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Understand the Jurisdictions Setup Requirement Before Proceed Your Register Company in Barbados
Barbados, an island situated in the Caribbean, is one of the preferred low-tax investment destinations due to its political and social stability, highly skilled workforce, modern infrastructure as well as the robust investment climate.
Why Invest in Barbados?
1. Barbados’s Market Overview
As one of the most developed and one of the richest countries in the Eastern Caribbean, Barbados enjoys one of the highest per capita incomes in the region. In fact, the longstanding democratic tradition and the political and economic freedom are the important cogs behind the good economic performance of Barbados. In Barbados, the wholesale and retail trade, business and other services, government services, and tourism are the four main pillars that contribute to the GDP of the country. Meanwhile, offshore finance and information services are also playing important roles as the foreign exchange earners due to its strategic location (Barbados is located in the same time zone as eastern US financial centres) and highly educated workforce. Despite the 2008-09 recessions, Barbados’s economy has seen substantial economic growth due to the surge in tourist traffic, as well as the good performing sectors like construction, financial services, and exports.
2. Barbados’s Market Opportunities
As a Caribbean Community (“CARICOM”) member country of the CARICOM Single Market and Economy (“CSME”), Barbados has a good bilateral trade relationship with countries like the United States (around 70% of Barbados’s food supplies are imported where one third of it comes from the United States) and China.
3. Advantages of doing business in Barbados
- Attractive tax regime and low tax rate
- Corporate TaxThe Barbados’s corporate tax rate is 25%. Under the Small Business Act, the corporate tax for local companies is 15% where the manufacturing companies are also paying a tax rate of 15%.
- Value Added Tax (VAT)The VAT in Barbados is 17.5% where certain business entities such as international business companies, international societies with restricted liability, international banks, and exempt insurance companies are eligible for tax exemptions.
- Imported goods are duty-free
- Factory spaces are low-cost and subsidized
- Free consulting services are available at the Barbados Investment and Development Corporation (BIDC)
- Highly skilled and well-educated workforce
Registering a Business in Barbados
Like many other jurisdictions, Barbados has its establishment requirements and procedures. However, the incorporation procedures are much simpler and straightforward. All Barbados’ companies must first register with the Corporate Affairs and Intellectual Property Office.
1. Business Entities in Barbados:
- Regular Barbados Companies (RBCs) This type of company is incorporated under the Companies Act of Barbados and it may only carry on international business with the approval of the Central Bank of Barbados.
- Societies with Restricted Liability (SRLs)This type of company is organised under the Societies with Restricted Liability Act. Unlike RBC, a SRL can be treated as a disregarded entity for US tax purposes (but under certain conditions).
- International Business Companies (IBCs)Generally incorporated under the Companies Act of Barbados, IBCs can only carry on international business. An IBC is mandated to have an International Business Licence issued by the Minister responsible for International Business.
- International Societies with Restricted Liability (ISRLs) Organised under the Societies with Restricted Liability Act (SRL Act) of Barbados, an ISRL is mandated to apply for an International Business Licence from the Minister responsible for International Business. Other than the land required for its business (held by way of lease or a tenancy agreement nor transact business with any Barbados residents), an ISRL cannot acquire or hold land in Barbados. Like SRLs, ISRLs can be treated as disregarded entities for US tax purposes.
- Exempt Insurance Companies (EICs) Incorporated under the Companies Act of Barbados, EIC is mandated to apply for a licence under the Exempt Insurance Act (EIC Act). Please note that the company’s object and activities are some of the requirements to be eligible for an EIC licence.The definition of Exempt insurance: under the EIC Act, EIC acts as the business of insuring risks located outside Barbados in respect of which premiums originate outside Barbados.
- Qualifying Insurance Companies (QICs)
Incorporated under the Companies Act of Barbados, QIC is registering as insurers under the Insurance Act and it has to apply for a certificate to be eligible as a QIC.One of the requirements to be qualified as a QIC is that the company must be a registered insurer with conditions:
- At least 90% of gross revenues from insurance premiums originate outside CARICOM
- At least 90% of all risks insured originate outside CARICOM.
- International Banks (IBs) Incorporated under the Companies Act, IBs is mandated to apply for a licence in order to operate as an international bank under the International Financial Services Act.
2. How to register a company in Barbados:
The following are the steps to complete the company incorporation:
- Must have company name
- An official address in Barbados is needed ( the address indicates where the share registers, minute books and other statutory information will be kept)
- Appoint company directors – a company can have at least one director
- Must have the full name and residential address of every proposed company directors
- Must have the full name and residential address of every shareholder of the company
- Must provide the details of the business like what kind of business activities will be carried on
- Must have the classes of shares (in the case if there are more than one) that the company is authorised to issue
3. Registering an International Business Company (IBC)
- An IBC has to be incorporated under the Companies Act.
- Must apply for an IBC licence from to the Minister of International Business as soon as after the company incorporation.
- A brief description of the intended business activities, the name, and address of the shareholders and the percentage of shares to be held must be included in the application.
- The application fee is US$125 where it has to be submitted to the International Business Unit (IBU), Ministry of Industry, International Business, Commerce and Small Business Development.
- Annual Requirements:
- The annual licence fee: US$500
- An IBC licence fee has to be paid annually on or before December 31
- Audit requirement is one of the mandatory requirements if the gross assets and revenues of the company exceed the statutory threshold of US$2.0M
- Must file annual return by January 31
- Must file the financial statements with the regulatory authorities
Let us cut the chase: the Barbados’s business climate offers a wide range of opportunities and support to both international and local investors. If you are looking forward to investing in Caribbean, Barbados is a good investment destination to start with.
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