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by Justin Cole
Justin Cole provides management and accounting services for international businesses in Barbados. He can be reached at his office: 20 Mount Clapham, St. Michael, via email at [email protected] or by phone at 431-0077.
Barbados is a well-regulated, low tax jurisdiction that offers a well-educated workforce, high-quality infrastructure and a fantastic quality of life. It is a very appealing location for international companies that wish to succeed in today’s highly competitive global marketplace.
Barbados offers a very competitive tax rate of only 2.5% down to 1% for international companies. This low tax rate allows international businesses to minimize their international tax burden by establishing the island as the hub of their worldwide operations. In addition, there are no withholding taxes on dividends or other income paid to non-residents by international businesses and they are also exempt from capital gains taxes. International businesses are exempt from exchange control regulations and are able to hold their bank accounts in major foreign currencies.
There are currently over 4,000 international businesses benefitting from these advantages. These businesses include international insurance, banking, treasury management, private wealth management, international trade and commerce, trust, and information and communications technology companies operating in markets across the world. International trading companies are set up to manage every kind of business imaginable including pharmaceuticals, oil and software.
Barbados’ reputation as well-regulated centre for international finance has been further enhanced by its inclusion on the “white list” released by the Organisation for Economic Co-operation and Development (OECD) on April 2nd, 2009. Inclusion on the “white list” means that Barbados is recognized as a jurisdiction that has substantially implemented the internationally agreed tax standard. This OECD standard provides for full exchange of information on request in all tax matters for the administration and enforcement of domestic tax law without regard to a domestic tax interest requirement or bank secrecy for tax purposes.
Barbados is one of only seven international business centres to be named to the “white list” of forty countries. Furthermore, it is the only independent, Caribbean jurisdiction on the “white list”, giving it a huge advantage over its Caribbean counterparts. As the leading international business centre in the Caribbean, Barbados has set itself apart and will therefore continue to have favourable growth and investment opportunities. In these turbulent times, when banks and financial centres are being extensively scrutinized by the international community, it is reassuring to both current and potential investors that the island has been formally recognized by the international community for its commitment to international standards on tax transparency.
The government began enacting legislation to provide tax incentives for international businesses decades ago. It now has an extensive network consisting of over 17 Double Taxation Agreements with foreign governments compared to the few signed agreements of its Caribbean counterparts. Barbados has developed its financial services through a treaty network that engages in tax information exchange and tax enforcement cooperation and has further enhanced its reputation by not being a tax secrecy jurisdiction.
Regulators ensure that the regulatory framework and legislation in place is enforced. The Central Bank plays an important role inspecting the financial institutions registered here to ensure operations are safe and in compliance with legislation resulting in a highly regulated and sound financial system. This stringent regulation has allowed the local banking sector to avoid the devastating bank failures that are shaking the world.
Barbados’ well-developed infrastructure makes it an appealing choice to international businesses that wish to establish the island as the centre of their worldwide operations. This includes a modern telecommunications infrastructure, a major international airport, and an educational system that produces skilled managers and workers. The local workforce can provide high-quality legal and accounting services needed by the international business community. The island’s long standing record of political, social and economic stability, coupled with its high rankings in the UN Human Development Index, Quality of Life Index and Index of Economic Freedom, further add to its appeal as a great place to invest, work and live.
The international business sector plays a major role in the local real estate market. The real estate market has benefitted in all areas including sales, long-term and short-term rentals. International business owners often purchase a second home in Barbados as they may choose to spend part of the year here overseeing their business. They may also purchase in order to take advantage of the investment opportunity offered by owning a piece of paradise. High-end rentals greatly benefit from foreign executives and managers who relocate here to work in the international sector and become long-term tenants of these properties. Short-term villa rental and hotel markets are also benefactors. Many business owners, consultants and managers from overseas operations frequent the island for a few days to several weeks at a time in order to conduct regular board meetings, consultations and on-site training. The international businesses themselves also become long-term tenants of offices, factories and warehouses from which they run their worldwide operations. International business companies are also allowed to acquire property and may choose to purchase instead of lease. Either way, the thousands of international companies that are established in Barbados provide huge benefits to the local real estate market.
Barbados truly has an appeal like no other. It stands out as a safe, regulated, low tax jurisdiction at a time when lapse regulation and risk taking around the world have resulted in the loss of trillions of dollars worldwide. Its highly developed infrastructure, high-quality of life, as well as its political, and economic stability, make the island a true gem amongst international business centres worldwide, and more specifically, within the Caribbean. Barbados really is a great place to invest, to work, and to live. After all, not much can top enjoying a rum punch while overlooking the Caribbean Sea after a board meeting!
How does Barbados’ inclusion on OECD’s “white list” benefit our reputation as a centre for international business?
Barbados’ strategy has been consistent since the introduction of a truly diversified international business sector over the past thirty years. It has focused on quality not volume mixed with transparency as opposed to secrecy. Inclusion on the OECD’s “white list” underscores this focus.
Dr. Trevor Carmichael, Q.C.
Principal, Chancery Chambers, Attorneys-at-Law
The positive endorsement of Barbados by the OECD has placed the Island at a major advantage when competing for business in the global arena. Our host of double tax treaties and bilateral tax agreements provide competitive advantages and attractive benefits for service providers and Barbados as a whole. In turn, this will improve longer term economic prospects and place Barbados in a stronger position to effectively navigate the global financial storm as the rebuilding of financial markets takes place.
Caroline Prow, ACIB MSI
Vice President, Butterfield Asset Management
Our inclusion in the recently announced OECD’s April 2009 and subsequent “white lists” is an endorsement of Barbados’ long standing philosophy toward the development of a responsible and prudently regulated international business and financial services sector. Fundamental to our international business brand is transparency and tax information exchange provisions – which form the bedrock of all our double taxation treaty agreements.
Chief Executive Officer, Invest Barbados
This article is published courtesy of Living Barbados magazine…