Business Barbados - 2023 Edition

10% of the capital of the foreign company. Addressing one of the ultimate concerns for investors, the Barbados tax regime elevates its advantages once more. The country acknowledges that a return on investment maintains value with the investor’s ability to receive/ benefit from that return. Therefore, domestic legislation exempts dividends paid from foreign sourced income from withholding tax once remitted to a non- resident of Barbados. For those who opt to finance investment into Barbados via debt, interest paid to non-residents of Barbados is also free from withholding tax. While there is no doubt that the headline rates of tax in a jurisdiction can be a deal maker or breaker for investors, Barbados acknowledges that the transactional taxes which arise with business operations are an important consideration as these have the potential to impact return on investment. Local indirect and transactional taxes such as Value Added Tax (VAT), Property Transfer Tax (PTT) and Stamp Duty (SD) are applicable in Barbados, with the VAT standard rate being 17.5% and PTT at 2.5%. SD is document determined and, in that regard, international investors often encounter the 1% duty applicable to assignments etc. While these taxes and duties are important for the sustenance of a small island economy like Barbados, there are opportunities for investors to mitigate their impact. With effect from 1 January 2019, Barbados introduced a Foreign Currency Permit (FCP) available to entities that earn 100% of their income in a foreign currency. Among the benefits for FCP holders are: • Exemption from ad valorem stamp duty • Property transfer tax exemptions • Exemption from payment of VAT and duties on the importation of plant, machinery and raw materials • Income tax concessions for specifically qualified employees. Direct benefits aside, for a tiny 166 square feet island, the ability to network with other countries with similar principles is paramount. Barbados’ treaty network is ever expanding and includes 40+ double-taxation agreements which are extremely advantageous. For the investor who wants to utilize Barbados resident entities to do business in other countries, these treaties provide the opportunity to: • Create certainty on tax treatment of income and gains arising from cross- border investments • Reduce/eliminate withholding taxes on certain types of income • Eliminate double taxation of income. Finally, in addition to a robust domestic tax framework and an expansive international tax treaty network, Barbados continues to ensure its presence, participation and contribution at a global level. As a member of the Organization for Economic Corporation and Development’s (OECD) Inclusive Framework, Barbados steadfastly commits to fair taxation and the elimination of Base Erosion and Profit Shifting. In recent years, the introduction of Economic Substance requirements for entities with geographically mobile businesses has reaffirmed the country’s pledge to provide a well-regulated, respected, yet attractive jurisdiction of choice for investors. In the midst of an evolving global tax environment, Barbados remains agile, attractive and as always, open for business. Prime Minister Mia Amor Mottley with Prime Minister Justin Trudeau at the Canada-Barbados Bilateral Meeting in February 2023 BUSINESS BARBADOS 2023 22