Barbados: Country and Foreign Investment
Investments by Foreigners
The Barbadian Government introduced a wide range of investment incentives applying broadly to manufacturing industry offered by the Barbados Investment and Development Corporation. Some of these are as follows:
- Full exemption from taxes on corporate profits for fifteen years for export-only manufacturing companies;
- Special tax rate for export industries of only 2.5% after the expiration of the tax exemption period;
- Tax rate of 1% - 2.5% on profits of Information Services companies;
- Full exemption from import duties on components, raw materials, production machinery and other production related equipment such as computers and spare parts;
- Expedited customs clearance procedures with minimal paper work and no delays;
- Full and unrestricted repatriation of capital, profits and dividends;
- Subsidised factory/office space available for rental in well-planned industrial parks;
- Industrial training grant scheme to subsidize the cost of worker training;
- A one-stop service for investors is provided by the Barbados Investment and Development Corporation, a special agency established by the Government to facilitate investors and promote industrial development;
- Tax rate of 1% - 2.5% on profits of International Financial Services Companies;
- Tax rate of 1 % - 2.5% for International Business Companies.
- Tax concessions for specially qualified employees
Another incentive announced in 2007 removed VAT on the importation of raw materials and packaging for registered exporters earning at least 40% of their revenues from export sales.
The government also announced in its 2007 financial statement an extension of the tax holiday period by another 5 years where approved manufacturers invest a specified level of capital over the previous three years. This measure takes account of the fact that approved manufacturers, nearing the end of their 15 year tax holiday, invest heavily to replace aging equipment or upgrade existing equipment.
The statement also proposed: extending the list of approved products eligible for fiscal incentives to include the botanicals industry and medical transcription services; the establishment of an import/export financing facility; the creation of an Export Promotion Agency; the sale of long leaseholds to manufacturers in industrial estates; and the establishment of a Medial Transcription Training Centre.
The Industrial Incentives (Factory Construction) Act 1965 (as amended) provides for extensive tax benefits to be given to certain companies that construct factory premises.
Manufacturing companies in Barbados are able to take advantage of several international trading treaties or conventions to which the country belongs, including:
- The Caribbean Basin Initiative, which covers exports into the US;
- The Lome Convention, which covers sugar and a number of other products and services, as imported into or provided to the EU;
- CARIBCAN, which provides duty-free access to Canada for many Caribbean products;
- and there are other trade pacts involving South and Central American countries.
In May, 2005, Barbados' Minister of Tourism and International Transport, Noel Lynch said Barbados was seeing unprecedented levels of investment in its tourism sector as a result of the Tourism Development Act 2003, which has attracted substantial amounts of capital since it was passed.
Under the Act a total of 11 new hotels accounting for 406 rooms have been developed, with extensions and renovations to 10 other hotels, representing an investment of $306.7 million, resulting in an additional 483 rooms and 442 new jobs. New multi-purpose developments include 100 hotel rooms and 605 villa rooms and are expected to generate 506 jobs on completion of the projects.
The need for greater hotel capacity was given greater urgency as the country prepared to host the quarter final matches and the final match of the Cricket World Cup in 2007. The total room requirement to accommodate Barbados’ regular visitors as well as anticipated fans of the Cricket World Cup was approximately 12,000 rooms against a stock of 8,000 rooms.
Mr Lynch urged the region to accelerate the creation of the long-mooted Regional Stock Exchange to encourage the formation of regional capital markets which could increase the flow of investment into tourism.
The Act allows investors in tourism projects to benefit from write-off of capital expenditure and 150% of interest costs. There is also exemption from import duty, value added tax and environmental levy in respect of furniture, fixtures and equipment as well as building materials, supplies and equity financing.