recipients by IBCs or ISRLs are exempt from withholding tax in Barbados. The withholding tax exemption also applies to dividends paid by a Barbados company to foreign recipients out of foreign-source income. Otherwise a 15% withholding tax on dividends applies, unless reduced under a treaty.

  • INTEREST

    Interest Income

    Interest income is taxable in Barbados.

    Interest Expense Deductibility

    Interest expense is generally tax-deductible as a business expense if incurred wholly and exclusively for the purposes of the trade.

    Withholding Tax on Interest

    Interest paid by an IBC or an ISLR to foreign recipients is exempt from withholding tax in Barbados. Otherwise, a 15% withholding tax applies to interest payments to foreign recipients, unless reduced under a tax treaty.

    There is no withholding tax on interest payments to local recipients.

  • ROYALTIES

    Royalty Income

    Royalty income is taxable in Barbados.

    Royalty Expense Deductibility

    Royalty expense is generally tax-deductible as a business expense if incurred wholly and exclusively for the purposes of the trade.

    Withholding Tax on Royalties

    Royalties paid by an IBC or an ISLR to foreign recipients is exempt from withholding tax in Barbados. Otherwise, a 15% withholding tax applies to royalty payments to foreign recipients, unless reduced under a tax treaty.

    There is no withholding tax on royalty payments to local recipients.

  • TAX LOSSES

    Ordinary Tax Losses

    Ordinary tax losses can be carried forward for 9 years.

    Ordinary tax losses cannot be carried back.

    Group Relief

    Group relief is available in Barbados whereby current year ordinary tax losses can be transferred between members of the same tax group.

    A tax group is created when:

    • One company is the 75% subsidiary of another company; or
    • Two companies are 75% subsidiary of another company
  • CAPITAL GAINS

    Disposal of Shares by Foreign Shareholder

    The profit on disposal of a Barbados company by its foreign individual shareholder is exempt from tax in Barbados. However, if the company holds Bahamian real estate then a property transfer tax of 2.5% on the value or amount of gross consideration above B$50,000 applies.

    Capital Gains

    Capital gains are not taxable in Barbados.

    Capital Losses

    Capital losses are not tax-deductible since capital gains are not taxable.

  • PARTNERSHIPS

    Partnership Profits

    Partnerships are treated as transparent entities for tax purposes, which means that their profits are taxed directly in the hands of each partner.

  • BRANCHES

    Branch Profits

    A Branch is treated in the same manner as other types of companies in Barbados.

    A 10% remittance tax is applicable on profits that are not reinvested in Barbados and transferred by a Barbados Branch to its foreign head office.

  • STAMP DUTY

    Stamp Duty

    Stamp duty is imposed on certain documents.

    Stamp duty is imposed at a rate of 1% on the transfer of real or personal property.

  • CAPITAL DUTY

    Capital Duty

    There is no capital duty on the issue of shares in Barbados.

  • VAT

    VAT Taxable Transactions

    VAT is levied on the supply of goods and services in Barbados.

    VAT Standard Rate

    The standard rate of VAT is 17.5%.

    VAT Reduced Rate(s)

    The reduced rates of VAT are 8.75% (short-term accommodation and 0% (exports, basic foodstuffs and international freight services).

    VAT Exempt Transactions

    Financial services, medical services, education and sales of real property are exempt from VAT in Barbados.

    VAT Registration Threshold

    The registration threshold for VAT purposes in Barbados is B$80,000.

    VAT Filing & Payment

    Filing of VAT returns and the payment of VAT liability is made every 2 months.

Compare Barbados to other jurisdictions and see the difference in corporation tax rates, tax residency requirements, VAT rates, capital gain taxes, etc.

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