Business Barbados - 2023 Edition

Barbados Offers Attractive Tax Benefits to Incoming Investors Tax Attraction La-Tanya Phillips Associate Partner, Tax Services, EY or many years, Barbados has asserted a value proposition of sun, sea and sand to those who vacation on our shores. For the persons who will eventually leave or perhaps even forfeit the beach in search of investment opportunities, another value proposition arises: Barbados is always open for business. The welcoming environment for investment and business operation is underpinned by a tax regime that offers many attractive benefits and rests on pillars of simplicity, fairness, adequacy, and transparency. Beginning and ending with simplicity, the Barbados regime does not impose tax on capital gains. Moreover, there are no exit, wealth, inheritance or gift taxes. Moving to the sphere of income taxes, companies not carrying on insurance business are subject to corporation tax at graduated rates of 5.5% down to 1% depending on their level of income. Most attractive to many multinationals is that income exceeding USD15 million is taxed at 1%. Entities carrying on insurance business are subject to corporation tax according to the class of license they hold. Class 1 licensees that underwrite related party business are subject to tax at 0%. Class 2 licensees that underwrite third-party risks are subject to tax at 2%. Finally, Class 3 licensees, including insurance intermediaries, brokers, insurance management companies and insurance holding companies are subject to tax at 2%. In addition to low rates of corporation tax across all industries, domestic tax legislation makes provision for a participation exemption which allows dividends received by a Barbados company from non-portfolio, non- resident subsidiaries to be exempt from corporation tax. In calculating the income which will be subject to tax in Barbados, a domestic credit is allowed for foreign taxes paid by Barbados resident companies on amounts to be taxed in Barbados. This credit is allowed up to the amount of the Barbados taxes payable on the income, but it cannot reduce the total tax payable by the Barbados entity for that year to less than 1% of its taxable income. An underlying tax credit is also allowed with respect to foreign dividends if the Barbados company owns at least F 21 BUSINESS BARBADOS 2023 T A X A T T R A C T I O N