Barbados Income Tax Rates

Barbados income tax rates are between 20% - 35%.

Taxable Income (BDM)    /    Tax Rate %    /    Cumulative Tax (BDM)

BDM 0 - 24,200                         20%                      BDM 4,840
Over BDM 24,200                      35%

Tax on net residential rental income in Barbados is 15%.

Gross assessable income up to BDM 25,000 is not subject to tax in Barbados. An individual over 60 years of age and in receipt of a pension is entitled to a basic deduction of BDM 40,000. Specially qualified expatriates working in the International Business and Financial Services 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.

Barbados income tax is levied on income of persons resident or nonresident in Barbados. There is no tax on capital. The system of taxation is based on self-assessment in Barbados.

Residency: A person is deemed to have been resident of Barbados if that person:
(a) spent in the aggregate more than 182 days in Barbados in an income year
(b) has a permanent home and has given notice to the Commissioner of his intention to reside in Barbados for at least 2 consecutive years including last income year (ordinarily resident), or
(c) was domiciled in Barbados at any time during income year

Currently, individuals who are resident but not domiciled in Barbados are taxed on income derived from Barbados as well as any foreign source income that is remitted or deemed remitted to Barbados. It is proposed that such individuals will qualify for the foreign currency earnings credit in respect of any foreign source income that is remitted to Barbados, even where the individual becomes domiciled in Barbados. This will reduce the effective rate of tax paid by such individuals.

Tax Year: Tax year in Barbados is the calendar year.

Basis - Tax is generally chargeable on the worldwide income of resident individuals and the Barbados-source income of nonresidents.

Residence - An individual is resident if he/she spends more than 182 days in Barbados in the year, or if the individual is regarded as "ordinarily resident."

Filing status - Each individual must file a tax return; joint filing of spouses is not permitted.

Taxable income - Taxable income includes income from employment, benefits in-kind, pension income, directors' remuneration and business income. A 12.5% withholding tax is imposed on dividends to resident individuals.

Tax Rates - The first BBD 24,200 is taxable at a rate of 20% and income exceeding BBD 24,200 is taxed at a rate of 35%. Tax on net residential rental income is taxed at 15%.

Gross assessable income up to BBD 25,000 is not subject to tax. Specially qualified individuals working in the international business and financial services 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.

Capital gains - Capital gains are not taxable.

Deductions and allowances - A basic personal allowance of BBD 25,000 is permitted. An individual over age 60 who is in receipt of a pension is entitled to a basic deduction of BBD 40,000.

Other taxes on individuals:

Capital duty - No

Stamp duty - Stamp duty is imposed on certain documents at varying rates.

Capital acquisitions tax - No

Real property tax - Building and land owners are liable to tax on the value of the property.

The tax is payable on 1 January and 1 July at rates ranging from 0.6% to 18.23%.

Inheritance/estate tax - There is no inheritance tax, but gifts may be subject to the property transfer tax

Net wealth/net worth tax - No

Social security - Companies employing persons in Barbados are required to register with the Director of National Insurance as an employer. Employees also must register.

Barbados Corporate Tax Rates

Barbados corporate tax rate is a flat 25%.

Below is a list of corporate tax rates for other business types:

Business Type                                                    /                        Tax Rate %

- Basic corporate tax 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                             15%
for sale not exceeding BBD 150,000 inclusive of land
- Inter-Company ordinary dividends                                                  Exempt
- Inter-Company dividends received from a nonresident company        Exempt
- Life Insurance Companies                                                                  5%
- International Business Companies                                               1% - 2.5%

A company is deemed to be resident if it is centrally managed and controlled in Barbados. Resident companies pay tax on their worldwide income, nonresident companies pay tax only on Barbados source income.

Residence - A company is deemed to be resident if it is centrally managed and controlled in Barbados.

Basis - Resident companies pay tax on their worldwide income; nonresident companies pay tax only on Barbados-source income.

Taxable income - Taxable income is determined by subtracting the following from gross income derived from the operation of a business: income from property and passive income and expenses incurred to produce the income.

Taxation of dividends - Dividends paid by a Barbados company to another Barbados company are exempt from tax.

Dividends derived by Barbadian resident companies, including IBCs, are exempt from tax in Barbados on dividends received from a nonresident company where the Barbados company holds at least 10% of the capital of the nonresident company and the shares are not held as a portfolio investment.

Capital gains - Although Barbados has no specific rules on the taxation of capital gains, capital gains generally are not subject to tax; ordinary gains on the disposal of real property may be taxed as business income.

Gains on the disposal of land may be subject to land development duty, in addition to income or corporate tax.

Losses - Losses may be carried forward for 9 years. The carryback of losses is not permitted.

