International Business and Financial Sector Makes An Impact
The International Business and Financial Services sector contributes nearly US $500 million (BDS $1 billion) to the Barbados economy. The greatest portion of this spend does not emanate from direct taxes paid to the Barbados Government but from indirect spending in the Barbados economy. Real estate in particular, with earnings of just over US $15 million (BDS $30 million) in 2010 is one of the primary beneficiaries of this sector.
Rent of commercial office space and housing has increased over the period of 2008 to 2010, growing by 12% between 2008 and 2009 and more moderately by 5.6% between 2009 and 2010. This drop in growth is in line with the general economic downturn experienced over the period, and still being experienced currently.
The Economic Contribution Committee, chaired by Dalia Littlewood of Freedom Financial Inc., was created to access the direct and indirect contributions of the International Business and Financial sector to the Barbados economy. The Committee was championed by the Barbados International Business Association (BIBA) whose mandate is to work in partnership with the Barbados Government towards development of the international business sector in the interest of both Barbados and its members.
The Committee’s research uncovered what has long been suspected, that the International Business and Financial Services sector is a major contributor to economic output in Barbados. In 2008 total earnings from the sector was US $430.1 million (BDS $860.2 million). In 2009 this grew to US $486.5 million (BDS $973 million) and slipped to US $439 million (BDS $878 million) in 2010. These figures compare to US $2.15 billion (BDS $4.3 billion) in 2008, US $1.95 billion (BDS $3.9 billion) in 2009 and US $1.8 billion (BDS $3.6 billion) in 2010 for Travel and Tourism, according to the Travel and Tourism Economic Impact Report 2012 for Barbados, compiled by the World Travel and Tourism Council. Although not as high as the tourism numbers, the figures show that International Business and Financial Sector is very important to the Barbados economy.
It is for this reason that BIBA has worked with the Government of Barbados to develop initiatives that will help maintain Barbados’ competitive advantage as an offshore business jurisdiction. Minister of Finance, Chris Sinckler officially announced the initiatives as he delivered the 2012 Barbados Budget. Changes included amending the Business Companies Act Cap 77 and the Societies with Restricted Liabilities Act to lower the tax rate on the highest band of taxable income (income exceeding US $15 million/BDS $30 million) for income years 2012 and 2013. The tax schedule in Section 10 (1) of the International Business Companies Act will be amended as follows:
(a) 2.5% on all profits and gains up to US $5 million (BDS $10 million);
(b) 2.0% on all profits and gains exceeding US $5 million (BDS $10 million) but not exceeding US $10 million (BDS $20 million);
(c) 1.5% on all profits and gains exceeding US $10 million (BDS $20 million) but not exceeding US $15 million (BDS $30 million); and
(d) 0.5% on all profits and gains in excess of US $15 million (BDS $30 million).
The 0.5% applicable on profits and gains in excess of US $15 million (BDS $30 million) will be changed to 0.25% for income year 2013.
Favourable changes were also made to non-dom immigration requirements for High Net Worth Individuals (HNWI’s) creating a more welcoming environment for persons wishing to invest, retire or reside in Barbados. Chief among these is the revised policy on Special Entry Permits for non-nationals. Prerequisites for acquiring these permits include security checks, proof of adequate health insurance coverage and submission of police certificates of character.