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 |
---|---|
| prepayment of tax on 15 September and final payment on 15 March of the year after the year end. |
| 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 |
---|---|
| 15th March following year |
| 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: | |
---|---|
| Exempt |
| 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.