The Central Bank of Barbados has become the premier financial institution in the country and its main policy is to formulate, in association with Government, monetary and fiscal policies to assist with the country’s economic development programme.
Barbados has made the most of the international expansion in offshore financial services sector activities and has developed this sector, accordingly it is now the major foreign exchange earner. The Finance and Business Services Industry is the largest component of GDP by industry since it accounts for 31.0 per cent of GDP at Basic Prices.
Barbados began establishing a series of bilateral income tax and investment treaties over 20 rears ago and this network is the principal reason why Barbados was the only small Caribbean financial centre to be on the OECD’s “white” list of tax jurisdictions when it was published after the G20 meeting in April 2009. Another reason is that the Barbados authorities recognise the importance of responsible financial services to the longterm development of the country. It is the second pole around which development is centred, the other being high-end tourism. Consequently Barbados is prepared to fight its corner and it has earned high respect in the corridors of the OECD in Paris and elsewhere.
Barbados’ Tax treaties with the United States and Canada were the bedrock of its financial services industry in the early years. More recently Barbados has signed a number of investment and income tax agreements with countries where the potential for investment is enormous but investors want the protection a Treaty can bring. Barbados investment and tax treaties with China and Venezuela have already become important for the international investor, benefiting all parties. Much is expected of the recent treaties with Mexico, Cuba, Panama, Luxembourg and Spain.
Adequate telecommunications infrastructure, a well-trained and English-speaking workforce, and a stable political environment give the country an additional advantage over other, similar destinations. Barbados has also done well from the increased scrutiny and regulation of financial services by international organizations such as the Organization of Economic Cooperation and Development (OECD).
One aspect that makes the sector attractive to U.S. investors in particular, is the fixed exchange tied to the U.S. dollar. This and the island’s proximity, aided by direct air routes, as well as its development have helped to direct North American capital into the country.