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30/04/24
Barbados: A Premier Location For Business And Investment
Barbados stands out as a prime jurisdiction for business and investment, offering a strategic and robust environment for entrepreneurs and investors worldwide. The island, just 166 square miles, packs a powerful punch when it comes to economic opportunities and investor-friendly attributes. In this article, we will explore the factors that make Barbados an attractive location for business and investment.
Transparent Planning And Extensive Treaty Network
Barbados is celebrated for its transparent planning and boasts an extensive network of double taxation treaties with forty countries. Notably, these treaties include major players such as Canada, Spain, the United Kingdom, and the USA, enhancing cross-border business transactions and simplifying complex tax arrangements. This level of transparency and cooperation eases the way for investors and business owners to navigate international tax matters.
Bilateral Investment Treaties (BITs) For Global Reach
Through the International Centre for Settlement of Investment Disputes, Barbados facilitates the effective operation of BITs. These treaties empower countries to protect their interests in foreign jurisdictions, making Barbados a crucial jurisdiction for international business. Key BIT partners include China, Venezuela, Germany, and Italy, enabling Barbados to be a lynchpin for global investment.
Risk And Treasury Management Excellence
Barbados has established itself as a centre for risk and treasury management, exemplified by the use of Barbados companies as treasury centres for multinationals. This showcases the jurisdiction's tax efficiency, mature banking systems, regulatory compliance, legislation and political stability. Additionally, Barbados' thriving captive insurance industry provides a suitable platform for global risk solutions for multinational enterprises.
Commitment To Environmental Sustainability
Beyond its economic appeal, Barbados is committed to being a climate champion. The nation has pledged to achieve 100 per cent renewable energy and carbon-neutral status aligning with global environmental goals. This commitment underscores Barbados' dedication to sustainability.
Quality Of Life And Connectivity
Barbados offers an exceptional quality of life, marked by a mix of robust infrastructure, Zagat-rated restaurants, beautiful beaches, vibrant nightlife, festivals, high quality primary, secondary and tertiary education and a thriving social scene. Its strategic location, and expanding tax and bilateral treaty network, have positioned it as a commercial transportation hub. With direct flights to multiple countries and transit points across the continents including Europe, North and South America, and the Caribbean, Barbados offers excellent connectivity.
Adherence To International Best Practices
The Barbados legal system, based on English common law, ensures the protection of property rights and intellectual property. An independent judiciary guarantees impartial dispute resolution. Auditing and reporting standards meet international benchmarks, fostering confidence in business activities. Barbados has a long-standing tradition of transparency and intergovernmental cooperation on information exchange matters.
Ready-To-Go Infrastructure
Barbados provides everything necessary to hit the ground running, including physical space for businesses and ready-to-go infrastructure, utilities, and connectivity. Stable utility services, a modern fiber-optic network, high-speed 4G LTE data services, and efficient international transportation through a modern airport and seaport, enhance your business operations.
Political Stability And Proven Track Record
Barbados has a rich history of political stability, with a parliamentary republic that has witnessed peaceful transfers of power, free and fair elections, and effective economic management. Its maturity as a jurisdiction, a top choice for global business since the mid-1960s, is underscored by a proven track record of successful businesses choosing to establish and stay in Barbados.
Anti-Corruption Stance And Economic Freedom
Barbados conducts business transparently and upholds a zero-tolerance policy for corruption. This commitment is reflected in its impressive rankings, being second in Latin America and the Caribbean, and 24th globally, in Transparency International's Corruption Perceptions Index. Barbados’ economic freedom score is 69.8, which makes its economy the 29th freest in the 2023 Index. The jurisdiction ranks fifth among 32 countries in the Americas, and its overall score is above the regional and world averages (Source: www.heritage.org).
Flexible Structures For Investment
Barbados’ legislation provides multiple ways to organise for business and investment, including trusts, partnerships, companies, and societies with restricted liability, giving local, regional and international investors more flexibility in the way they structure their investment depending on short and long-term goals.
Trends
In recent years, several positive trends have been observed in Barbados, making it an even more attractive location for business and investment:
- Cross-Border Efficiencies for Multinationals: There's a notable surge in interest from large multinationals seeking cross-border efficiencies and cost streamlining. This underscores Barbados' appeal as a jurisdiction that facilitates international business operations while optimising financial structures.
- Diversification of Multinational Interests: Barbados is not only attracting typical corporate entities but also expanding its appeal to educational institutions, FinTech companies, and healthcare providers. This diversification showcases the country's adaptability and attractiveness across various industries.
- Compliance-Driven Operational Companies: The increase in operational companies with a local staff complement is a strategic response to economic substance requirements. This move not only ensures compliance but also positions these companies to fully leverage the benefits of its international expansion including access to high skilled labour, cost efficiency and double taxation and bilateral investment treaty benefits.