Tax Rate - 25%

Surtax - No

Alternative minimum tax - No

Foreign tax credit - Credit is granted for tax paid overseas. However, the credit is limited to 50% of the Barbados rate (i.e. 12.5%).

Excess credits may not be carried forward.

Participation exemption - Dividends derived by a Barbados resident company from an overseas company are exempt from tax if the Barbados resident holds at least 10% of the capital of the overseas company and the shares are not held as a portfolio investment.

Holding company regime - Although there is no typical holding company regime, a special regime applies to IBCs and societies with restricted liability (ISRLs), under which an exemption is available for dividends and interest paid to another IBC or to a person resident outside Barbados. The withholding tax exemption also applies to dividends paid by a resident Barbados company to nonresident shareholders out of foreignsource income.

Incentives - Barbados provides incentives for IBCs, ISRLs, qualifying insurance companies and entities incorporated under the International Financial Services Act. Benefits include: (1) tax on income on a sliding scale, from a minimum of 1% to a maximum of 2.5%; (2) no capital gains tax or estate duty; (3) a tax credit for tax paid outside Barbados but only insofar as it does not reduce the tax payable in Barbados to less than 1%; (4) tax concessions for specially qualified individuals; (5) an exemption from exchange control; and (6) equipment and machinery may be imported free of customs duty, consumption tax and stamp duty.

Withholding tax:

Dividends - Dividends paid by IBCs and ISRls to a nonresident are exempt from tax.

Otherwise, dividends paid to a nonresident are subject to a 15% withholding tax, unless the rate is reduced under a tax treaty. There is also an exemption from withholding tax on dividends paid by a resident Barbados company to nonresident shareholders out of foreign-source income.

Interest - Interest paid by IBCs and ISRLs to a nonresident is exempt from tax. Otherwise, a 15% withholding tax applies unless the rate is reduced under a tax treaty.

Royalties - Royalties paid by IBCs and ISRLs to a nonresident are exempt from tax. Otherwise, a 15% withholding tax is levied, unless the rate is reduced under a tax treaty.

Branch remittance tax - 10%

Other taxes on corporations:

Capital duty - No

Real property tax - Building and land owners are liable to tax on the value of the property.

The tax is payable on 1 January and 1 July at rates ranging from 0.6% to 18.23%.

Social security - Employers are required to make social security contributions at rates ranging from 0.75% to 11.25%.

Stamp duty - Stamp duty is imposed on certain documents at varying rates.

Transfer tax - A transfer tax is imposed on real property, shares and debentures.

Tax Year: Tax year in Barbados is the calendar year.

Barbados Offshore

Barbados provides incentives for IBCs (International Business Companies), ISRLs (Societes with Restricted Liability), qualifying insurance companies and entities incorporated under the International Financial Services Act. Benefits include:

1) Tax on income on a sliding scale, from a maximum tax rate of 2.5% to a minimum tax rate of 1%.
2) No capital gains tax or estate duty
3) Tax credit for tax paid outside Barbados but only insofar as it does not reduce the tax payable in Barbados to less than 1%.
4) Tax concessions for specially qualified individuals
5) Exemption from exchange control
6) Equipment and machinery may be imported free of customs duty, consumption tax and stamp duty.

The International Business Company (IBC) and International Society with Restricted Liability (ISRL) can be used to conduct business with non-residents. In practice, these entities are used for a diverse range of activities including real estate, trading, the provision of services and manufacturing.

Barbados also offers incentives that are used specifically for the provision of international financial services, namely, International Banks, Exempt Insurance Companies, Qualifying Insurance Companies, Offshore Trusts and International Trusts. Special incentives are also extended to companies engaged in international manufacturing, ICT and the ownership and operation of ships.

Barbados Corporation Tax for International Business Company (IBC)

Taxable Income (BDM)         /         Tax Rate %

BDM 0 - 10 million                             2.5%
BDM 10 million - 20 million                 2.0%
BDM 20 million - 30 million                 1.5%
Above BDM 30 Million                        1.0%

- Foreign tax credits for corporate tax are available to the extent that they don't reduce the tax payable in Barbados to less than 1% of income.
- Barbados corporate tax exempt if the company's shares are all owned by an Offshore Trust, the company is managed by an International Bank and its activities are restricted to buying, selling, holding or managing securities
- Income tax paid by specially qualified nonresidents whose services are required for the business are 35% to 60% exempt, depending on the level of income earned
- Withholding Tax on income paid to nonresidents are tax exempt
- Tax on capital gains is not imposed in Barbados
- Taxes on transfers of its securities and assets to nonresidents is exempt
- Import of equipment and machinery necessary for conduct of business is exempt from customs duty, consumption tax and stamp duties
- Exempt from exchange controls in Barbados
- Guarantee of benefits may be granted for 15 years

Barbados Corporation Tax for International Society with Restricted Liability (ISRL)

