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Taxation in Barbados
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Taxation in Barbados

Corporate Tax

Main rate: Corporate tax rate is 30% in 2005

Resident companies pay tax on their worldwide income; non-resident companies pay tax on income derived from Barbados. The 30% corporate tax rate is to be reduced to 25% in 2006. Branch profits reinvested in Barbados are exempt from the branch profits tax. A 10% branch profits tax applies to the after-tax profits of non-resident companies.

Individual Tax

Rates rise progressively to 37.5%

Tax is generally chargeable on the worldwide income of resident individuals and the income of non-residents derived from Barbados. An individual is resident if more than 182 days are spent in Barbados in the year, or if the individual is regarded as “ordinarily resident”. Special rules apply to individuals who are resident but not domiciled in Barbados. The top income tax rate of 37.5% applies to income over BBD 24,200. This rate is to be reduced to 35% in 2006.

Capital Gains

Gains are generally not subject to tax

Barbados has no specific rules on the taxation of capital gains; regular 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.

Indirect Tax

Standard rate: 15%
Other rates: 7.5%, 0%

VAT applies to most transactions. The lower rate of 7.5% applies 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 is compulsory for businesses with annual turnover above BBD 60,000. Voluntary registration is possible.

Tax Administration and Compliance

Tax year: Corporations: year of assessment is year following accounting period; Individuals: calendar year

Companies make an advance tax payment (amounting to 50% of tax paid in the previous year) by September 15th in the tax year (December 15th where the company’s accounting period ends between October 1st and December 31st). A second advance payment is made on March 15th of the following year, and the tax return must be submitted by that date. Any remaining tax is payable by September 30th of the year following the relevant accounting period. Individuals carrying on a business or profession must make three quarterly advance payments of tax, amounting to 25% of the previous year’s liability. Emoluments are taxed by withholding.

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