Business Barbados 2022

Exchange Control The Government has a liberal policy toward foreign exchange controls and is committed to moving towards the elimination of all foreign exchange controls. The Exchange Control Act of Barbados provides for: • Registration and repatriation of foreign investment. • Remittance of dividends, profits, interest, and rentals from real estate to non-residents. • Transfer of land and buildings situated in Barbados. It is possible to buy foreign currency directly from the commercial banks however the Government, through the Central Bank, has imposed limits on the amount of foreign transactions available to residents and non- residents. A 2% foreign exchange fee is charged on purchases of foreign currency and payments related to foreign currency transactions, provided the transaction is not made from a foreign currency account. Residents are allowed US$10,000 for personal travel, and a higher limit for business travel. Foreign nationals working in Barbados may operate an external account, which can be credited with foreign currency from specific sources, provided that they are not classified as residents. The Government is seeking to liberalize the Exchange Control regime with a phased approach. As a part of this process, in August of 2019 the Central Bank of Barbados issued guidance allowing all resident individuals and companies to open foreign currency denominated bank accounts locally, and to hold foreign currency which they have earned in Barbados or abroad. Corporate Law The Barbados Companies Act, which came into effect in 1985, is modelled on the Canada Business Corporations Act. The procedure for incorporating a company is simple and efficient. A company can be established by either residents or non-residents without a license or other authorisation, unless one is seeking to obtain a Foreign Currency Permit or intends to become licensed as an Insurance company or financial institution. There is a minimum of one director required. The names and addresses of the directors must be filed at the Corporate Registry. There is no limit on the amount of authorised share capital and shares are without par value. A company can carry on any type of legal activity, unless its articles of incorporation specifically provide otherwise. INCENTIVES FOR INTERNATIONAL BUSINESSES The Government has established a separate Ministry to facilitate the development and expansion of the international business sector. Under the former International Business regimes (repealed at the end of 2018), several concessions were granted to entities carrying on international business from Barbados. While the International Business regimes have now been repealed, entities incorporated and licensed prior to 17 October 2017 were granted the option to be grandfathered until 30 June 2021. Exempt Insurance Act While the Exempt Insurance Company regime has now been repealed, entities incorporated and licensed prior to 17 October 2017 were granted the option to be grandfathered until 30 June 2021. Qualifying Insurance Companies A 1998 legislative enactment allows companies involved in international insurance business to register under the domestic insurance legislation as Qualifying Insurance Companies (QIC) on the condition that at least 90% of its premiums originate outside Barbados and at least 90% of its risks insured are located outside CARICOM. Following the 2018 amendments, companies that were classified as qualifying insurance companies (QIC) which were entitled to the foreign currency allowance will be subject to tax at the rate of 2% in respect of general insurance business and 0.35% in respect of life insurance business until 30 June 2021. Insurance Sector Effective 1 January 2019, three classes of licenses came into existence for the insurance sector as follows: • Class 1: Insurance companies which restrict the business they can underwrite to related party business. These insurance companies will be taxed at a rate of 0%. • Class 2: Insurance companies which can underwrite risks of third parties. These companies will be taxed at a rate of 2%. • Class 3: Includes brokers, intermediaries, insurance management companies, insurance holding companies, etc. These entities will be t axed at a rate of 2%. International Banks The International Financial Services Act 2002 was repealed at the end of 2018 and entities formerly licensed under that Act are now considered to be qualified foreign currency earning banks under the Financial Institutions Act and are regulated accordingly. Entities which were licensed under the International Financial Services Act before 17 October 2017 were entitled to be grandfathered under that Act until 30 June 2021. In order to establish a Foreign Currency Earning Bank in Barbados, details of the proposed bank must first be submitted to the Central Bank of Barbados for approval. Approval must be sought from the Ministry of Finance prior to the incorporation of a company. A company must have a licence before engaging in banking business. Applications for a licence are submitted to the Central Bank which may issue the license, subject to the approval of the Minister of Finance. A licence to operate is issued only to suitably qualified applicants. Licences are under the control and oversight of the Central Bank of Barbados. Non-deposit taking Foreign Currency Earning Banks are subject to an annual licence fee of BB$50,000 (US$25000), whereas deposit taking International Banks must pay an annual licence fee of BB$100,000 (US$50,000). Societies with Restricted Liability Act The Societies with Restricted Liability Act 1995 was designed to favourably position Barbados in yet another niche market for international financial services. An entity formed under the Societies with Restricted Liability (SRL) Act possesses the flexibility to be treated as a corporation, a partnership or a disregarded entity for US tax purposes. Prior to the changes to Barbados’ International business regimes, an SRL may have been licensed as an International Society with Restricted Liability (ISRL). ISRLs which were created and licensed prior to 17 October 2017 were granted the option to be grandfathered until 30 June 2021. BUSINESS BARBADOS 2022 118 B U S I N E S S B A R B A D O S F A C T F A C T S G U I D E 2 0 2 2