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ANTIGUA and BARBUDA

Table of Contents

ECONOMIC OVERVIEW

Antigua and Barbuda, comprising two main islands and several smaller ones, boasts extensive reef-lined coastlines. Its journey to independence began in 1967 within the British Commonwealth, culminating in full independence in 1981. Benefiting from a thriving tourism sector and offshore financial services, the nation has risen to become one of the wealthiest in the Caribbean. Transitioning from financial struggles, it now thrives as a competitive financial hub, fostering a high quality of life. The official currency, the Eastern Caribbean dollar, maintains a fixed exchange rate of $1 USD to $2.70 XCD. Antigua and Barbuda’s tax system is highly favorable, offering numerous advantages for residents and businesses alike. Notably, there are no taxes imposed on wealth, inheritance, or capital gains related to global income. International Business Companies (IBCs) enjoy significant benefits, including income tax holidays and exemption from paying customs duties. These measures contribute to an environment that encourages investment and entrepreneurship within the country.

Personal Tax

Antigua and Barbuda do not impose personal income tax, a change implemented in April 2016 as part of broader tax reforms. Furthermore, there are no capital gains or inheritance taxes in this jurisdiction, and wealth tax is also not applicable. Nevertheless, transfer tax may apply to gifts. These tax advantages have positioned Antigua and Barbuda as an appealing choice for both business ventures and lifestyle preferences.

Tax Filing and Compliance

Individuals, both residents and non-residents, typically do not need to submit personal income tax returns in Antigua and Barbuda as there is no such tax in place. However, for business owners and self-employed individuals, the requirement entails filing profit/loss tax forms and other pertinent documents tailored to their specific business structure. Nevertheless, it is crucial to remember that although Antigua and Barbuda do not impose these taxes, U.S. citizens must still disclose all global income to the IRS, encompassing earnings accrued in the islands.

Corporate Tax

Companies operating in Antigua and Barbuda face a flat corporate tax rate of 25% on their profits, while specific sectors like commercial banks, insurance firms, oil companies, and telecommunications entities benefit from a reduced rate of 10%. Legal entities do not incur taxes on dividends, interest, or royalties. Furthermore, the jurisdiction imposes no capital gains, wealth, or inheritance taxes. Businesses are required to adhere to sales tax regulations, and taxes related to real estate transactions, including ownership, purchases, and sales, are applicable. A company is classified as a resident entity subject to corporate tax if it meets certain criteria:

 

It is managed and controlled within Antigua and Barbuda.

 

It operates within the jurisdiction.

 

It is incorporated in Antigua and Barbuda.

 

It earns income from sources within Antigua and Barbuda.

 

It possesses assets within Antigua and Barbuda that generate income.

 

For unincorporated businesses, tax rates are variable and applied on a sliding scale, ranging from 0% to 25% of gross income, regardless of whether the income is generated locally or abroad.

 

Non-resident companies are liable to unincorporated business taxation on income derived from within Antigua and Barbuda only. Unincorporated business tax is due quarterly instead of annually.

Sales Tax

ABST, the Antigua and Barbuda Sales Tax, is an indirect tax imposed at a rate of 15% on a wide array of goods and services either imported into or provided within Antigua and Barbuda by individuals or businesses registered under ABST. However, the rate for hotel accommodation is 12.5%. Several services such as financial services, local transportation, sale of residential land, education, long-term accommodation (exceeding 45 days), and medical and veterinary services are exempt from ABST. Transactions between related entities are subject to taxation.

 

Businesses operating under the ABST system are required to register for ABST, with a registration threshold set at 300,000 East Caribbean dollars (XCD) in taxable activity within a 12-month period. Each month is considered a period under the ABST Act. Certain supplies are zero-rated, meaning they incur a tax rate of 0%. These include exports, essential food items, water, residential electricity, sale of new residential properties, construction of new residential premises, and fuel.

 

Registered entities can offset input tax against output tax when calculating the amount of tax owed for a specific ABST accounting period. If input tax exceeds output tax, the registrant is eligible for a refund of ABST.

Customs Duties

Customs duties are imposed on all imports and include charges for ABST, RRC, and an environmental levy, although exemptions may apply in certain cases. The rates for customs duty range from 0% to 70%, depending on the type of imported goods, as outlined in the Custom Duties Act. These duties are calculated based on the cost, insurance, and freight (CIF) values, with rates determined by the Caribbean Community (CARICOM) Common External Tariff.

Excise tax

Antigua and Barbuda do not impose excise taxes.

Property Tax

Property tax in Antigua and Barbuda is assessed annually at varying rates based on the market value and usage of real estate, as determined by the Property Valuation Department. The rates are as follows:


Agricultural land: 0.10%


Residential land: 0.20%


Residential buildings: 0.30%


Other property buildings: 0.50%


Other property land: 0.40%


Certain allowances and rebates are available, including:


A dwelling house allowance of XCD 150,000 deducted from the taxable value.


A 5% rebate for timely tax payment.


Newly habitable dwelling houses are exempt from tax for the first two years.


