5. Other Forms/entities
Barbados provides various types of entity that are attractive
both locally and internationally, since they provide financial
incentives. These entities include domestic companies,
international business companies, captive insurance companies,
financial institutions, societies with restricted liability, mutual
insurance companies, non-profit companies and ship registration.
The Companies Act regulates the operations of these
companies.
A. Domestic Barbados Companies
The following is a synopsis of domestic Barbados companies:
- incorporated within 24 hours by filing articles of
incorporation at the Registry of Corporate Affairs
- a minimum of one director who need not be a resident of
Barbados
- shareholders may or may not be residents of Barbados; a foreign
shareholder must apply to the Exchange Control authorities to hold
shares in a Barbados domestic company
- no minimum shareholding requirements
- annual audit required if assets and/or gross revenue exceed
USD500,000
- taxed at the rate of 37.5 per cent per annum on profits,
and
- must file annual returns.
B. International Business Company (ibc)
An IBC can be incorporated within 24 hours by filing articles of
incorporation at the Registry of Corporate Affairs. Upon
incorporation, the IBC applies to the Ministry of Economic
Development for a licence to conduct business. The following is a
synopsis of IBCs:
- must have at least one director, who need not be resident of
Barbados
- shares may be issued to residents of Barbados or foreign
entities
- no minimum capital requirement
- shares can be issued in various classes and cannot be issued at
par value
- taxed at rates ranging from a low of 1 per cent to a maximum of
2.5 per cent on profit
- restricted from carrying on business with residents of
Barbados
- exempt from exchange control requirements, withholding taxes on
payment of dividends, interest, royalties, management fees, and
other fees to non-residents
- annual licence fee of USD250
- annual audit required if assets and/or gross revenue exceed
USD500,000
- most supplies are zero-rated for the purposes of VAT, and
- must file annual returns.
C. Society With Restricted Liability (srl)
An SRL is an entity designed to take advantage of benefits that
can be gained in the US through the use of hybrid entities,
characterised in the local jurisdiction as corporations but treated
as partnerships for US tax purposes. The SRL is governed by the
Society with Restricted Liability Act 1995-7, as amended
(SRL Act). An SRL can be engaged in any legal business
activity.
The following is a synopsis of SRLs:
- must have at least one manager who need not be resident in
Barbados
- must have at least two members
- no minimum capital requirement
- can be organised as an exempt international society
- restricted from carrying on business with residents of
Barbados
- similar to IBCs and taxed at rates ranging from 1 per cent to a
maximum of 2.5 per cent on profits
- exempt from exchange controls and withholding taxes on
distributions to non-residents
- annual audit required if assets and/or gross revenue exceed
USD500,000
- must pay annual licence fee of USD250, and
- must file annual returns.
D. Exempt Insurance Company (eic)
The following is a synopsis of EICs:
- must be incorporated and licensed under the Exempt Insurance
Act in Barbados with a minimum capital of USD125,000
- must have at least one director who is a resident citizen of
Barbados
- taxed at the rate of 0 per cent with an annual licence fee of
USD2,500
- exempt from exchange controls and withholding tax being levied
on remittances to non-residents, and
- must meet reasonable solvency tests.
E. Qualifying Insurance Company (qic)
A company licensed under the Barbados
InsuranceAct may apply for a certificate of
qualification where at least 90 per cent of its premiums and risks
originate outside the Caribbean Community (CARICOM). The following
is a synopsis of QICs:
- can benefit from a low effective rate of tax of 2.8 per cent
after deduction of a foreign currency earnings tax credit
(applicable to general insurance business)
- tax rate for life insurance business can be lowered to 0.35 per
cent of gross investment income
- reasonable solvency requirements
- exempt from exchange controls and withholding taxes, and
- may be owned by residents of Barbados, who can insure a certain
amount of local risk.
F. Financial Institutions
The IFSA permits banking in foreign currencies (receiving
deposits, sale of securities, making loans, advances, and
investments). There are capital and reserve requirements, which
must be audited annually. The following is a synopsis of the laws
governing banking in foreign currencies.
- Licensees are under the supervision and regulation of the
Central Bank of Barbados
- initial application fee and annual licence fee of
USD12,500
- exempt from withholding tax on payment of dividends, interest
to non-residents and exchange controls
- thorough investigations of the shareholders, directors and
officers of a company are carried out before a licence is granted,
and
- IFSA provides total and complete exemption in respect of trust
activities carried on by a licensee.
G. Redomiciliation Of Companies
The Companies Act provides for a Barbados company to be
continued in another jurisdiction with shareholder approval so long
as it satisfies the Registrar of Corporate Affairs that its
proposed continuance will not detrimentally affect shareholders or
creditors. It is necessary for the other jurisdiction to provide
complementary legislation, which recognises the assumption by the
continued entity of all rights, obligations, and liabilities of the
continued company.
H. Registration Of External Company
A company incorporated under the laws of another country may
register in Barbados as an external company where it proposes to
carry out an undertaking in Barbados.