Income tax is payable on all income worldwide of those who are resident in Barbados, although only on the Barbados income of non-residents. Residency status is determined by the length of time spent in the country. Spending 182 days or more in the country in a tax year is classed as residency. There is also the status of ‘ordinarily resident’, so that those who have simply chosen to spend much of the year elsewhere but are still officially Barbadian residents will pay the same level of taxes.

Tax returns must be filed for individuals and joint returns for married couples are not permitted. The tax year is the calendar year and when returns are filed those who are self employed will have to make three payments during the year based on the taxable amount for the previous year. There are fines and interest payments imposed if the tax return is filed late or not at all and continual flouting of the regulations could lead to prosecution. The tax returns can be complicated documents if you are not used to them and many people will hire the services of a qualified accountant to make the process simpler.

Income that is considered taxable covers earnings from employment, pension payments, and dividends from shares. Residents pay a tax of 12.5% on dividends and other tax rates will vary depending upon the amount earned. The first BBD 24,000 of anybody’s salary is taxed at 20% and anything earned above this amount is taxed at 35%. Earnings from renting out property are taxed at a standard 15%. There are some people working in the financial and business sectors who may have specific qualifications who may qualify for a tax exemption on part of their salary. The requirements for this will vary from person to person and your employer should be able to tell you if you qualify. This tax exemption is limited to the first three years.

There are a number of allowances for taxable income. There is a basic salary allowance that is not taxed and those who are retired and drawing a pension are permitted a higher allowance. Those who are self employed are able to deduct reasonable working expenses from their tax payments and these can include items such as protective work clothing, travel expenses and office equipment.

Capital gains from sales of assets or property are not taxable and there is no inheritance tax either. Some gifts may fall into the category of property transfer and may be taxable. There is no wealth tax in Barbados, which makes the country attractive to those who are wealthy, although they are still subject to taxation on their income.

Other taxes that may be imposed on residents include the real property tax. This is based on the value of the property and has to be paid twice a year in January and June. Depending upon the value of the property, the tax will be somewhere between 0.6% and 18.23%. Stamp duty is another tax that is applied to certain documents, such as property deeds when they are transferred and the sales of businesses. The stamp duty rates are variable depending upon the amounts involved and the type of transaction.

VAT is added to a number of goods and services at a standard rate of 15%. Hotel accommodation is taxed at a rate of 7.5%. Items such as basic foods and international freight shipments do not have VAT added. Sales of property and some financial services are also exempt from VAT. Many consumable items are imported into the country and these are subject to VAT. Services such as utility provisions are also subject to VAT.

Barbados has a number of tax treaties in place with other countries. This means that the country will share information on its residents and expats with other countries. Those who pay taxes in Barbados on earnings in other countries could be subject to taxation in those countries too. The treaties mean that people can avoid being taxed in more than one country on the same income.

The Barbados Department of Inland Revenue should be the first port of call if you have any queries or problems with your tax status or payments.