Company formation in Barbados

Attractive taxation.
A corporate tax rate of only 2.5%, no capital gains tax, customs duty, stamp duty, or gift tax.

Minimum requirements for incorporation.
No residency requirements for directors/founders, there should be only one shareholder. Company registration in Barbados costs about $1000.

Increased confidentiality.
Closed registers of company owners, as well as information about their property and capital.

Minimal financial reporting requirements.
Only a tax return is filed annually, and documents can be stored anywhere at the company’s discretion.

Financial stability and developed legislation.
Possibility to conduct any type of business, for banking and insurance activities it is necessary to undergo licensing.

Company formation in Barbados requirements consist of:

• Select a unique name for the company (may include abbreviations: Ltd., Inc., Corp. for IBC).
• Provide company documents (contracts, memoranda, protocols, certificates, etc.).
• Minimum one managing director (no residency requirements), but must provide residential address data.
• Minimum one shareholder/owner (residency of any country), must notify the address of registration
• No requirements for the number of directors’ meetings, and owners.
• There is no norm for the amount of authorized capital, but banks require $1000, average capital size is about $50k.
• Open a bank account (can be in US dollars)
• Have a local registered office

The package of documents may vary depending on the type of business chosen and the need for licensing (for banks, insurance organizations, investment trusts, and asset/capital management).
The general document package consists of:

• For managers, shareholders/founders, and pass-throughs provide a resolution to appoint a director, copies of passports, proof of domicile address (bills, receipts, contracts, etc.), and a description of employment activities
• Articles of Association (where the corporate policy is described), memorandum of association (with a description of the type of activity), office lease agreement/resolution, and minutes of the shareholders’ meeting.
• Application for incorporation of the company to the Corporate Affairs and Intellectual Property Department

The registration process can be done remotely, lasting about one month.

In Barbados, business activities are regulated by the Companies Act (1982) as amended in 2019.

The most popular form for conducting international business has been the IBC:

• A prerequisite for an IBC is registration on the island with a local office
• IBC company is prohibited from owning real estate on the island, to do business with residents
• Managers and owners can be both individuals and legal entities, there are no residency requirements.
• It is obligatory to have at least one director, one shareholder, and a secretary (must reside in the territory of the state).
• No tax on income received from non-residents of the country
• Progressive income tax scale
• Auditing if income over $500 thousand from the Association of Accountants of Barbados.

To obtain an IBC permit, you must apply to the International Business Department (MIBI) and specify:

• Type of activity (trading, service, financial services, etc.)
• Provide the names and addresses of the shareholders (Commonwealth Caribbean residents cannot hold more than 10%)
• Provide information on the percentage of shares (Caribbean Commonwealth residents cannot receive distributions/dividends of more than 10%)

The IBC registration package includes:

• Articles of Association, Memorandum of Association, minutes of meetings, contracts
• Authorized capital of $50,000 with proof of the origin of the money. It is also necessary to explain the origin of the money for shareholders with 10% capital.
• A document confirming the entry into office of the managing director, as well as his passport data
• Proof of local office
• Resolution on the opening of a bank account (with a description of who will have the right to sign)
• Applications for registration

Documents for obtaining IBC status must be submitted in English and notarized, the registration period may take up to 3 months.

Barbados provides opportunities to register various types of business under the Companies Act. Different types of legal entities have different requirements, all depending on the purpose and size of the company.
A brief description of the different types:

• Regular Barbados Company (RBC), doing international business is possible with authorization from the Central Bank. This type of business is suitable for doing business with residents of Barbados. Limited Liability Companies (SRL), international activities only with the authorization of the Central Bank. No requirements for authorized capital, no currency control, and no taxes on payments to non-residents.
• International Business Company (IBC) operates based on the Law on International Business Companies and conducts activities such as buying and selling goods outside the country, services for non-residents, and export; must have a license from the Ministry of Industry and International Business and pay an annual fee ($100). The obligatory condition is to have an office in the territory of the state, to provide data on directors and shareholders, and to pass the audit of financial statements for income over $500 thousand.
• International Limited Liability Companies (ISRL) are regulated by the Limited Liability Companies Act (SRL Act) of Barbados and must obtain a permit for international activities. Cannot do business with residents, nor can they purchase land in Barbados.

There is no capital gains tax or VAT for an IBC company, and there is no stamp duty.
Corporate income tax here is defined as profits derived from business or property for the year. Taxation of company dividends is governed under the Barbados Income Tax Act (BITA) and depends on the residency of the company.
Barbados Income Tax Rates:

• For resident and non-resident commercial companies: 25%.
• Insurance organizations (life): 5%, general insurance: 25%
• Manufacturing firms:15%
• IBC (banks, commercial companies, international business): 0.25%-2.5% depending on income
• For branches: 10%