Taxable Income (BDM)         /         Tax Rate %

BDM 0 - 10 million                             2.5%
BDM 10 million - 20 million                 2.0%
BDM 20 million - 30 million                 1.5%
Above BDM 30 Million                        1.0%

- Foreign tax credits for corporate tax are available to the extent that they don't reduce the tax payable in Barbados to less than 1% of income.
- Income tax paid by specially qualified nonresidents whose services are required for the business are 35% to 60% exempt, depending on the level of income earned
- Withholding Tax on income paid to nonresidents are tax exempt
- Tax on capital gains is not imposed in Barbados
- Taxes on transfers of its securities and assets to nonresidents is exempt
- Import of equipment and machinery necessary for conduct of business is exempt from customs duty, consumption tax and stamp duties
- Exempt from exchange controls in Barbados
- Guarantee of benefits may be granted for 30 years

Barbados Withholding Taxes for Residents

- Interest over $100 paid to individuals: 12.5% *
- Barbados Government Securities: 12.5%
- Ordinary dividends paid in cash to individuals: 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
- Investment withdrawn by an individual from a Mutual Fund or Capital Fund within 5 years of being invested: 25%
- Withdrawal of investment in shares in a Credit Union within 5 years of investment: 20%

Barbados Withholding Taxes for Nonresidents

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 +

* Represents full tax liability.
+ Paid by local companies to nonresident associates for services performed in the International Business & Financial Services Sector.
** Rates may be reduced under a Double Taxation Treaty

Tax Penalties in Barbados

- Failure to estimate tax payable: 5% of tax assessed.
- Failure to pay tax estimated on the relevant date: 5% of tax assessed plus an additional BDM 100.
- Failure to file a tax return by the relevant date: 5% of tax assessed plus an additional BDM 100.
- Tax evaded or sought to be evaded: 100% of tax evaded.

Tax and penalty unpaid will attract interest at a rate of 1% per month.

Barbados Property Taxes - Land Tax

Barbados levies an annual land tax at different rates.

Residential Tax Rates
Value                  /         Tax Rate %

on first BDM 150,000              0%
on next BDM 250,000          0.10%
on next BDM 600,000          0.45%
over BDM 1,000,000            0.75%

Pensioners who occupy their own homes will pay residential rates but on 50% of the improved value.
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 Tax Rates
Improved Value               0.65%

Note: A tax rebate of 50% is granted to hotels and a 25% tax rebate is granted to villas, on production of certificate from the Barbados Tourism Authority.

Unimproved Land Tax Rate
Site Value                   0.60%

Barbados Property Transfer Tax

Property Transfer Tax in Barbados is payable on the transfer by gift, sale or other method of any direct or indirect interest in land.

Tax rates on shares and real property only

Vendor:
- First $50,000 on sale of shares: Exempt
First $150,000 on sale of house and land: Exempt
- Tax on excess: 2.5%

Purchaser: NIL

- Creation or transfer of lease 25 years or more of a residential or commercial property: 2.5%
- Securities traded on the Securities Exchange: Exempt

Barbados Stamp Duty

Stamp Duty is payable in a number of situations in Barbados at varying rates, including transfers of real estate and shares (1%), leases (1%), and mortgages (BDM 5 on the first $500, and BDM 3 on each subsequent BDM 500).

Barbados Value Added Tax (VAT) Rates

The general rate of Value Added Tax (VAT) in Barbados is 15%, with a reduced rate of 7.5% applying to hotel accommodation. Exports and certain goods and services are also exempt from Value Added Tax.

Rates of Value Added Tax in Barbados

- Most goods and services: 15%
- Hotel accommodation: 7.5%
- Supply of financial services: Exempt
- Sale, transfer or disposition of real property: Exempt
- Leases of real property for at least 25 years and residential leases: Exempt
- Basic food items: 0%
- Exports: 0%
- Certain supplies of services to non-residents: 0%
- Goods imported by International Business Companies, Offshore Banks, Exempt Insurance Companies, Exempt Insurance Management Companies, Approved Shipping Companies, Qualifying Insurance Companies,
Fiscal Incentives Companies, Societies with Restricted Liability and International Trusts: 0%

Taxable transactions - VAT is levied on the sale of goods and the provision of services.

Rates - The standard VAT rate is 15%, with a lower rate of 7.5% applying to hotel accommodation. A zero rate applies to exports, basic foodstuffs and international freight services. Exemptions include some financial services and sales of real property.

Registration - Registration is compulsory for businesses with annual turnover above BBD 60,000. Voluntary registration is possible.

Filing and payment - Ongoing requirements are detailed and complex in some instances.

They include the requirement to file a return every 2 months and pay any tax due to the Comptroller of Customs by the 21st day of the month following the 2-month cycle.