Business Barbados - 2023 Edition

In addition, insurance companies are taxed in accordance with the table illustrated below based on the Class of licence which the company obtains (see discussion above regarding classification of insurance licences). Also, effective income year 2019, the basis of taxation for life insurance companies was changed from gross investment income to net income. Individuals are subject to income tax at the rate of 12.5% on taxable income up to and including US$25,000, and 28.5% on taxable income exceeding US$25,000. Resident individuals earn the first US$12,500.00 (and first US$ 20,000.00 in case of individuals who is 60 years of age or over and in receipt of a pension) of their annual income tax free as personal allowance. There are no capital gains taxes levied in Barbados, and gift, inheritance, and estate taxes are not applicable. Property transfer tax applies to the transfer of property situated in Barbados at a rate of 2.5%. This includes real estate as well as certain leasehold interests and shares. Stamp duty is also payable on instruments executed in Barbados, which relate to any property situated in Barbados or to any matter or thing done or to be done in Barbados. Generally, stamp duty at the rate of approximately 1% is applied to instruments executing the sale of real estate. Value Added Tax (VAT) Barbados introduced a value-added tax on January 1, 1997. Generally, value-added tax is levied at the rate of 17.5% on all goods and services supplied in Barbados, and on goods imported into Barbados. However, there is provision for specific zero-rated and exempt goods and services that would not attract the value-added tax. VAT is included in the final price the consumer pays for goods and services. Effective 1 January 2020 the VAT rate for hotel accommodation and certain supplies related to tourism, increased from 7. 5% to 10%. Additionally, the supply of mobile services of voice, data, and text messaging attracts an enhanced VAT rate of 22%. In 2019 The Value Added Tax Act was amended to apply VAT to online purchases from overseas vendors where the good or service purchased will be consumed in Barbados. Effective 1 December 2019 these overseas vendors are required to charge and collect VAT and remit it to the Barbados Revenue Authority by the 21st January, April, July and October of each year. Official guidance on the application of this process has not yet been issued by the Barbados Revenue Authority. ROOM RATE LEVY In July 2018, a room rate levy was imposed on all tourist accommodation including apartments, guest houses, hotels, vacation rental properties and villas. Effective April 1, 2019, the room rate levy is as outlined below: PRODUCT DEVELOPMENT LEVY In July 2018, a product development levy was introduced and applied to direct tourism services. Effective April 1, 2019 the levy is applied at the rate of 3.75% of the cost of the Direct Tourism Service. Shared Accommodation Levy A 10% Shared Accommodation Levy also applies to all fees charged for shared accommodation by providers of such (e.g. AirBnB, Home Away, and others). DOUBLE TAXATION/INVESTMENT TREATIES Barbados has entered into Double Taxation Agreements (DTAs) and bilateral investment treaties with the countries as indicated in the table below. Licences for Insurance Companies Rate % Class 1 0.0 Class 2 2.0 Class 3 2.0 Accommodation Rates (US) Apartments $4.38 Guest House $4.38 Hotel “B” Class $4.38 Hotel “A” Class $9.63 Hotel luxury Class $17.50 Vacation rental property 3.75% of the nightly rate (maximum $17.50 per night) Villas 3.75% of the nightly rate (maximum $17.50 per night) Austria Iceland Rwanda Bahrain Italy* San Marino Botswana Luxembourg Seychelles Canada* Malta Slovak Republic CARICOM Mauritius* Spain China Mainland* Mexico Sweden Cuba* Netherlands Switzerland* Cyprus Norway United Arab Emirates Czech Republic Panama United States Finland Portugal United Kingdom* Ghana Qatar Venezuela* BUSINESS BARBADOS 2023 128 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 3