Barbados

Foreign tax credit

Barbados allows a credit for foreign taxes (taxes paid in jurisdictions outside Barbados). However, the credit claimed cannot reduce the total tax payable by the person on that income to less than 1%.

Employment tax credit

Where a person carries on business in an income year and during that income year or any of the following two consecutive income years:

• there is an increase in profits directly attributable to the business
• there is an increase in the number of employees who are employed directly in the operations of the business by an amount of at least 10% of the total workforce employed during the previous year, and
• the increase in the number of employees referred to is maintained for a period of three years,

that person is entitled to a tax credit of 10% of the actual amount of the expenditure incurred in respect of wages for the increase in employees.

The credit is applied in the year in which persons meet the above-mentioned criteria. Any unused credit can be carried forward for three years from the end of the income year in which the credit was obtained, and no cash refund shall be allowed.

Jobs credits 

A jobs credit may be claimed by a company or PE carrying on business in specified sectors and incurring eligible payroll expenditure after 1 January 2024. The jobs credit will be determined as follows:

• A credit equal to 25% of eligible payroll expenditure for up to 50 employees.
• A credit equal to 50% of eligible payroll expenditure for between 51 to 100 employees.
• A credit equal to 75% of eligible payroll expenditure for between 101 to 150 employees.
• A credit equal to 100% of eligible payroll expenditure for more than 151 employees.

A claim for a jobs credit must correlate to the income year in which the eligible payroll expenditure was incurred. These credits may be set-off against any other tax liability for a period of four years.

Patent box regime

Barbados has introduced a new patent box regime whereby, on election, income derived from qualifying intellectual property (IP) may be subject to tax at a rate of 4.5%. The categories of IP that qualify under the regime include rights to software copyright, rights to patents, and other similar legally protected rights.

Productivity and innovation tax credit

Entities incurring expenditure that is innovative in nature and leading to the development of a new manufacturing process, product, service, or organisational procedure will be granted a tax credit of 25% of the amount expended in that income year. The credit will only be granted if the innovation was successfully introduced to the market as evidenced by increases in sales, productivity, or organisational efficiency.

Any unused tax credit shall be carried forward for a maximum of three years from the end of the income year in which the credit was obtained, but no cash refund will be allowed. Certification from the Executive Director of the National Productivity Council is required.

Renewable energy

A number of tax concessions have been enacted with respect to the conservation of energy. These measures include a 150% deduction of actual expenditure, not exceeding BBD 25,000, for each year for five years in respect of the following:

• Energy audits.
• 50% of the cost of retrofitting premises or installing systems to produce electricity from sources other than fossil fuels.

The business must be current in the payment of its CIT, VAT, land tax, and National Insurance contributions, or, where not current, has entered into an agreement with the respective authorities to settle outstanding arrears.

Further tax concessions have been enacted with respect to the generation and sale of electricity from renewable energy sources and installation and sale of renewable energy electricity systems or energy efficient products, including:

• An income tax holiday of ten years granted on the certificate of the Minister Responsible for Energy to a developer, manufacturer, or installer of renewable energy systems and energy efficient products.
• 150% deduction of interest on a loan in respect of the construction of a new or the upgrading of an existing property to generate, supply, or sell electricity from renewable energy or for the installation or supply of renewable energy systems or energy efficient products.
• 150% deduction for a period of ten years commencing from income year 2012 of the amount expended on staff training relating to generation and sale of electricity from a renewable energy source or installation and servicing of renewable energy electricity systems or energy efficient products.
• 150% deduction of expenditure on the marketing of products for the generation and sale of electricity from a renewable energy source or products related to the installation and servicing of renewable energy electricity systems or energy efficient products.
• 150% deduction of expenditure on product development and research related to the generation and sale of electricity from a renewable energy source or the installation and servicing of renewable energy electricity systems or energy efficient products.
• Exemption from the payment of WHT on dividends earned by shareholders of companies solely engaged in the installation or supply of renewable energy electricity systems or energy efficient products for a period of ten years commencing from income year 2012.
• Exemption from the payment of tax on interest earned by financial institutions for financing the development, manufacturing, and installation of renewable energy systems and energy efficient products for a period of ten years commencing from income year 2012.

