Barbados is a tropical island in the Caribbean. It is quite densely populated, with 288,000 (2019 est.) people of mostly African descent living on an island of 430 km2 (166 sq. mi). Barbados is an independent member of the Commonwealth and a member of Caricom, the Caribbean common market. It is politically stable and GDP per capita of US$16,800 (2017) at PPP is reasonable. The Barbadian dollar is pegged to the US dollar at exactly 2 to 1. The climate is warm and humid; sea breezes alleviate the high summer temperatures. English is the official language.
Historically, Barbados mostly produced sugar. The island has now diversified into tourism, manufacturing (with a host of incentives), informatics and financial services.
Since the global financial crisis, the Barbadian economy has made steady progress. For the years 2015, 2016 and 2017, annual GDP growth was at 0.9%, 1.0% and 2.0% respectively. Unemployment had been reduced from a high of over 13% in 2014 to generally less than 10%. There has however been some fluctuation; figures for July and October 2018 were 8.2% and 10.7% respectively. In the last ten years the Government has been business-friendly and economically sound.
Barbados’s Low Tax Specialisations
Barbados has preferred quality to quantity, and has developed a remarkably wide range of offshore formats to suit all tastes! A good US tax treaty and the foreign sales corporation legislation (now repealed) have particularly encouraged US interest; Canada has also been a traditional partner. The offshore insurance sector is as big as the BVI’s, and there are 7 offshore banks.
Barbados is very picky about who it will have, and probably stands in better with the OECD than many OIFCs. There is a fully computerised stock exchange with a central depositary, though mutual funds have not yet developed strongly. The island is currently developing its e-commerce capabilities.
Lots of Taxes in Barbados!
Alongside a really large selection of corporate formats, Barbados has many different taxes. Although the introduction of VAT in 1997 got rid of eleven of them, there are plenty left, and for a resident individual rates are quite high. The structure of manufacturing and other incentives is complex, but properly used can reduce the tax burden substantially.
It may be that fewer, simpler taxes would be beneficial; anyway, an offshore business will be able to avoid all taxation in one way or another.
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