Barbados, located close to Central and South America, has a long history of facilitating international business. The history of international business in Barbados dates back to the 1960s, and was formalised by legislation passed in 1980. The legislation is further enhanced by a comprehensive taxation framework that includes double taxation treaties with Mexico, Panama and Venezuela and 33 other countries. The treaties can be used directly in Barbados and indirectly to access other treaty countries.
Historically, we have attracted many international business structures sourced in Canada, more so than from any other jurisdiction. In 2008, it was estimated that 75% of international business in Barbados was of Canadian origin, and last year Barbados accounted for 8% of all Canadian foreign direct investment (FDI).
As we all know, times change and survival requires adaptation to these changes. Led by the USA, developed countries have been increasingly targeting “tax havens” and unfair tax competition and have systematically been tightening rules in an effort to increase the taxation revenues generated onshore by their constituents. Barbados is not a tax haven and operates specifically within the rules of its double tax treaties with other nations, but it has been affected by the fall-out from these initiatives.
During 2014, Canada made changes to their legislation which resulted in some significant investments moving out of Barbados and back to Canadian soil. This has been a costly exercise to the island both in terms of tax revenues generated and employment. However, it has given local service providers the chance to focus on fresh opportunities available to Barbados in the international business landscape, not the least of which is providing financial services to our Latin and South American neighbours.
Barbados is an OECD-approved, low taxation jurisdiction, and corporate tax rates as low as 0.5% can be obtained for international business entities. Personal tax rates of 2.45% may apply for individuals, and it is possible to qualify for a Special Entry Permit (SEP). Structures that can be used in Barbados to the advantage of our Latin American partners include those for estate planning, asset protection, deferred taxation, family offices, wealth management, reduction of withholding taxes, trusts and foundations.
These structures are customised for each personal circumstance, and there are a number of knowledgeable accounting, legal and tax practitioners who can work with Latin American clients and/or their advisors to bring order to their financial affairs in the most beneficial way. While Spanish and Portuguese are not widely spoken on the island, many experienced local service providers have Latin American nationals on staff who help make the client experience as seamless as possible.
For Latin Americans who decide to set up a company and/or relocate to Barbados, the tax advantages are reinforced by a professional business environment and a wonderful lifestyle for them and their employees. There is excellent physical and communication infrastructure, extensive inventory of office space, comprehensive airlift, and a well-educated workforce. Barbados provides a safe and stable environment for people to raise their families, with a high standard of education and healthcare services. This is all complemented by a sophisticated and diverse society where it is possible to watch a polo match, have dinner in a first class restaurant and dance the night away in an exclusive nightclub, all in the same evening.
Barbados is a stable international business centre with a well-deserved reputation for professionalism and quality. As a jurisdiction, we have proven ourselves to be adaptable and sensitive to the business needs of our international partners over the years. As we turn over a new chapter in the history of international business on the island, we look forward to expanding our relationships with Latin and South America!