Barbados

Bureau of Economic and Business Affairs
Report
July 5, 2016

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Executive SummaryShare    

Historically, Barbados’ economy is seen as one of the more resilient in the region, with its Gross Domestic Product (GDP) estimated at USD $4.35 billion (2014). The economy grew marginally in 2015 with a real growth rate estimated at 0.7%. Barbados’ economy demonstrated some signs of improvement over the last twelve months. According to the Central Bank of Barbados, Barbados’ economy is expected to grow by 1.8% in 2016. The tourism sector gains that were witnessed in 2015 are expected to continue in 2016. While not totally out of the recession that began in 2008, real GDP is expected to grow by an average of 1.7% over the next five years. The services sector remains the largest potential for investment growth, particularly in tourism and renewable energy services. Barbados is ranked 119th in the World Bank’s Doing Business report for 2016; after falling three places from its 2015 position. Concerns were highlighted in the areas of the procedure of starting a business, obtaining credit, and paying taxes.

  • The government offers special incentive packages for foreign investments in the hotel industry, manufacturing, and offshore business services. Foreign nationals receive the same legal protections as local citizens. Local enterprises generally welcome joint ventures with foreign investors to access technology, expertise, markets, and capital.
  • Companies can freely repatriate profits and capital from foreign direct investment. The Embassy is not aware of any outstanding expropriation claims or nationalization of foreign enterprises in Barbados. Barbados bases its legal system on the British common law system.
  • Barbados uses transparent policies and effective laws to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety. These rules are in keeping with international standards. The regulatory system can be slow and at times not forthcoming on information regarding the refusal of a license.
  • Barbados is a member of the Caribbean Basin Initiative, which permits duty free entry of many products manufactured or assembled in Barbados into markets of the United States. Barbados has no bilateral investment treaty with the United States, but has a double taxation treaty and tax information exchange agreement.

Table 1

Measure

Year

Index or Rank

Website Address

TI Corruption Perceptions index

2015

17 of 175

transparency.org/cpi2014/results

World Bank’s Doing Business Report “Ease of Doing Business”

2016

119 of 189

doingbusiness.org/rankings

Global Innovation Index

2015

37 of 143

globalinnovationindex.org/content/page/data-analysis

U.S. FDI in partner country ($M USD, stock positions)

2015

USD 14.7 billion

http://www.bea.gov/international/factsheet/factsheet.cfm

World Bank GNI per capita

2014

USD 15,310

data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

The Government of Barbados, through Invest Barbados, encourages foreign direct investment with the stated goals of creating jobs and earning foreign currency. The services sector holds the largest potential for growth, especially in the areas of international financial services, tourism, information technology, education, health, and cultural services. In agriculture, the gradual decline of the sugar industry opened up land for other agricultural uses, and investment opportunities exist in the areas of agro-processing, alternative and renewable energy, and hydroponics. In the financial services sector, the government improved its regulatory oversight and the industry is thriving under better regulatory standards designed to prevent money laundering and tax evasion. The government offers special incentive packages for foreign investments in the hotel industry, manufacturing, and the international business and financial services sector. For example, International Business Companies (IBCs) have a maximum tax rate of 2.5% on income and exemption from foreign exchange controls.

Foreign nationals receive the same legal protections as local citizens. The police and court systems are fairly unbiased in commercial matters, and the government operates in a mostly transparent manner, although the lack of adequate government staff and bureaucratic procedures can slow certain processes and limit access to information. There are no requirements for participation either by nationals or by the government in foreign investment projects. Local enterprises generally welcome joint ventures with foreign investors in order to access technology, expertise, markets, and capital.

Barbados’ economy is small and was traditionally protective. New enterprises that might compete with entrenched local establishments, especially in the retail and restaurant sector, faced an objection to their license by local private interests. Licenses for importers of U.S. ice cream and poultry products, and some U.S. fast food franchises, were considerably delayed due to this objection process. Recently, however, there has been a relaxation on the use of this mechanism and an increase in the entry of franchises on the island.

Deregulation in the telecommunications industry has facilitated market access for new competitors. There are currently two service providers: Flow (Liberty Global/Cable and Wireless) and Digicel. In 2015, Cable and Wireless PLC and Columbus Communications completed their USD $3.025 billion merger. The national Fair Trading Commission (FTC) hopes that the conditions of this merger as outlined will foment additional competition in the sector.

Other Investment Policy Reviews

In 2015, Barbados conducted an investment policy review through the World Trade Organization. This report, which speaks to the general investment climate in Barbados, can be found at https://www.wto.org/english/tratop_e/tpr_e/tp408_e.htm.

Laws/Regulations on Foreign Direct Investment

The main laws concerning investment in Barbados are the Barbados International Business Promotion Act (2005), the Tourism Development Act (2005), the Companies Act, and the Fiscal Incentives Act. There is also a framework of legislation concerning International Business Companies, Financial Services, and Trusts.

