Double Taxation Treaties (DTA’s) allow corporations to open up a subsidiary in Barbados in order to assist with their expansion outside of their home country by having active business income from foreign operations potentially taxed at a much lower rate in Barbados. This allows companies with international sales the ability to compete with companies located in lower corporate tax jurisdictions.
Parent corporations would most likely establish an active company in Barbados that fall under the many company structures which exist under various Barbados legislation including:
Barbados Domestic Business Company, created under the Barbados Companies Act (amended in 2001 & 2004)
International Business Company, created under the International Business Companies Act, 1991 and the Barbados Companies Act (amended in 2001 & 2004)
Barbados Society with Restricted Liability (“SRL”) and International Society of Restricted Liability (“ISRL”) are variations of the IBC and RBC respectively and are created under the Societies with Restricted Liability Act 1995
exemption from Barbados exchange control
income taxed on a reducing scale starting at 2.5% to a minimum of 1%
the opportunity to buy back its own shares or reduce its stated capital
An IBC is not permitted to carry on business in Barbados which would provide goods or services to the residents of Barbados and may require an audit.
An RBC is created under the Companies Act (amended in 2001 & 2004) and may utilise all benefits provided for under the DTA’s including reduced withholding taxes. The income from an RBC is taxed at a rate of 25% and may require an audit.
a single shareholder and director
corporate directors and secretaries
no minimum capital required
no tax or duties on capital
no local tax on capital gains
A Barbados Society with Restricted Liability (“SRL”) and International Society of Restricted Liability (“ISRL”) are variations of the IBC and RBC respectively and are created under the Societies with Restricted Liability Act 1995.
For SRLs and ISRLs:
Members (quota holders) instead of shareholders in the traditional corporate entity
Managers instead of directors in the traditional corporate entity
two members are permitted
one manager is permitted
may be allowed to move into Barbados from another jurisdiction
maximization of foreign tax credits
‘Limited life’ to maximum of 50 years
The requirements for operating an ISRL in Barbados are that the company must have and continuously maintain a registered office and registered agent in Barbados.
A captive insurance company is created under the Exempt Insurance Act 1983 and provides the following features:
low capitalisation requirements
flexibility of using GAAP accounting versus statutory accounting
strong infrastructure of professionals to provide services
lower premium taxes (1.6% taxable income – property & casualty/ 0.35% investment – life)
flexible investment policy permitted
loan-backs to parent permitted (assuming all parties are financially sound)
The Axebridge Group
The Grove, 21 Pine Road, Belleville,
St. Michael, BB11113, Barbados
+1 (246) 228-9886