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.