Barbados

Group relief

The provisions for group relief will enable the current trading losses of a surrendering resident company to be set-off, by way of relief from CIT, against the profits of a claimant company, whether in whole or in part. Group relief is available where:

• the surrendering company and the claimant company are members of the same group
• the companies are subject to tax at 9%
• the companies meet the 75% subsidiary test
• every company seeking group relief is resident in Barbados, and
• the relief sought must not exceed 50% of the amount of tax that would have been payable had the relief not been granted.

Group relief will apply from income year 2024 with respect to all entities that have trading losses from income years prior to income year 2024 in excess of USD 50 million. For all other companies, group relief will apply from income year 2025.

Transfer pricing

Although Barbados has no specific transfer pricing legislation or regulations in place, the Income Tax Act contains a section dealing with artificial transactions. This enables the revenue authorities to amend the assessable income of a person where they believe the main purpose of a non-arm's-length transaction is to artificially reduce that person's assessable income.

In such circumstances, the transaction is disregarded or modified to achieve the effect that no longer results in the artificial reduction of that person’s assessable income.

Thin capitalisation

Barbados has introduced a thin capitalisation rule of 1.5 to 1 effective 1 September 2019. Interest payable on outstanding debts due to non-resident related parties, owning more than 10% of the company, will be deductible to the extent that the total amount of debt does not exceed more than one and a half times the equity of the company. Any portion of interest exceeding the above ratio will no longer be deductible.

Controlled foreign companies (CFCs)

Barbados does not have tax provisions with respect to CFCs.