Barbados

Corporate - Significant developments

Last reviewed - 05 August 2021

Value-added tax (VAT) on digital services

Barbados has joined various other countries around the world in introducing VAT on digital services. The new tax measure will apply to foreign suppliers of digital services to local consumers on the island. The foreign companies must apply, collect, and remit VAT on their digital sales.

The new measure will affect:

  • the collection of VAT on goods and services purchased online from a vendor outside Barbados where the goods and services are for consumption in Barbados
  • the collection and transmission of VAT on goods and services purchased online from local vendors by consumers in Barbados where the goods and services are for consumption in Barbados and the transaction is processed outside Barbados, and
  • the collection and transmission of VAT on goods and services purchased online from local vendors by persons outside Barbados where the goods and services are for consumption in Barbados.

End of grandfathering period for special tax regimes

The grandfathering period for certain special tax regimes that were repealed and closed to new entrants on 31 December 2018 ended on 30 June 2021.

Ratification instrument for MLI

On 21 December 2020, Barbados deposited its ratification instrument for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). This will enter into force from 1 April 2021.

Barbados and Vietnam tax treaty

Barbados and Vietnam are considering entering into a double taxation agreement. Representatives from both jurisdictions also met to discuss bilateral cooperation in areas including agriculture, investment, trade, education, training, and economic development.

Barbados and Luxembourg tax treaty

The synthesised text of the MLI and the 2009 Barbados-Luxembourg income and capital tax treaty is based on the MLI positions submitted to the Organisation for Economic Co-operation and Development (OECD) on 9 April 2019 by Luxembourg and 21 December 2020 by Barbados. Unless otherwise stated in the synthesized text, the provisions of the MLI take effect as follows:

  • Regarding taxes withheld at source on amounts paid or credited to non-residents, when the event giving rise to those taxes occurs on or after 1 January 2022.
  • Regarding all other taxes levied, for tax periods beginning on or after 1 October 2021.

Barbados and Netherlands tax treaty 

The Netherlands is negotiating revisions to its existing tax treaty with Barbados according to a release published 22 April 2021 by the Dutch Ministry of Finance.