SIGNIFICANT DEVELOPMENTS
Three agreements for the avoidance of double taxation to which Barbados is a party have recently entered into force. These agreements, with Cuba,China, and Venezuela, entered into force on March 16, 2000, October 27, 2000, and January 17, 2001, respectively. The agreements with Cuba and China will have effect from the income year commencing on or after January 1, 2001, whereas the agreement with Venezuela will have effect from the income year commencing on or after January 1, 2002.
TAXES ON CORPORATE INCOME
Corporation tax/Corporation tax is levied at the flat rate of 40% on companies, excluding insurance companies and companies subject to differing rates of corporation tax under specific pieces of incentive legislation.
In lieu of corporation tax, life insurance companies are taxed at 5% on gross investment income.
CORPORATE RESIDENCE
A corporation is deemed to be resident in Barbados if it is incorporated in Barbados or if it is managed and controlled in Barbados.
OTHER TAXES
Life insurance premium tax/This tax is levied at the following rates on gross direct premium income.
Percentage of premium income
New Renewal
Business Business
% %
Resident companies………………………………………… 5 3
Foreign companies………………………………………… 5 5
General insurance premium tax/This tax is levied at the following rates (as a percentage of premium income) for both resident companies and foreign companies.
%
Property……………………………………………………………… 5
Other………………………………………………………………… 3
Property transfer tax/This tax is assessed at 10% on the gross consideration for sales of real estate or interests in real estate and for the transfer of shares or debentures issued by or on behalf of a company.
An exemption of Bds$50,000 of the gross sales proceeds for the sale of shares or debentures and Bds$125,000 of the gross sales proceeds for the sale of land on which a building exists is granted to the vendor. Transfers of shares that are listed on the Securities Exchange of Barbados, or where there is no change in beneficial ownership, are also exempted from property transfer tax.
Land tax/Land tax is levied on the site value of land, or the improved value where a building exists, at the following rates.
1. On unimproved sites:
a. Value up to Bds$10,000: 0.8% to maximum of Bds$50;
b. Thereafter: 0.8%.
2. Improved value:
a. A dwelling house used exclusively as a residence:
i. Up to Bds$350,000: 0.2%;
ii.$350,001 to $850,000: 0.7%;
iii. Thereafter: 1.2%.
b. All other properties: 0.7%.
Land tax for hotels and for residential properties owned by pensioners is calculated on 50% of the improved value of the property.
Tax on bank assets/An annual charge of 0.2% is payable on the average domestic assets of licensed banks.
Value added tax/VAT is applicable to a wide range of goods and services.The standard rate is 15%; hotel accommodation bears a rate of 7.5%.A number of services, including financial services, sale of real estate, public transportation, medical services, and education, are exempt.
Intergroup transactions are taxable. Certain supplies are zero rated, including exports, basic
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