Business Registration

Established through an Act of Parliament in 2005, Invest Barbados is the main investment promotion agency to facilitate foreign investment into Barbados. All potential investors applying for government incentives must submit their proposals for review by Invest Barbados to ensure that the project is consistent with the national interests and provides economic benefits to the country. Invest Barbados’ foreign direct investment policy is to actively promote Barbados as a desirable investment location, to provide advice, and to assist prospective investors.

Invest Barbados has a website that is useful to navigate the laws, rules, procedures and registration requirements for foreign investors. This can be found at http://www.investbarbados.org.

The Corporate Affairs and Intellectual Property Office (CAIPO) maintains an E-registry online filing service for matters pertaining to the Corporate Registry. You must be a registered agent to use this system. Further information can be obtained at www.caipo.gov.bb. Generally, it takes about 18 days to start a business but the E-registry is expected to cut that time drastically.

According to the Small Business Development Act (1999), a small business is defined as having no more than 25 employees and must be registered under the Companies Act. Foreign owned micro and small sized enterprises have access to any provisions as stipulated under this Act. An approved small business shall not be eligible for any incentives under the Tourism Development Act, the Fiscal Incentives Act, the Special Development Areas Act, or the Shipping Incentives Act.

Industrial Promotion

Invest Barbados is the investment promotion arm of the government with identified key industries to attract investment into the country.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limits on foreign control in Barbados. It is a constitutional right for nationals and non-nationals to establish and own private enterprises and private property in Barbados. These rights also pertain to the acquisition and disposition of interests in private enterprises.

No industries are closed officially to private enterprise, although the government reserves the right not to allow certain investments. Some activities, such as telecommunications, utilities, broadcasting, franchises, banking, and insurance require a license from the government. There are no quotas, or other restrictions, on foreign ownership of a local enterprise or participation in a joint venture.

Privatization Program

Barbados currently does not have a targeted program of privatization.

Screening of FDI

Invest Barbados has the authority to offer guidance and direction to new and established investors who are interested in pursuing investment opportunities in Barbados. The process is transparent and is contingent on the size of capital investment and the economic impact that it will have on the country.

Based on the type of business that the foreign investor wishes to set up, there are different steps that must be completed. Potential investors should contact Invest Barbados for guidance during this process.

Competition Law

Chapter 8 of the Revised Treaty of Chaguaramas provides the competition policy applicable to Caribbean Community (CARICOM) States. Member States are required to establish and maintain a national competition authority for facilitating the implementation of the rules of competition. At the CARICOM level, a regional Caribbean Competition Commission is established to apply the rules of competition in respect of anti-competitive cross-border business conduct. The CARICOM competition policy addresses anti-competitive business conduct, such as agreements between enterprises, decisions by associations of enterprises, and concerted practices by enterprises that have as their object or effect the prevention, restriction, or distortion of competition within the Community and actions by which an enterprise abuses its dominant position within the Community. The Fair Competition Act is codified the establishment of the Fair Trading Commission (FTC). The FTC is responsible for the promotion and maintenance of fair competition and participates in the Caribbean Competition Commission. Sectorial regulation of competition in the telecommunications field is provided for under the Telecommunications Act.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

The currency of exchange of Barbados is the Barbadian dollar (BBD) and it is issued by the Central Bank of Barbados (CBB). Barbados’ foreign exchange system is liberalized. The Barbadian dollar has been pegged to the United States dollar at a rate of BBD $2.00: USD $1.00 since 1975. As a result, the Barbadian Dollar does not fluctuate, creating a stable currency environment for trade and investment in Barbados.

Remittance Policies

Companies can freely repatriate profits and capital from foreign direct investment if they are registered with the CBB at the time of investment. The CBB has the right to limit or delay these conversions depending on the level of international reserves under the bank’s control.

The Ministry of Finance and Economic Affairs controls the flow of foreign exchange and the Exchange Control Division of the CBB executes fiscal policy under the Exchange Control Act. Individuals may apply through a local bank to convert the equivalent of USD $3,750 per year for personal travel and up to a maximum of USD $25,000 for business travel. To convert any amount over these limits one must apply to the CBB. International businesses, including Exempt Insurance and Qualifying Insurance Companies, are exempt from these exchange regulations.

Barbados is a member of the Caribbean Financial Action Task Force. Barbados signed onto an inter-governmental agreement with the United States to facilitate compliance with the Foreign Account Tax Compliance Act (FATCA).

