BarbadosTax Obligations Detailed

In Barbados, employers have various tax obligations, including corporate tax, PAYE, and social security contributions.

Corporate Tax

• Standard Rate: The standard corporate tax rate is 25%. Certain exceptions apply based on income thresholds as follows:
  • 5.5% on the first BBD 1 million
  • 3% on BBD 1,000,001 to BBD 20 million
  • 2.5% on BBD 20,000,001 to BBD 30 million
  • 1% on amounts exceeding BBD 30 million
• Basis: Resident companies are taxed on worldwide income, while non-resident companies are taxed only on Barbados-source income.
• Monthly Prepayments: Starting January 1, 2025, most companies (excluding small businesses registered under the Small Business Development Act Cap. 318C) are required to prepay corporate taxes in monthly installments. These installments are calculated based on the prior year's tax base multiplied by the applicable rate, accounting for relevant tax credits.

Pay-As-You-Earn (PAYE)

• Threshold: Employees earning more than BBD $481 weekly or BBD $2,083 monthly are subject to PAYE.
• Rates: The individual income tax rates are:
  • 12.5% on taxable income up to BBD $50,000
  • 28.5% on taxable income exceeding BBD $50,000
• Deduction and Remittance: Employers deduct PAYE from employee salaries and remit it to the Barbados Revenue Authority within 15 days after the end of the pay period.
• Filing: Employers must file monthly PAYE returns by the 15th of each month using the prescribed form (A47:004) through the TAMIS online platform.

Social Security Contributions

• National Insurance Scheme (NIS): Both employers and employees contribute to the NIS.
• Employee Contribution: 11.1% of insurable earnings.
• Employer Contribution: 12.75% of insurable earnings.
• Insurable Earnings Limit: As of January 1, 2025, the maximum insurable earnings are:
  • BBD $1,219 per week
  • BBD $5,280 per month
• Remittance: Contributions are due within 15 days after the end of the pay period.

Other Employer Obligations

• Employee Declaration Form: Employees complete a declaration form (A74:001) claiming personal allowances.
• Tax Credits: Employees may be eligible for tax credits that reduce their tax liability.
• Record Keeping: Employers must maintain accurate payroll records.

It is important to note that this information is based on the latest available data as of February 5, 2025, and might be subject to change due to legislative updates or revisions in regulations. For the most current and detailed information, consulting with a tax advisor or referring to official government resources is recommended.

In Barbados, employers deduct Pay As You Earn (PAYE) income tax and National Insurance Contributions (NIS) from employee salaries.

PAYE Income Tax Deductions

The PAYE system facilitates income tax collection by employers. Employees complete a declaration form (A74:001) to claim allowances, influencing their tax code. Employers use this code to deduct the correct tax amount each pay period.

• Tax Rates (2025): 12.5% on the first BBD 50,000 of taxable income, 28.5% on any amount exceeding BBD 50,000.
• Basic Allowance: All employees receive a basic personal allowance of BBD 25,000. Those over 60 receiving a pension have a BBD 45,000 allowance.
• Tax Credits: Employees may be eligible for tax credits reducing their tax liability. One such credit is the compensatory income credit for residents earning between BBD 25,000 and 35,000. There's also a foreign currency earnings allowance rebate for residents earning income from outside Barbados.
• Deductible Expenses: Employees can deduct unreimbursed travel and entertainment expenses incurred while performing their duties. They can also deduct annual bonuses converted into company shares (up to BBD 7,500 or 75% of the bonus, with a 5-year holding period), trade union/statutory association subscriptions (up to BBD 240 annually), and medical exam expenses for those 40 and over (up to BBD 750 yearly).

National Insurance Contributions (NIS)

NIS contributions are mandatory for both employers and employees. These fund social security benefits like pensions, sickness, and maternity benefits.

• Employee Contributions: NIS deductions are not tax-deductible for employees.
• Employer Contributions: Employers can deduct the NIS portion they pay on behalf of their employees.

Employer Responsibilities and Deadlines

• Registration: Employers with employees earning over BBD 481 weekly or BBD 2,083 monthly must register with the Barbados Revenue Authority.
• Monthly Returns: Employers must file PAYE returns (Form A47:004) and remit deducted taxes and NIS contributions by the 15th of the following month.
• TINs: Taxpayer Identification Numbers (TINs) are required for all employees and must be included on the PAYE returns.

Additional Information

• Welcome Stamp visa holders are exempt from income tax.
• Self-employed individuals have separate tax obligations and may deduct certain business expenses.

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Disclaimer: This information is for general guidance only and is current as of February 5, 2025. Consult with a tax professional for personalized advice.

In Barbados, the Value Added Tax (VAT) is a consumption tax levied on most goods and services.

VAT Rates

• Standard Rate: 17.5% This applies to most goods and services.
• Reduced Rate: 10% This applies to accommodation services provided by hotels, guesthouses, and similar establishments, as well as direct tourism services.
• Increased Rate: 22% This applies to mobile services, including voice, data, and text messaging.
• Zero Rate: 0% This applies to specific goods and services, including exports, certain basic food items, prescription drugs, and certain supplies to the international financial services sector.

