BARBADOS
“The attractiveness of Barbados as a jurisdiction of choice for international insurance entities is closely aligned to the level of local expertise that the Island can offer.”
The Barbados government has been active in expanding its DTA and bilateral investment treaty (BIT) network. Primarily because of its DTA agreement with Canada, the country has been able to maintain a significant share of that market. Under the Federal Income Tax Act of Canada, dividends derived from active business profits earned by an affiliate that is resident in a country with which Canada has a DTA are classified as ‘exempt surplus’ and are generally not subject to Canadian federal tax. The BIT can also be used as the framework for dispute settlement between the two countries. This treaty benefit, along with low operating cost, language, geographical location, available professional expertise and ease of doing business, is among the factors that make Barbados a preferred jurisdiction for the Canadian market.
Despite the competition, there are several advantages for insurance companies in the US to conduct insurance business in Barbados. One of the reasons put forward for this is Barbados’ less burdensome GAAP accounting system. US companies have indicated that one of the main reasons for operating in Barbados is that the domicile does not have the concept of statutory financial statements.
Second, subsidiaries of US companies are subject to tax under US tax rules. Barbados provides tax certainty through its DTA with the US. This allows business convention expenses incurred by US corporations and organisations to be deductible against US taxes. The language in the treaty also makes analysis easier, transparent and more certain, as opposed to the case in countries without tax treaties.
Third, Barbados also possesses DTAs with a growing number of other key jurisdictions. This treaty network proves financially beneficial for US companies conducting business with other jurisdictions through Barbados.
Important advantages with the US are: • The Barbados/US DTA; • Barbados’ treaty network; and • Barbados’ GAAP accounting system.
As new market opportunities for captives are rapidly emerging in South and Central America, Barbados, as a part of its expansion programme, is working to encourage more captive formation from these regions. This country is already starting to see growth from these markets, and its treaty network with Central and South American countries could prove financially beneficial for US and Canadian companies conducting business with other jurisdictions through Barbados.
104 CICA | Forty years of captive leadership
Barbados’ main advantages for those considering business with Latin America are:
• Barbados DTAs with Panama, Venezuela, Mexico and Cuba; and
• DTAs under negotiation with Brazil, Columbia and Chile.
As part of efforts to stay in the forefront, legislation in Barbados has been crafted to provide for segregated/protected cell structures and for the use of branch offices. This allows companies in more costly domiciles to take full advantage of Barbados’ competitiveness without the costs inherent in the setting up of a full Barbados subsidiary. Also, companies will benefit from reasonable solvency ratios, uncomplicated filing requirements and inward and outward re-domiciling provisions.
The attractiveness of Barbados as a jurisdiction of choice for international insurance entities is closely aligned to the level of local expertise that the Island can offer. The wide-ranging and high level skills which characterise the depth of Barbados’ talent pool assure international investors that their operations can be ably and expertly managed. The existence of these skills adds to Barbados’ success through the presence of diversified management companies, which have played a pivotal role in the development of this Island as a jurisdiction of choice. These companies provide active management and know-how for the local subsidiary on behalf of the parent company.
Barbados also has good business retention levels. It is a domicile that can play a pivotal role in any multinational company’s investment strategy. The Barbados model goes beyond products and infrastructure. In assisting companies to achieve their international business objectives, investors are not left alone as they go about the process of starting up their operation. The government agency, Invest Barbados, provides a personalised advisory service to all investors and focuses on the three main elements for attracting foreign direct investment into the country: investment identification, investment promotion and investment facilitation.
Visits by potential investors to the country are facilitated by Invest Barbados and visitors are given the opportunity to meet executives of resident international companies to discuss first-hand how they could benefit from the use of a Barbados entity. l
For more information visit
www.investbarbados.org and let us assist in creating your winning solution.
Emeline Taitt is director of Investment Promotion and Facilitation at Invest Barbados. She can be contacted at:
ETaitt@investbarbados.org
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