Barbados: Personal Taxation
Taxable income is defined very broadly, and includes the following categories:
- Remuneration from an office or employment, including accommodation, car and other benefits;
- Director's fees;
- Taxable profits from a trade or business;
- Interest, dividends, annual payments;
- Social benefits;
- Trust income, whether or not received;
- Partnership income;
- Income from the disposal of shares issued to employees;
- The benefit of loans at under-value;
Dividends received from resident companies carry a tax credit and are grossed up accordingly.
See Double Tax Treaties for details of Treaty exemptions and reliefs as regards the taxation of foreign-source income for residents.
There are various personal allowances under Barbados tax law. The basic personal allowance is BDS25,000.
The basic and top rate is 17.5% on the first BDS35,000 of taxable income, and 35% thereafter.
Barbados tax law also provides for numerous other personal reliefs and tax allowances, a non-exhaustive list of which include:
- Rental allowance, which is equal to the lower of 20% of rent paid and BDS3,000
- 50% exemption for royalties received in Barbados
- 75% of value of bonus converted to shares government bonds/debentures or mutual funds up to BDS7,500, up to a maximum of BDS7,500
- A BDS10,000 allowance on the purchase of new shares in a public company, and investments in mutual funds and credit unions
- A BDS10,000 allowance in investments in a Registered Venture Capital Fund or Innovation Fund
- A 5% allowance of assessable income from annual payments/covenants
- Tax exemption on severance payments.
Employers collect income tax from employees under a 'pay as you earn' scheme, along with social security contributions (see below).
Foreign employees working in Barbados are taxed at normal rates and are subject to Barbadian exchange controls, but if their employer is able to take advantage of the special schemes described above, up to one third of their remuneration is paid tax-free and is exempt from exchange controls.
From income tax year 2006 the government introduced enhanced tax concessions for specially qualified individuals employed in the International Financial Services Sector, as follows:
- Up to BDS150,000 per annum 35%
- Over BDS150,000 but less than BDS500,000 50%
- Over BDS500,000 60%
Individuals file income tax returns by 30th April; if tax is due, half is payable with the return, and the other half on 30th September. If an individual has self-employment or business income, then the tax is payable as a proportion of the previous year's tax, in instalments during the tax year, on 15th June, 15th September and 15th December.