Barbados – In 2018, Barbados repealed the International Business Companies Act in response to initiatives led by the OECD and the EU, moving towards a tax convergence between the country’s international and domestic business sectors. As a result of the repealed law, no new International Business Company (IBC) and International Societies with Restricted Liability (ISRL) licenses were issued from December 31st, 2018. Entities registered as IBCs and ISRLs were automatically converted to either a Regular Barbados Company (RBC) or Societies with Restricted Liability (SRL).
However, those IBCs and ISRLs which were licensed before October 17th, 2017, and did not hold intellectual property (under certain exceptions), were granted a transitional period in which they could continue obtaining the benefits of an IBC/ISRL. That period is due to end on June 30, 2021. At this point, any remaining IBC/ISRL will need to “re-license” under the new regime.
In place of the IBC/ISRL framework, Barbados’ regulators implemented the Foreign Currency Permit (FCP) act, which allows for entities that earn 100% of their income in foreign currency to obtain certain benefits, similar to what IBCs/ISRLs accessed, but with adjusted tax rates. Entities operating under the FCP regime must:
- Renew FCP license annually
- Companies incorporated between January 1 and June 30 – no later than June 30
- Companies incorporated between July 1 and December 31 – no later than December 31
- Pay annual fee of US $500
- FCP will automatically expire if payment is not made within 3 business days of the renewal date.
- Submit declaration by a director/manager to the Ministry of International Business and Industry, on or before the anniversary date, certifying that a corporation tax return for the previous year has been filed with the Barbados Revenue Authority and confirming that 100% of the income earned was in foreign currency
- Retain a Corporate and Trust Service provider licensed under the Corporate and Trust Service Providers Act of Barbados
Additionally, all Barbados entities will be subject to the below sliding scale of tax rates as of January 1, 2021:
- 5.5% on taxable income up to US$500,000
- 3% on taxable income exceeding US$500,000 but not exceeding US$10,000,000
- 2.5% on taxable income exceeding US$10,000,000 but not exceeding US$15,000,000
- 1% on taxable income exceeding US$15,000,000
All remaining IBCs and ISRLs are recommended to make the necessary changes with enough time. The deadline to re-license is June 30th, 2021. To learn more about this requirement and how to comply, contact a CT representative at (844) 322-6993 (toll-free U.S.).