Explanation of export incentives or guarantees
The manufacturing, international financial services and information communications and technology sectors are able to take advantage of certain tax incentives available for those sectors. Companies can be incorporated under the International Business Companies Act Cap.77 to sell products outside of Barbados and are able to benefit from various tax benefits including duty-free importation of machinery and equipment, exemption from exchange control restrictions and import duties, zero rated value added tax and tax rates ranging from 2.5% to 1%.
Similarly, manufacturers who can qualify for fiscal incentives under the Fiscal Incentives Act Cap.71A may be granted a tax holiday for up to 15 years and are further able to benefit from duty-free importation of equipment and raw materials required for the manufacturing process. Even though a company may not be able to take advantage of the incentives under the Fiscal Incentives Act an export allowance may be applicable. An export allowance is permitted for the export of certain products and services such as data processing services and the export of products of a company that purchases wholesale from a local producer exclusively for export. The allowance permits a rebate of tax due on “export taxable profit” of a company which arises from the export of its products and services to countries outside of the CARICOM region. A cumulative tax rate of 2.8% is available if the company exports more than 80% of its products.
As a result of several bilateral investment treaties to which Barbados is a party, certain products may be exported to certain regions and countries free of duty. Bilateral investment treaties are in force with Mauritius, China, Canada, Cuba, Italy, Switzerland, Germany, Venezuela. Bilateral investment treaties with Belgium/Luxembourg and tge Economic Union, and with Ghana, are awaiting ratification.
Incentives are available for the production of certain products which are produced by companies approved by the relevant Minister. Incentives are available for the manufacture of products such as medical supplies, electronic components, leather items, electro-mechanical items, wooden furniture, sporting goods and quality apparel.
Outside of the incentives, there is generally no export financing available from the government as of course (such as in the form of loans). There are a number of financial institutions in Barbados, with international connections and applications may be made to them for financing to facilitate the development of a business which will be export oriented.
Incentives are usually only available to companies registered or incorporated under the laws of Barbados.
Grants, Subsidies or Funds Which Barbados Offers Foreign Investors
Grants and subsidies are generally not available to foreign investors. Barbadian manufacturers and service companies may qualify for a grant under the Export Grant & Incentives Scheme (EGIS) which is operated by the Barbados Investment Development Corporation (BIDC) (the investment agency arm of the government). This assistance allows these companies to undertake market sales, promotion and marketing activities in overseas markets. Successful applicants are able to be reimbursed with up to 75% of the cost of the activity. The BIDC is also responsible for processing the applications for tax incentives from the Government.
A training grant is available for the training of Barbadian nationals in the information communications and technology or manufacturing sectors. This grant is also administered by the BIDC. Reimbursement is available for a maximum of 12 weeks training at BDS$100.00 per week. This grant is open to foreign investors.
Prior to the commencement of the marketing activity or the training of Barbadian nationals, an investor is required to obtain the approval of the BIDC. An application which provides the details of the proposed venture must therefore be made to the BIDC. For further information on the BIDC please visit their website at www.bidc.com. The BIDC has indicated that it is likely to take 4-6 weeks for the application to be processed.
There are no facilities in place for the provision of loans to foreign investors from the government or government agencies.
Tax holidays may be given for up to 15 years thereby suggesting that the expectation is that the investment will be long-term. There is however no formal requirement for incentives to be based on the duration of the activity. Application for a tax holiday should be made to the BIDC.