Lowtax Network

Back To Top

Your Lowtax Account

Barbados: Offshore Business Sectors

Banking

Barbados established an offshore banking sector under the Offshore Banking Act 1979 as amended. The Act provided for the licensing of offshore banks, and contained a precise description of offshore banking (see Law of Offshore for details) as the obtaining of funds as deposits or through the sale of financial instruments, the use of such funds to give advances or finance investment, and the use of trusts to hold money or property.

The Offshore Banking Act was repealed and replaced by the International Financial Services Act, 2003. The Act defines international financial service as the business of:

  • Receiving foreign funds through:
    • Acceptance of foreign money deposits payable on demand, after a fixed period, or after notice;
    • Sale or placement of foreign bonds, certificates, notes or other debt obligations, or other foreign securities;
    • Any similar activity involving foreign money or foreign securities.
  • Using the foreign funds mentioned above to finance: 
    • Loans, advances and investments; or
    • Activities of the person carrying on the business.

Offshore/International Banking also includes the acceptance in trust of:

  • Amounts of money in foreign currencies, foreign securities or both;
  • Foreign personal or movable properties; and/or
  • Real or immovable property outside Barbados from persons resident outside Barbados.

To qualify and obtain a license, an applicant must:

  • Obtain the consent of the Minister to incorporate for the purpose of offshore banking. The government imposes a flat annual license fee of USD25,000.
  • Show that it is an eligible company or a qualified foreign bank
  • State the names and addresses of its director
  • Submit a certified copy of its articles of incorporation;
  • Give particulars of the proposed banking activity
  • Submit the names of shareholders who are residents of Barbados and the number of shares held by them.
  • Have at least one of the directors resident in Barbados.
  • Minimum capital requirement for residents and non-residents of USD500,000 and USD1 million respectively.

There were 45 licensed offshore banks in Barbados in April 2011. The Central Bank has recently strengthened its vetting procedures over applicant banks in response to international money laundering and criminal concerns. Subsidiaries of foreign banks have to provide written authorisation from the parent supervisory authority, and the activities of in-house corporate treasury operations must be consolidated into published group accounts.

Licence fees for financial institutions were increased by the 2008 budget, from January 1, 2009: Local – main branch: BDS250,000 per bank; Local – other branches: BDS20,000 per additional branch; Local – ATM’s: BDS1000 per ATM other than at branches; International banks BDS100,000 per bank.

See Offshore Legal and Tax Regimes for details of the tax concessions offered to offshore banks, which are also exempt from exchange control regulations. The Central Bank requires quarterly balance sheet reporting, and filing of full annual accounts, along with a list of the licensee's directors.

 

 

Back to Barbados Index »