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Corporate Tax Advice in Barbados
Last Updated 17/12/2024
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Introduction:
Let’s explore the taxation of corporate income in Barbados, breaking down the rates and income brackets to help you understand the system more easily.
Taxation for Resident and Non-resident Companies:
In Barbados, resident companies are taxed on income earned from all sources, both within and outside the country, minus any expenses incurred to generate assessable income within a fiscal period not exceeding 53 weeks.
On the other hand, non-resident companies are generally taxed only on income derived from sources and operations conducted within Barbados.
Corporate Income Tax (CIT) Rates:
Barbados applies different tax rates depending on the taxable income brackets of companies. Here’s a simple breakdown of the rates:
- Taxable income up to BBD 1 million: 5.5%
- Taxable income exceeding BBD 1 million but not more than BBD 20 million: 3.0%
- Taxable income exceeding BBD 20 million but not more than BBD 30 million: 2.5%
- Taxable income exceeding BBD 30 million: 1.0%
Insurance companies in Barbados have their own tax rates:
- Class 1 insurance companies: 0%
- Class 2 and 3 insurance companies: 2%
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Corporate Residence and Permanent Establishment in Barbados
Let’s take a look at corporate residence and the concept of permanent establishment (PE) in Barbados, simplifying the concepts for a better understanding.
Corporate Residence:
A company is considered to be a resident in Barbados if its management and control are exercised within the country.
Permanent Establishment (PE):
The concept of a PE is found in several of Barbados’s double taxation agreements (DTAs) and is generally in line with the OECD Model Convention.
According to domestic legislation, a non-resident person is deemed to be conducting business in Barbados and is required to file a CIT return if, during an income year, they:
- Produce, grow, mine, create, manufacture, fabricate, improve, pack, preserve, or construct anything in Barbados, whether or not they export the item without selling it before exportation, or
- Solicit orders or offer anything for sale in Barbados through a representative, agent, or employee, whether the contract or transaction is completed inside or outside Barbados or partly in and outside Barbados.
In either of the situations mentioned above, the non-resident is considered to be conducting business in Barbados for that income year, and the income generated by the business is deemed to be derived from Barbados for that income year.
Foreign Currency Exchange (Forex)
Forex differences are not taxable or deductible for CIT purposes, except for those arising from trading in foreign currencies and related derivatives, which are subject to CIT.
Conclusion
In conclusion, understanding corporate residence and the concept of permanent establishment is crucial for businesses operating in Barbados. This simplified guide aims to make it easier for you to navigate these aspects of the country’s taxation landscape.
Non-trading company income and gains
Capital Gains:
Capital gains aren’t taxed in Barbados.
Dividend Income:
Dividends between two Barbados-based companies aren’t taxed for the recipient. Dividends from a non-resident company to a resident Barbados company aren’t taxed if certain conditions are met. Dividends from a regular business to a non-resident shareholder are not subject to withholding tax if the income comes from sources outside Barbados.
Interest Income:
Interest amounts are usually included in taxable income calculations. However, some types of interest, like those on government bonds or certain savings bonds, may be exempt for non-residents or within specific limits.
Royalty Income:
Royalties received by a corporation are taxed as business or property income. Royalties from sources within the Caribbean Community (CARICOM) are usually exempt from corporate income tax.
Partnership Income:
Income from a partnership is included in taxable income calculations, regardless of whether it was withdrawn during the year.
Foreign Income:
Barbados corporations are taxed on foreign branch income as it’s earned. Double taxation is avoided through foreign tax credits or exemptions when double taxation agreements (DTAs) exist.
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The Curator is a fully-fledged member of the Tax Natives team. As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives.
However, the Curator has additional responsibilities. They are tasked with the responsibility of managing and updating one of the jurisdiction pages.
There is only one Curator membership available for each jurisdiction.
Where a Curator fulfils their commitments then they receive a 100% discount against their monthly membership fee.
| Initial admin fee | £250 Free |
| Minimum membership term | 12 months |
Article contentCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
No |
| Managing and updating your jurisdiction page | Yes |
FREE
Read moreTAX NATIVES: CREATOR —
Creator
The Creator is a fully-fledged member of the Tax Natives team. As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives.
However, the Creator has additional responsibilities. They commit to their other Natives that they will produce at least one piece of quality content each quarter – whether an article, video or other valuable content.
There are multiple Creator memberships available for each jurisdiction. Where a Curator fulfils their commitments then they receive a 100% discount against their monthly membership fee.
| Initial admin fee | £250 Free |
| Minimum membership term | 12 months |
Content creationCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
YesCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
| Managing and updating your jurisdiction page | No |
£65 / month
Read moreTAX NATIVES: ADVISOR —
Adviser
The Adviser is a fully-fledged member of the Tax Natives team.
As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives.
The Adviser Native is a care-free soul and has made no other commitments to his fellow Tax Natives to generate content or curate a jurisdictional page.
That's cool.
However, the Adviser will be eligible to pay the full monthly membership fee.
| Initial admin fee | £250 Free |
| Minimum membership term | 12 months |
Content creationCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
No |
| Managing and updating your jurisdiction page | No |
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