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BARBADOS

Table of Contents

ECONOMIC OVERVIEW

Barbados is the wealthiest and most developed country in the Eastern Caribbean and enjoys one of the highest per capita incomes in Latin America. Historically, the Barbadian economy was dependent on sugarcane cultivation and related activities. However, in recent years the economy has diversified into light industry and tourism with about four-fifths of GDP and of exports being attributed to services. Offshore finance and information services are important foreign exchange earners and thrive from having the same time zone as eastern US financial centers and a relatively highly educated workforce.

BARBADOS TAXES

INCOME TAX

Income tax rates – Individuals

Taxable Income

Rate of Tax

BDS$

%

1 – 35,000

16

Over 35,000

33.5

Tax on net residential rental income

15

Personal Allowance

 

– Persons in receipt of pension – Bds $40,000

 

– All other persons – Bds $25,000

 

Note: Certain expatriates working in the International Business and Financial Sector may qualify for a tax exemption ranging from 35% to 60% depending on the level of Income for an initial period of 3 years.

PERSONAL ALLOWANCES

Basic deduction

$25,000

Dependent spouse allowance

$3,000

Child allowance:


Under 18 years or over 18 years but under 25 years and receiving full time education

$1,000 each in respect of 2 children (maximum)

Capital Gains

Not Taxable

150% of the cost of conducting energy audits and 150% of 50% of the cost retrofitting premises or installing systems to produce electricity from sources other than fossil fuels:

Individuals

$10,000 (max p.a)

Registered businesses

$25,000 (max p.a.)

Retrofitting of residential property with roof straps and shutters

$2,500 (Max)

NIS contributions paid on behalf of an employee

Allowed in full

Annual payments/covenants

5% of assessable income

Amounts contributed to exempt charities

Allowed in full

Amounts of less than BDS $1 million paid to registered charities

10% of assessable income

Amounts in excess of BDS $1 million paid to registered charities

50% of assessable income

Royalties received in Barbados

50% Exempt

Payments

(i) Employment income earners only: Any balance due – 50% on 30 April and 50% on 30 September

 

(ii) Individuals earning Business Income exceeding 25% of the assessable income: Installments on 15 June, 15 September, 15 December and balance on 30 April following year

Filing Deadline

• Returns are due to be filed by 30 April in the year following the year of income

 

Note: In practice where the filing and payment deadlines fall on a Saturday, the deadlines are extended to the next business day.

NATIONAL INSURANCE CONTRIBUTIONS

{Based on a % of maximum insurable earnings of $4,650 per month)


Employee

Employer

Total

Employed persons

%

%

%

National Insurance

6.75

6.75

13.50

Non-Contributory

2.00

2.00

4.00

Employment Injury

-

0.75

0.75

Unemployment

0.75

0.75

1.50

Severance Fund

-

0.50

0.50

Training Levy

0.50

0.50

1.00

Catastrophe Fund

0.10

0.10

10.10

11.25

21.35

Employed Persons Under age 16 or 66 years or over

Employee

Employer

Total

Employment Injury

-

0.75

0.75

Training Levy

0.50

0.50

1.00

Catastrophe Fund

0.10

-

1.85

0.60

1.25

1.85

Self-Employed Persons

Total

National Insurance

13.50

Non-Contributory

2.00

Training Levy

0.50

Catastrophe Fund

0.10

16.10

SEVERANCE PAYMENTS

For each complete year of employment

up to 10 years

2.5 weeks’ basic pay*

11 years to 20 years

3 weeks’ basic pay*

21 years to 33 years

3.5 weeks’ basic pay*

*Basic pay means the insurable earnings of the employee for National Insurance purposes.Note: Severance payments are not taxable.


CORPORATION TAX RATES

Basic rate

25%

Rental of residential properties

15%

Approved Small Business

15%

Approved Developer in Special Development Area

15%

Manufacturing companies

15%

Companies engaged in the construction of houses for sale

not exceeding $150,000 inclusive of land

15%

Inter-Company ordinary dividends

Exempt

Inter-Company dividends received from a non-resident company

Exempt

Tax Payments

With a year end between:

Payment due date

  • 1 January and 30 September (inclusive)

prepayment of tax on 15 September and final payment on 15 March of the year after the year end.

  • 1 October and 31 December (inclusive)

prepayment of tax on 15 December, 15 March and final payment on 15 June of the year after the year end.

Dates for Filing Returns

With a year end between:

Filing due date

  • 1 January and 30 September (inclusive)

15th March following year

  • 1 October and 31 December (inclusive)

15th June following year

Note:In practice where the filing and payment deadlines fall on a Saturday, the deadlines are extended to the next business day.

BANKS (TAX ON ASSETS)

The provisions of the Banks (Tax on Assets) Act which had previously expired on 31 March 2016, have now been revived by The Banks (Tax on Assets) Act 2017, which has an effective date of 1 April 2016 so as to allow for seamless continuation of the previous provisions.


