Barbados: Executive Summary

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- BARBADOS EXECUTIVE SUMMARY

Barbados Executive Summary

Barbados Is In The Caribbean And Caricom

Barbados is a sub-tropical island in the Caribbean; it is a member of Caricom, the Caribbean Common Market. Quite densely populated, with 280,000 people of mostly African descent on 430 sq km, Barbados is an independent Commonwealth member. It is politically stable; English is the official language; and the Barbadian dollar is fixed against the US dollar at 2:1. The climate is warm and humid; sea breezes compensate for high summer temperatures. GNP/head of US$19,300 (2009) at PPP is reasonable.

One-Crop Economy Has Successfully Diversified

Barbados was mostly a sugar producer but the island has diversified into tourism, manufacturing (with a host of incentives), informatics and financial services. After a bad time in the 1980s, Barbados has grown well in the 1990s, although slowing down in 1998/99. The impact of 9/11 was moderately serious, with the economy contracting slightly in 2002, but rebounding between 2003 and 2007, dropping again to 1.5% in 2008. Unemployment has been reduced from catastrophically high levels to less than 10%. In the last ten years the Government has been business-friendly and economically sound.

Barbados's Lowtax Specialisations

Barbados has preferred quality to quantity, and has developed a remarkably wide range of offshore formats to suit all tastes! A good US tax treaty and the Foreign Sales Corporation legislation (now repealed) have particularly encouraged US interest; Canada has also been a traditional partner. The offshore insurance sector is as big as the BVI's, and there are 57 offshore banks. Barbados is very picky about who it will have, and probably stands in better with the OECD than many OIFCs, although it is nervous about current developments. There is a stock exchange, fully computerised as from July 2000, with a central depositary; but mutual funds have not yet developed strongly. Barbados probably has a good shot at becoming an e-commerce centre if it plays the right cards - so far the Government doesn't seem sufficiently aware of this.

Lots of Taxes In Barbados!

Alongside a really large selection of corporate formats, Barbados has many different taxes. Although the introduction of VAT in 1997 got rid of eleven of them, there are plenty left, and for a resident person rates are quite high. The structure of manufacturing and other incentives is complex, but properly used can reduce the tax burden substantially. It may be that fewer, simpler taxes would be beneficial; anyway, an offshore business will be able to avoid all taxation in one way or another.

In July 2000, Barbados pledged to make changes to its financial supervisory regime in order to have its name removed from an OECD blacklist; in February, 2002, shortly before the OECD finally published its long-delayed revised list, Barbados was removed.

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