Barbados Tax Treaty

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Barbados Tax Treaty

Barbados International Tax Compliance Rules

Barbados – US Tax Treaty Quick Summary.  Barbados is a Caribbean island in the Lesser Antilles of the West Indies.  A parliamentary democracy maintains ties to the British monarchy.  

Barbados implemented a new tax regime effective 2019.  Corporate tax rates apply to all entities.  For individuals, resident/domiciliaries are subject to tax on worldwide income, whereas individuals who are residents but not domiciled in Barbados are taxed on Barbados source income and other income to the extent a benefit is obtained in Barbados.  

Barbados is a signatory to the Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS).  In an effort to implement provisions consistent with the framework, Barbados abolished multiple preferential tax regimes, resulting in a wider tax base and other structural changes.    

Income Tax Treaty between the United States and Barbados

Barbados Treaties.

Barbados Currency.

 Barbados dollar (BBD).

Common Legal Entities.

  The regular business company, partnership, limited liability company.

Tax Authorities

Barbados Revenue Authority, National Insurance Office, Financial Services Commission, International Business Unit, Ministry of Industry, International Business Commerce & Small Business Development, and Central Bank of Barbados.

Income Tax Treaty between the United States and Barbados

Barbados Tax Treaties.  

Barbados is a party to 31 tax treaties.  It is a signatory to the OECD MLI.

Corporate Income Tax Rate.  1% – 5.5% (generally).

Individual Tax Rate12.5% – 28.5%.

Corporate Capital Gains Tax RateNo.

Individual Capital Gains Tax RateNo.

Residence.  An entity is a resident if it is centrally managed and controlled from within Barbados.  An individual is a resident if he or she is in Barbados more than 182 days in the tax year.  If an individual is not domiciled in Barbados, the individual can become an “ordinarily resident” if the individual has a permanent home in Barbados and elects to reside in Barbados for at least 2 consecutive years.

Withholding Tax.

Dividends. 0% (company resident) / 15% (individual resident) / 0% / 5% / 25% (company and individual nonresidents).

Interest. 15% (company and individual residents) / 0% (company and individual nonresidents).

            Royalties. 0%.

Transfer Pricing.  No transfer pricing legislation but the Revenue Commissioner has the ability to impute a market rate of interest for transactions between related parties.

CFC Rules. No.

Hybrid Treatment

No specific rules but the OECD Forum on Harmful Tax Practices found Barbados to be in compliance with the requirements of BEPS action 5.

Inheritance/estate taxNo, but certain gifts may be subject to property transfer tax.

Tax Treaty Network – International Tax Attorneys

Our international tax expertise allows us to guide clients through tax planning and compliance so that they can focus on what matters most. At Freeman Law, our clients are engaged in an interconnected business environment that spans across the globe.  From supply chains to markets, cross-country taxation impacts every global business.

Do you have questions about Barbados’s Treaties? 

Schedule a free consultation with one of Freeman Laws International Tax Experts Today!