In addition to its revival, the rate of tax will now be increased from 0.20% to 0.35% of the domestic assets of banks in Barbados.

WITHHOLDING TAX

Residents

Interest paid to individuals over $100

12.5%

Barbados Government Securities

12.5%

Ordinary dividends paid to individuals in cash

12.5%

Dividends received from shares under a dividend reinvestment plan but restricted to 75% of the dividend up to $7,500 p.a.

NIL

Non-Residents

Non-Treaty Countries

%

Dividends paid out of foreign source income

NIL

Dividends paid from non-foreign source income

15

Interest

15

Rents

25

Royalties

15

Management/Technical Aid Fee

15

Dividends from untaxed profits

25

Services other than Management

25

Covenants

20

Branch profits remitted/deemed remitted

10

Barbados Government Securities

NIL

Professional fees

NIL+

Key:

 

+ Paid by local companies to non-resident associates for services performed in the International Business & Financial Services Sector.

 

Note: These rates may be reduced under the existence of a Double Tax Treaty

DOUBLE TAXATION TREATIES

Barbados has entered into the following double taxation treaties:

Austria

Norway

Bahrain

Panama

Botswana

Republic of Seychelles

Canada

Republic of Mexico

Caricom

San Marino

China

Singapore

Czech Republic

Spain

Cuba

State of Qatar

Finland

Sweden

Iceland

Switzerland

Kingdom of the Netherlands

The United Kingdom

Luxembourg

USA

Malta

Venezuela

Mauritius

VALUE ADDED TAX

VAT is imposed on:

 

(a) the taxable supply in Barbados of goods or services by a registrant; and

 

(b) Goods imported into Barbados.


VAT rates are below:

 

Standard Rated Goods and Services

17.5%

Hotel Accommodation

8.75%

Supplies related to Tourism◊

7.5%

Mobile Services (w.e.f. January 1, 2016)

22%

Supplies related to Tourism◊

7.5%

◊ This rate is applicable to specific goods and services provided by qualified registrants as provided by the VAT Act.

Note: Exemptions are available to certain legal structures, such as International Business Companies, International Banks and Exempt Insurance Companies.

Zero Rated Goods / Exempt Services

Zero-rated Goods

Exempt Services

International Freight Services

Gambling, Betting, Lotteries, Bingo and Instant Money Tickets

Prescription medicines and drugs

Financial Services

Exports

Sale of Real Estate

Selected food Items

Medical Services

Certain supplies of services to non-residents

Training & Education (Approved Institutions)

Unconditional gift of goods or services to a charity

Rental of residential property

Crude oil

Insurance Services

Water


Water and Sewages provided by the Barbados Water Authority

Public Postal Services

Domestic Travel by Bus, Taxi or Coach

VAT return filing and payment deadline

• Returns must be filed, and any VAT liability settled, within 21 days of the end of the registrant’s taxable period.

 

Note: In practice where the filing and payment deadlines fall on a Saturday, the deadlines are extended to the next business day.

NATIONAL SOCIAL RESPONSIBILITY LEVY

During the 2016/2017 Financial Statements and Budgetary Proposals on 16 August 2016, the Minister of Finance announced the imposition of a National Social Responsibility Levy which will be effective as at 1 September 2016.

 

The levy will be applied at the rate of 2% on domestic outputs as well as on the customs value of all imports, with the exception of goods for the manufacturing, agriculture and tourism sectors.

 

To date, the enabling legislation for this Levy has not been enacted.

PROPERTY TAXES

Land Tax

Residential Rates

Improved Value

0% on first

$190,000

0.10% on next

$310,000

0.45% on next

$750,000

0.75% on excess over

$1,250,000

Pensioners who occupy their own homes will pay residential rates, but on 50% of the amount by which the improved value exceeds $190,000.

 

Land tax is capped at $60,000 where a dwelling house is used exclusively as a residence by the person who owns the land on which the dwelling house is erected.

Commercial, Industrial, Hotel and Villa Rate Improved Value

65%

Unimproved Land Site Value

60%

Rebate of 50% granted to hotels and 25% granted to villas on production of certificate from the Barbados Tourism Authority.

PROPERTY TRANSFER TAX

Shares and real property

Rates of tax

Vendor:

  • First $50,000 on sale of shares;
  • First $150,000 on sale of house and land


Exempt

  • Excess

2.5%

The purchaser does not pay property transfer tax.

Creation or transfer of lease 25 years or more of a residential or commercial property

2.5%

Securities traded on the Securities Exchange are exempt.

CAVEAT

The information on this page is provided as at March 26th, 2017, and is provided for information purposes only.


It is not intended to be relied upon for specific tax and/or business advice and as such, readers are encouraged to consult with professional advisors on specific matters prior to making any decision.


Should you require tax advice, please contact us and we shall be happy to make a referral to a local tax practitioner.

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