| Barbados Income Tax Rates Barbados income tax rates for 2009 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.
National Insurance Contributions by Employees: National insurance contributions by an employee in Barbados is 10.10%, with maximum insurable earnings of BDM 3,720 per month. For employed persons who are under age 16 or 65 years or over, the rate of the national insurance contributions is 0.50%. Employers in Barbados also contribute to national insurance (see corporate tax section below). Self-employed persons in Barbados contribute at a rate of 16.00%.
Capital Gains Tax: Capital gains are not taxable in Barbados.
Wealth Tax: There is no wealth tax in Barbados.
Barbados Corporate Tax RatesBarbados corporate tax rate for 2009 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.
Foreign Tax Credit: Credit is granted for tax paid overseas. However, the credit is limited to 50% of the Barbados tax rate (i.e. 12.5%). Excess credits may not be carried forward.
Capital Gains Tax: Capital gains are generally not taxed in Barbados. Ordinary gains on disposal of real property may be taxed as business income. Gains on disposal of land may be subject to land development duty, in addition to income tax or corporate tax.
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: While there is no typical holding company regime in Barbados, a special regime applies to International Business Companies (IBCs) and International Society 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 foreign source income.
National Insurance Contributions by Employers: National insurance contributions by an employer in Barbados is 11.25%, with maximum insurable earnings of BDM 3,720 per month. For employed persons who are under age 16 or 65 years or over, the rate of the national insurance contributions is 1.25%. Employees in Barbados also contribute to national insurance (see personal tax section above). Self-employed persons in Barbados contribute at a rate of 16.00%.
Tax Year: Tax year in Barbados is the calendar year.
Barbados OffshoreBarbados 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 NonresidentsNon-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 TaxBarbados 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 TaxProperty 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 DutyStamp 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) RatesThe 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%
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