VAT Registration

• Mandatory Registration: Businesses supplying goods and services in Barbados exceeding BBD 200,000 in annual taxable turnover must register for VAT.
• Voluntary Registration: Businesses below the BBD 200,000 threshold can register voluntarily. This can be beneficial to reclaim input tax on purchases. It's worth noting some sources indicate voluntary registration might not be actively encouraged by the tax authorities.
• Non-Resident Suppliers: Non-resident suppliers of digital services to Barbadian consumers must also register for VAT if their sales exceed BBD 200,000.

VAT Filing and Payment

• Filing Frequency: VAT returns are filed bi-monthly, on the 21st of the month following the two-month filing period (e.g The VAT return for January and February is due on March 21st).
• Payment: VAT payments are due with the bi-monthly filing.
• Online Filing: VAT returns and payments are typically managed through the Tax Administration Management Information System (TAMIS).

Exempt Supplies

Certain supplies are exempt from VAT, meaning VAT is not charged on these supplies and businesses providing exempt supplies cannot generally recover input tax related to them. Examples of exempt supplies include:

• Financial services (with some exceptions)
• Real estate sales
• Medical services
• Educational services

Other Indirect Taxes

Barbados also levies other indirect taxes, including:

• National Social Responsibility Levy (NSRL): Although information on current rates wasn't available in provided sources, this levy applies to imports and domestic outputs.
• Excise Tax: Applied to specific goods like alcohol, tobacco, and fuel. Rates vary.
• Property Transfer Tax: Levied on property transfers. Rates vary depending on the property type.
• Stamp Duty: Applies to certain legal and commercial documents.

Please note: This information is for general guidance only, is based on available resources as of February 5, 2025, and may be subject to change. It's important to consult with a tax professional for personalized advice.

Barbados offers a range of tax incentives designed to attract investment and stimulate economic activity. These incentives span various sectors, including international business, manufacturing, tourism, renewable energy, and research and development.

Personal Income Tax Incentives

• Personal Allowance: BBD 25,000 per year for individuals of working age. This allowance is increased to BBD 40,000 for pensioners aged 60 or over and receiving a pension.
• Spousal Allowance: BBD 3,000 per year for a spouse with no income (excluding investment income up to BBD 800), who is fully supported by and lives with the taxpayer.
• Reverse Tax Credit: Available to residents earning BBD 25,000 or less annually (not exceeding BBD 2,083.33 monthly), who have worked for at least four months during the income year and earned a minimum of BBD 1,000 per month (or BBD 250 per week). Directors, self-employed individuals, and those receiving income from goods and services are not eligible.
• Compensatory Income Credit: A tax refund for residents earning between BBD 25,000 and BBD 35,000 annually.
• Foreign Currency Earnings Allowance: A tax rebate of up to 65% on income tax payable on foreign earnings transferred through Barbadian banks. The rebate percentage varies based on the proportion of income derived from foreign sources.
• Foreign Tax Credit: Available for taxes paid overseas, with a caveat that it cannot reduce Barbados tax payable to less than 1% of taxable income.

Corporate Tax Incentives

• Reduced Corporate Tax Rates: A general corporate tax rate of 9% applies. Specific rates include 5.5% for approved small businesses (gross income up to USD 1 million) and between 0% and 2% for licensed insurance companies. Companies involved in international shipping may qualify for rates between 1% and 5.5%.
• Group Loss Relief: Available for companies resident in Barbados, generally applying from income year 2025. For 2024, it applied to companies with trading losses exceeding USD 50 million brought forward from prior income years. This relief is not applicable to companies benefiting from special tax rates or exemptions.
• Research and Development Credit: 50% of eligible expenses, with an additional 25% for projects related to the ocean or green economy initiatives.
• Jobs Credit: Ranging from 25% to 100% of eligible payroll expenses.
• Tax Credits for Investments: 50% for investments in public-private partnerships, facilities offering specific training (AI, coding, robotics, digital), elderly care facilities, hospices, net-zero emission projects, laboratories, and sports/entertainment venues. A 100% credit is available for digitizing or re-engineering business processes or upgrading systems by June 30, 2025.
• Patent Box Regime: Income from qualifying intellectual property is taxed at 4.5%.

Sector-Specific Incentives

• Manufacturing: Import duty exemptions for components, raw materials, and production equipment, as well as capital allowances on fixed assets.

• Tourism: Reduced income tax rates, customs concessions on imports, and tax allowances for staff training and international marketing.

• ICT: Training grants for workforce upskilling during the initial operating period.

• Renewable Energy: Duty-free concessions on imported equipment, income tax holidays for up to 10 years, and other benefits for developers, manufacturers, and installers of renewable energy systems and energy-efficient products.

Application Procedures

Specific application procedures vary depending on the incentive. More information can be obtained from the Barbados Revenue Authority and Invest Barbados. Please note that the information provided here reflects the situation as of today, February 5, 2025, and may be subject to change.