We live in interesting times! The Internet and social media have made the world much smaller and have transformed the ways in which we do business and interact with each other. Barbados’ international tax platform was established with a firm foundation and with solid business reasons to enable entities to operate globally from Barbados.
As we aim to ensure economic diversification, Barbados is always on the lookout for new opportunities and enhanced ways of doing business and attracting foreign direct investment to the island. During a recent visit to Morocco, the Barbados government was able to build strong relationships with local government officials which will enhance the establishment of trade in both goods and services between the nations. In addition, government is looking into the future, paving the way for the signing of new bilateral investment treaties which are useful “asset protection” mechanisms and which signal to multinationals the jurisdiction’s interest in preserving the companies’ wealth. Indeed, as Africa continues to remain a focus as a major opportunity to expand the Barbados’ offering of financial services, reciprocal visits are planned or have been carried out to Ghana and the UAE where public private sector partnerships have presented the depth of talent and the breadth of investment opportunity.
While the international financial services sector continues to be the main tax revenue earner, and indeed foreign exchange earner for the Government of Barbados, tourism remains one of the mainstays of our economy. Our traditional markets for tourists have been the United Kingdom, United States, and Europe along with the Caribbean islands which are geographically near to us. However, the time is right for Barbados to explore new markets to attract tourists. Heritage Tourism is a niche market on which we can capitalize with our over 300-year history as we attract those visitors with an interest in the colonial architecture and traditional cuisine. Barbados could also seek to attract those from the African continent who may be interested in seeing how life has evolved in the Caribbean.
Of course, we still welcome those long- stay High Net Worth Individuals (“HNWIs”) from the UK and other countries who have decided to make Barbados home, as they enjoy all that the island has to offer. The introduction of the Special Entry and Reside Permit (“SERP”) allows such individuals to remain on island for extended periods, and in the case of individuals over the age of 60, the permit is issued on an indefinite basis.
While the SERP does not include the right of citizenship to the holder, Barbados benefits from the direct investment required by the applicant, whose net worth should be a minimum of US$5 million and who has made investment on the island in the form of real estate or other investment to the tune of at least US$2 million. These HNWIs may also participate in the development of the financial services sector by carrying on business while in Barbados and being able to benefit from a reduced tax rate on income earned in Barbados from sources outside Barbados. For the tax resident HNWI an effective tax rate of 10/15% percent allows the individual to recognize their contribution to the social and economic fabric of Barbados, while allowing him/her to carry on investment activities.
The present Government has dedicated one of its Ministries to Innovation, Science and Smart Technology. It is possible that among these HNWIs are entrepreneurs and innovators who can create opportunities in Barbados with facilitation from such a Ministry, to the benefit of the island. With the requirement for economic substance to be implemented by companies in the very near future, especially those in the intellectual property (IP) holding business, Barbados could further benefit from an influx of skilled workers for IP development.
In fact, with the post-Brexit migration issues which may be experienced in the UK, Barbados may stand to gain if companies establish operations on island for the purposes of software development. With our skilled workforce and high level of university graduates, these operations could be staffed by local talent supplemented by European staff who train the locals in the companies’ ways of doing business. The new tiered corporate tax rates of 5.5 percent to 1 percent allow for the collection of significant tax revenue while generating after-tax profits which could in turn, fund the companies’ future activities, leading to increased employment, growth of capital assets, and increased returns to shareholders.
Barbados has much to offer to a global audience and all stakeholders should seek ways to attract new opportunities for the overall benefit of our nation.