Research and development (R&D) credits

From income year 2024, a company may claim an R&D credit of 50% of eligible expenditure incurred after 1 January 2024 in relation to qualifying R&D activities. Qualifying R&D activities include activities undertaken in the fields of medical sciences, engineering and technology, natural sciences, and financial technology. Qualifying R&D activities should be carried on wholly or mainly in Barbados, involve innovation and technical risk, and be carried on for the purpose of:

• acquiring new knowledge with a view to that knowledge having a specific commercial application
• developing, enhancing, protecting, maintaining, and exploiting IP assets, or
• creating new or improved materials, products, devices, processes, or services. 

Qualified R&D activities are not eligible for persons engaged in the business of export to a country outside the Common Market on specified expenditure relating to market R&D for the purpose of promoting the export sales of the business.

These credits may be set-off against any other tax liability for a period of four years.

Housing Incentives Act, Cap. 226A

The Housing Incentives Act provides CIT, import duty, WHT, and other concessions to developers who undertake low income housing projects. Approved developers are subject to CIT at a rate of 15%.

Shipping (Incentives) Act, Cap. 90A

The Shipping (Incentives) Act was enacted to encourage the development of Barbados’ shipping activities by granting CIT, import duty, WHT, and other concessions to approved shipping companies for a period of ten years.

Small Business Development Act, Cap. 318C

Companies incorporated under the Companies Act with at least 75% of their shares owned locally and having share capital of not more than BBD 1 million, annual sales not in excess of BBD 2 million, and not more than 25 employees may obtain approval as a small business. Such companies pay CIT at a reduced rate of 15% and are exempt from the payment of import duties on equipment imported for use in the business and from stamp duty in some instances. In addition, 120% of certain expenditures directly related to the development of the business are deductible for tax purposes. Investors in such businesses are exempt from WHT on interest and dividends earned on their investment.

Special Development Areas Act, Cap. 273A

The Special Development Areas Act provides relief for approved developers constructing or improving a building or structure in certain defined locations in Barbados and to persons financing such work (other than a commercial bank). Persons financing such work are exempt from income tax on interest received. Approved developers are exempt from import duties and VAT on inputs for the construction or renovation of buildings, WHTs on repatriation of interest (for a period of 15 years), land tax, and property transfer tax payable by vendors on the initial purchase of the company. An approved developer pays CIT at the rate of 15% and is granted initial and annual allowances on industrial buildings of 40% and 6%, respectively, and on commercial buildings of 20% and 4%, respectively.

Tourism Development Act, Cap. 341

The Tourism Development Act provides that a qualifying owner of a tourism project or of a completed tourism product may offset expenditures on construction or the provision of certain amenities against its profits.

A tourism project includes the following:

• The construction of a new hotel.
• The alteration or renovation of an existing hotel.
• The conversion of an existing building or buildings into a hotel by reconstruction, extension, alteration, renovation, or remodelling.
• The furnishing and equipping of a building to be utilised as a hotel.
• The provision of tourist recreational facilities and tourism related services.
• The construction and equipping of a new restaurant.
• The alteration or renovation of an existing restaurant.
• The construction of a new attraction or the alteration or renovation of an existing attraction.
• The restoration, preservation, and conservation of natural sites.
• The establishment, restoration, preservation, and conservation of monuments, museums, and other historical structures and sites.
• The construction and furnishing of villas.
• The construction and furnishing of timeshare properties.
• The addition to a tourism product of any facilities or services intended to increase or improve the amenities that the tourism product provides.

Concessions extend to the following:

• The importation of building materials and supplies without payment of customs duty and an exemption from the payment of customs duties on specified supplies to be used for equipping the project.
• A refund of customs duty (including VAT) where the holder of a permit can satisfy the Comptroller of Customs that the building materials and supplies purchased for a tourism product have been purchased in Barbados, or in the case of importation that the customs duty was paid by the holder of the permit.
• Income tax concessions with respect to the write-off of interest, accelerated deduction of expenditure, interest rate subsidy, equity financing, training, and marketing.
• The set off of approved capital expenditures against revenues for a period of 15 years by the owner of a qualifying tourism project (except restaurants), which has a project with a value of up to BBD 200 million. Hotels with capital expenditure over BBD 200 million are allowed one additional year to write off expenditure for each additional BBD 20 million expended, up to a maximum of 20 years.