Over the past two decades, as Barbados has faced increasing competition from other tourist destinations leading to a decline in revenue from this source and the contribution of the once King Sugar to the economy has dramatically declined, successive Administrations have realised the importance of diversifying the base of the country's economy.
The International Business Sector has, during this time, grown from a fledgling institution into a vibrant component of the economy as the country has established a reputation as a low tax domicile of integrity, rather than a tax haven, catering to the diverse needs of individuals and corporations around the world.
Barbados's already developed infrastructure to cater to its tourist trade was a ready springboard to the country's foray into the world's financial communities. There was already ready access to the financial capitals of the world by air, sea and telecommunication links. Allied to these factors, was the fact that the country possesses one of the highest literacy rates in the world, many highly trained professionals, a tried and tested legal system with a final appeal to the British Privy Council and the presence of several major accounting firms and International Banks on the island. The island's long standing democracy has ensured a political stability (the island boasts of a Parliament dating back to 1639 the third oldest in the Commonwealth) that encourages investment from foreign investors which in itself has contributed to the economic stability that has seen the Barbados dollar maintain a parity of exchange of $2 Barbados to $1 U.S., since being tied to the $U.S. in 1975.
During the last twenty years, legislation has been passed to create the legal and financial framework within which this sector can operate and successive Governments and the private sector have actively marketed Barbados abroad as a sophisticated financial sector offering a variety of low tax advantages to potential investors.
Legislation has been enacted establishing the following:
1. International Business Companies.
2. Foreign Sales Corporations.
3. Captive Insurance Companies (Exempt Insurance).
4. Offshore Banks.
5. Societies with Restricted Liability (limited liability companies).
6. International Trusts.
7. A Shipping Registry
In addition there is draft legislation for the following:
1. Mutual Funds and
2. Exempt Limited Partnerships.
Parallel to the passage of the above legislation, the country has negotiated and entered into double taxation treaties, which whilst in the main providing for the relief for double taxation of foreign individuals and corporations operating in the offshore sector, just as importantly from a regulatory point of view provide for the exchange of information between treaty parties. Treaties have been established with the following countries:
United States
United Kingdom
Canada
Sweden
Switzerland
Finland
Bi-lateral Investment Treaties have been signed with the above-mentioned countries as well as with Germany and Venezuela.
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