3. Expropriation and CompensationShare    

The Barbados Constitution and Companies Act Cap 308 contain provisions that permit the government to compulsorily acquire property for public use upon prompt payment of compensation at fair market value. The Embassy is not aware of any outstanding expropriation claims or nationalization of foreign enterprises in Barbados

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Barbados bases its legal system on the British common law system. The Attorney General, the Chief Justice, Puisne (junior) Judges, and Magistrates administer justice in Barbados. The Caribbean Court of Justice (CCJ) is the highest court of appeal for Barbados. Modern corporate law is based on the Canada Business Corporations Act.

The United States and Barbados are both parties to the World Trade Organization (WTO). The WTO Dispute Settlement Panel and Appellate Body resolve disputes over WTO agreements, while courts of appropriate jurisdiction in both countries resolve private disputes.

Bankruptcy

Barbados is ranked number 34 for ease of “resolving insolvency” in the World Bank’s Doing Business Report for 2016. The Companies Act makes provision for the insolvency and/or liquidation of a company incorporated or continued under the Act. The Bankruptcy and Insolvency Act 2002 gives the Company three options: receivership, bankruptcy (voluntary and involuntary), and reorganization of the company.

Investment Disputes

The U.S. Embassy Bridgetown is not aware of any current investment disputes in Barbados.

International Arbitration

The Barbados Arbitration Act (1976) and the Foreign Arbitral Awards Act (1980), which recognizes the 1958 New York Convention on the Negotiation and Enforcement of Foreign Arbitral Awards, contain provisions for arbitration of investment disputes.

Parliament wrote The New York Convention’s provisions into domestic law, but has not ratified the convention. Barbados is also a member of the International Center for the Settlement of Investment Disputes (ICSID), also known as the Washington Convention. Additionally, individual agreements between Barbados and multilateral lending agencies have provisions calling on Barbados officials to accept recourse to binding international arbitration to resolve investment disputes between foreign investors and the state.

Duration of Dispute Resolution – Local Courts

According to the Doing Business Report for 2016, dispute resolution generally took 1,340 days, however this may vary. The slow court system and bureaucracy are widely seen as main hindrances to timely resolutions to commercial disputes. Barbados is ranked at number 164 in enforcing contracts.

5. Performance Requirements and Investment IncentivesShare    

WTO/TRIMS

As a member of the World Trade Organization, Barbados is party to the Agreement to the Trade Related Investment Measures. While there are no formal performance requirements, government encourages investments that will create jobs, increase exports and foreign exchange earnings. There are no requirements for participation either by nationals or by the Government in foreign investment projects. There is no requirement that enterprises must purchase a fixed percentage of goods from local sources, but the government encourages local sourcing. Foreign investors receive national treatment.

Investment Incentives

Most investment incentives in Barbados are tax incentives, although there are some special programs for manufacturers. Potential investors should contact Invest Barbados, a licensed accountant, and/or an attorney in Barbados to find out which incentives fit best with their goals.

Companies must meet export performance requirements to take advantage of certain tax incentives. For example, “enclave enterprises” must produce goods exclusively for export outside the CARICOM region. Foreign investors must finance their investments from external sources or from income that the investment generates. When a foreign investment generates significant employment or other tangible benefits for the country, the authorities may allow the company to borrow locally for working capital. Invest Barbados may provide a training grant to qualifying manufacturing and information and communication technology enterprises during the initial operating period.

There is no requirement that locals own shares of a foreign investor’s enterprise, but some restrictions may apply to share transfers. The Companies Act does not permit bearer shares. Foreign investors do not need to establish facilities in any specific location, although there are some zoning restrictions on residential and commercial construction for environmental reasons. There is no requirement that enterprises must purchase a fixed percentage of goods from local sources. However, investors, particularly within the hospitality industry, are encouraged to use local products and produce wherever possible.

The Fiscal Incentives (Amendment) Act (2001) provides a maximum 15-year tax holiday to any manufacturer of an approved product, provided that it meets the definition of an enclave enterprise: manufacturing exclusively for export outside of CARICOM; manufacturing approved products containing a specified percentage of local value added; or being highly capital intensive. Under the Fiscal Incentives Act, such enterprises may import duty-free equipment, spare parts, and raw materials from outside CARICOM. Dividends and other distributions to shareholders during the tax holiday are also exempt from the payment of income tax. Non-resident shareholders liable to tax in their country of residence are subject to Barbados withholding tax at a lower rate. To qualify for these incentives, the enterprise must apply to the Ministry of Industry, International Business, Commerce and Small Business Development.

Enterprises not obtaining benefits under the Fiscal Incentives Act (Amendment 2007) and generating export profits (other than from exports within CARICOM) may receive an export allowance expressed as a rebate of corporation tax on those profits. The maximum rebate of 93% applies if more than 81% of an enterprise's profits result from extra-regional exports. The Export Development Allowance permits a company to deduct from taxable income an additional 50% of what the company spends in developing export markets outside CARICOM.