Tax rebates ranging from 25% to 100% for special development property and property for public use, with a 25% rebate applicable for hotels.

Stamp Tax

Stamp tax in Antigua and Barbuda applies to a wide range of transactions, such as bills of sale, leases, mortgages, contracts, and bills of lading. Specifically concerning the transfer of real property and shares, the following regulations are in place:


Transfer of real property:


Both the buyer and seller are subject to stamp tax, calculated based on the consideration for the sale or the assessed value of the property, whichever is higher. Vendors are taxed at a rate of 7.5%, while purchasers are taxed at 2.5%. Non-citizen vendors must pay a land value appreciation tax at a rate of 5%, calculated on the difference between the property’s purchase value (including improvements) and its current value at the time of sale. Non-citizen purchasers are also required to pay 5% of the property’s value, referencing the non- citizen license necessary to own property in Antigua and Barbuda.


Transfer of shares:


Stamp tax applies to both buyers and sellers of shares, based on either the market value or book value of the shares, whichever is higher. Vendors are taxed at a rate of 5%, while purchasers are taxed at 2.5%. Non-citizens holding shares or acting as directors in companies owning land exceeding five acres for over five years must obtain a license, costing XCD 400.


Tax Period and Returns

The tax year aligns with the company’s fiscal year-end, and tax returns are due by March 31st. There are no tax holidays, and the tax return date is definitive.

Tax Deadline and Penalties

Tax deadlines vary depending on the type of tax, so it is important to remain updated on these deadlines to ensure timely filing. Late filing of tax returns may lead to penalties, and individuals should refer to the Antigua and Barbuda Inland Revenue Department (IRD) for accurate information regarding these penalties.

Withholding Tax

Withholding tax, also referred to as retention tax, is deducted directly from certain types of income at the source of payment. Interest payments on bank deposits to non-resident individuals do not incur withholding tax (WHT). However, interest payments on bank deposits to non- resident corporations are taxed at a rate of 25%. In cases where a non-resident lends money at arm’s length for the purpose of promoting various types of development, the WHT rate is 10%. Prior approval from the Commissioner of Inland Revenue is necessary, and it is advisable to obtain Cabinet approval as well. WHT is payable at the time of payment or accrual and must be settled within seven days of that occurrence.

Appeal Process

If you disagree with a tax assessment, you can follow the appeal process outlined by the IRD. In Antigua and Barbuda, the tax system for companies operates on a self-assessment basis. However, the Inland Revenue Department (IRD) conducts continuous compliance efforts to verify that corporations fulfill their tax responsibilities. The IRD employs various methods for compliance and audit activities, typically involving reviews focused on particular issues and conducting audits as needed.

Controlled Foreign Corporation Regulations

Antigua and Barbuda do not enforce any Controlled Foreign Corporation (CFC) regulations. The residency of an individual in Antigua and Barbuda does not affect the tax status of an offshore company, unless the company is managed and controlled from within Antigua and Barbuda.

Implications of Trading with a Resident Company in Antigua and Barbuda

When an offshore company generates income from transactions with a company operating within Antigua and Barbuda, the income is regarded as originating from within the islands. Consequently, it becomes subject to taxation in Antigua and Barbuda. Any company registered, incorporated, or maintained in Antigua and Barbuda is required to pay a 25% tax on all its profits.

Characteristics of International Business Corporations (IBCs) in Antigua and Barbuda

An International Business Corporation (IBC) in Antigua and Barbuda is a tax-exempt entity that requires only one shareholder and one director, who can be the same individual or legal entity from any country. Foreigners have the freedom to own all corporate shares in an IBC. Antigua and Barbuda provide a 50-year tax exemption for IBCs, covering most forms of income, including dividends, interest, and royalties involving foreign parties.

While there is no obligation to submit audited accounts or annual returns to authorities, IBCs must maintain financial records reflecting their financial status. IBCs in Antigua and Barbuda are restricted from engaging in trade within the country or owning real estate there. Additionally, they cannot offer shares to the public. Moreover, Antigua and Barbuda IBCs are prohibited from conducting banking, insurance, fund management, collective investment schemes, and other financial activities associated with the banking or insurance sectors. This restriction encompasses all financial institutions.

Advantages of International Business Corporations (IBCs) in Antigua and Barbuda

Foreign Ownership: IBCs allow for complete foreign ownership, with all shareholders being able to be foreigners.

 

Tax Exemption: IBCs are not subject to any taxes in Antigua and Barbuda. However, it is important to note that U.S. taxpayers and individuals subject to global income taxation must still report all income to their respective governments.

 

Privacy: Beneficial owners and shareholders identities remain confidential and are not disclosed in public records.

 

Asset Protection: The assets of an IBC are not publicly disclosed and are owned by the corporation as a separate legal entity from its shareholders, providing asset protection.

 

Quick Formation: IBCs can be formed and registered within a single day, facilitating swift establishment.

 

Simplified Structure: With only one shareholder required, who can also serve as the sole director, IBCs offer streamlined control and management.

 

No Minimum Capital Requirement: There is no mandatory minimum authorized capital for setting up an IBC in Antigua and Barbuda.

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