- Success of the Welcome Stamp Programme: The Welcome Stamp Programme's resounding success, with its extended one-year visa offering, has led to a substantial increase in business nomads choosing to work and live in Barbados. This influx not only boosts the local economy, but also enriches the business environment with diverse skill sets and perspectives. Looking ahead, during phase two we expect to see corporates taking advantage of this programme, including greater collaboration with local and regional business partners.
- Local and Foreign Direct Green Investment: Barbados continues to see a commendable upward trend in green investment, particularly in photovoltaics. This reflects a growing global awareness and commitment to sustainable and environmentally friendly business practices, and recognition of our leader, Prime Minister Mia Amor Mottley, as a climate champion and advocate for regional stability and sustainability.
- Trusts for High Net Worth Individuals (HNWIs): The higher demand for trusts in structuring real estate and succession planning highlights Barbados' attractiveness for HNWIs seeking tax residency, a high quality of life, and connectivity. The jurisdiction's robust legal and financial framework enhances its appeal as a secure destination for wealth management.
- Emergence of the Medicinal Cannabis Sector: Barbados has entered the medicinal cannabis sector, aligning with global trends in the industry. This emerging sector not only presents economic opportunities but also positions Barbados at the forefront of a rapidly evolving market.
- Strengthening Connections with Africa: Barbados is actively deepening its connections with Africa, engaging in advanced talks for trade and investment cooperation with various countries including Rwanda, Ghana, Kenya and Nigeria. This strategic outreach aligns with the interest of Barbados of expanding economic ties between regions and with our Afro-Caribbean diaspora.
Global Risk Management Strategy
Barbados has positioned itself as a leading jurisdiction for captive insurance, offering a regulatory framework that is both robust and flexible. The Exempt Insurance Act of Barbados provides a comprehensive legal structure for the establishment and operation of captive insurance companies. Barbados ranks among the top ten domiciles for captive insurance entities.
Key features of Barbados' exempt insurance legislation provides for:
- Regulatory Oversight: The legislation ensures strong regulatory oversight by the Financial Services Commission, which is responsible for supervising and regulating captive insurance activities. This oversight ensures compliance with international standards while providing a supportive environment for captive insurance operations.
- Flexibility in Structure: Barbados offers flexibility in the types of captive structures, allowing companies to tailor their insurance arrangements to meet specific risk management needs. This includes the formation of pure captives, group captives and rent-a-captive, providing versatility to multinational companies.
- Prudent Investment Regulations: The legislation includes prudent investment regulations, ensuring that captive insurance companies make sound investment decisions. This contributes to the financial stability of captives, and aligns with best practices in risk management.
- Tax Advantages: Barbados' insurance regime enjoys a neutral tax position with insurance companies’ corporate tax rates falling between zero per cent and two per cent depending on their classification. In addition to its other attractive features, Barbados offers favourable tax policies for investors. The country does not tax capital gains, maintains a maximum corporation tax of nine per cent, and waives withholding tax for dividends paid to foreign shareholders.
Ideal Business Environment
Barbados is an attractive location for investors due to its extensive treaty networks, and robust legislation that supports company and cross border family structures, including global risk treasury management, transfer pricing strategy and international expansion. Additionally, its commitment to environmental sustainability, quality of life, connectivity, adherence to international best practices and ready-to-go infrastructure are appealing factors. The country boasts political stability, a strong stance against corruption and offers flexible investment structures.
Positive trends, such as cross-border efficiencies, diversification of multinational interests and the success of programmes like the Welcome Stamp, further enhance its attractiveness. Emerging sectors like medicinal cannabis and strengthening connections with Africa contribute to Barbados' global risk management strategy, making it a premier choice for business and investment.
Roland Jones, AICB, CPA, CGA, FCA, TEP
Roland Jones AICB, CPA, CGA, FCA, TEP is Managing Director and Founder of the Axebridge Group, a group of companies, based in Barbados and specializing in corporate and family advising as well as Accounting and Finance. Roland has more than 30 years of experience in the areas of Banking, Trusts, Wealth Management and International Financial Services. Roland is a trust professional, a chartered accountant and banker and sits on the board of the Axebridge Group of companies and several private international business companies. He is a member of the Certified General Accountants of Canada (CGA), the Chartered Professional Accountants of British Columbia (CPA), a Fellow with the Institute of Chartered Accountants of Barbados (FCA), an Associate of the Institute of Canadian Bankers (AICB), the International Fiscal Association, and a Certified Trust Practitioner with the Society of Trust and Estate Practitioners (TEP). Roland is a past Chair of the Barbados chapter of the Society of Trust and Estate Practitioners (‘STEP’) Barbados, past Chair of STEP Caribbean and Latam Regional Committee and a past Council member of STEP worldwide. He is also Chair of the Legislative Committees and Council Member with the Institute of Chartered Accountants of Barbados (‘ICAB’) and other industry groups.
