Barbados has a relatively simple and straightforward taxation system. The government collects taxes through various means, including income tax, corporate tax, and value-added tax (VAT). Expats living and working in Barbados may need to be aware of certain taxes and regulations.
The Taxation System in Barbados
Barbados has a progressive income tax system, which means that higher earners are taxed at a higher rate. The income tax rates in Barbados range from 12.5% to 40%. Non-residents are only taxed on income earned in Barbados, while residents are taxed on their worldwide income.
The corporate tax rate in Barbados is 5.5% for small businesses with an annual income of less than BBD 1 million and 1% for entities with annual income of BBD 30 million or more. VAT is charged at a standard rate of 17.5%.
Double Taxation Agreements in Barbados
Barbados has signed double taxation agreements with over 30 countries to prevent individuals and companies from being taxed twice on the same income. These agreements provide for reduced rates of withholding tax on certain types of income, including dividends, interest, and royalties.
Main Taxes for Expats in Barbados
Expats living and working in Barbados may need to be aware of the following taxes:
Income Tax
Expats who are resident in Barbados are required to pay income tax on their worldwide income. The income tax rates in Barbados range from 12.5% to 40%. Non-residents are only taxed on income earned in Barbados.
Corporate Tax
Companies operating in Barbados are subject to corporate tax, which is charged at a rate of 5.5% for small businesses and 1% for larger entities with annual income of BBD 30 million or more.
Value-Added Tax
VAT is charged at a standard rate of 17.5% in Barbados. Certain items, such as basic food items and medicine, are exempt from VAT.
Property Tax
Property tax is levied on the owner of the property, and the rate depends on the property’s assessed value. The rate is typically between 0.1% and 0.8%.
Special Tax Breaks
Expats in Barbados may be eligible for certain tax breaks, including tax credits for certain business expenses and tax deductions for contributions to approved pension funds.
Filing a Tax Return in Barbados
Expats who are resident in Barbados are required to file an annual tax return. The deadline for filing tax returns in Barbados is typically in April of each year.
To file a tax return, expats will need to register with the Barbados Revenue Authority (BRA) and obtain a tax identification number (TIN). The TIN is used to identify taxpayers and track their tax obligations.
Tax Exit Procedures for Barbados
If you are leaving Barbados to move abroad permanently, you will need to follow certain tax exit procedures. This includes informing the Barbados Revenue Authority of your intention to leave and paying any outstanding taxes.
To obtain a tax clearance certificate, expats will need to ensure that all their tax affairs in Barbados are up to date. The tax clearance certificate confirms that all taxes have been paid and that the taxpayer has met all their tax obligations in Barbados.
Barbados has a relatively simple and straightforward taxation system, with income tax, corporate tax, and value-added tax being the main taxes. Expats in Barbados may be eligible for certain tax breaks and credits, and they are required to file a tax return annually. Following tax exit procedures is important to ensure that expats leaving Barbados have fulfilled all their tax obligations and obtain a tax clearance certificate. Overall, expats in Barbados should be aware of the country’s tax regulations and seek professional advice if necessary to ensure compliance with the tax laws.