Initial Allowances or Investment Allowances of up to 40% on capital expenditure are available for businesses making capital expenditures on machinery and plants, or on an industrial building or structure. Annual depreciation allowances on such expenditures are also available.

Barbados' method of calculating export allowance is as follows:

Export Profit as % of Total Profit Income Tax Rebate as % of Income Tax on Export Profits
Up to 20% 35%
21%, but under 41% 45%
41%, but under 61% 64%
61%, but under 81% 79%
81% and over 93%

In the tourism sector, a Market Development Allowance allows a company to deduct an additional 50% of what it spends encouraging tourists to visit Barbados. Under the Tourism Development Act of 2002, businesses and individuals that invest in the tourism sector can write off capital expenditure and 150% of interest. Those same entities are also exempt from import duties; value added tax; and environmental levies on furniture, fixtures and equipment, building materials, supplies, and equity financing. The Act expands the definition of tourist sector to include not just accommodation, but restaurants, tourist recreational facilities, and tourism related services. The Act encourages the development of attractions that emphasize the island’s natural, historic, and cultural heritage, and encourages construction of properties in non-coastal areas. The Ministry of Tourism must first be engaged on projects under this legislation.

Barbados entered into double taxation treaties with the United States, Austria, Bahrain, Botswana, Canada, CARICOM, China, Cuba, Czech Republic, Finland, Iceland, Luxembourg, Malta, Mauritius, Mexico, Netherlands, Norway, Panama, Qatar, San Marino, Seychelles, Singapore, Spain, Sweden, Switzerland, United Kingdom, and Venezuela. Accords awaiting ratification include treaties with Ghana, Portugal, Rwanda, and the United Arab Emirates.

International businesses may operate either free of income tax (e.g., captive insurance) or with a tax rate from 0.25 to 2.5%. An International Business Company (IBC) must, by the terms of its license, export 100% of its services or products in order to enjoy the following tax rates on gains and profits:

Gains and Net Profits Corporate Tax Rate
Up to US$5 million 2.5%
US$5-10 million 2.0%
US$10-15 million 1.5%
Over US$15 million 0.25%

The rate for income over USD $15 million was reduced to 0.25% effective income year 2013. In addition, there are no withholding taxes on dividends, interest, royalties, or management fees paid to non-residents.

An IBC may import machinery and equipment into Barbados free from certain taxes and customs duties. IBCs in the information services sector have the same maximum tax rate of 2.5% on profits mentioned above, full exemption from import duties on production-related equipment, including computers, full and unrestricted repatriation of capital, profits, dividends, rental of subsidized office space, and training grants to subsidize worker training.

International financial service companies also enjoy several tax incentives. Under the Exempt Insurance Act, a company incorporating with a minimum capital of USD $125,000 and at least one Barbadian director is eligible for taxation on profits at zero percent (0%) for the first 15 years, and thereafter at 8% on the first USD $125,000 of taxable income, as well as an exemption from a withholding tax on royalties and exchange control restrictions. Its beneficial shareholders also must not be persons resident in CARICOM. In 1998, legislation allowed companies involved in the international insurance business to register as Qualifying Insurance Companies, entitled to a tax rate of 1.75%, after deducting a foreign currency earnings allowance, and exemption from withholding taxes and exchange controls.

The International Trust Act allows non-residents to create trusts for the benefit of non-residents, with no minimum capital requirements and no withholding taxes, but subject to 35% tax on profits earned in or remitted to Barbados. Exempt Societies of Restricted Liability, which may not acquire land in Barbados or transact business with CARICOM residents, enjoy certain concessions for up to 30 years, including exemption from exchange controls and withholding tax on dividends, royalties, interest, or other interest paid to non-residents.

Research and Development

Barbados does not currently have a government financed or subsidized research and development program.

Performance Requirements

Non-nationals seeking to work in Barbados must apply for work permits. This is also required for all managerial and technical staff brought into Barbados. The work permit is specific to the job and employer and the permit can be granted for a period of up to five years for long term permits. Short-term permits of up to six months are also available for staff that may be required to spend brief periods at the Barbados facility. One requirement for granting a work permit is that the expatriate must bring to the job special skills or knowledge not readily available in Barbados. While work permits are readily granted to senior management, the number of permits approved may be restricted depending on the amount of persons employed by the local company. No restrictions exist regarding foreign Directors of boards. Please visit the following site for further details: www.immigration.gov.bb/pages/WorkPermit.aspx.

Data Storage

There are no requirements for foreign IT providers to turn over source code and/or provide access to surveillance (backdoors into hardware and software turn over keys for encryption, etc.)

6. Protection of Property RightsShare    

Real Property

There are no restrictions on foreign ownership of property on Barbados. Foreign investors and locals are treated equally with regards to taxation on property. Civil law protects physical property and mortgage claims. The Central Bank must verify real property purchases for non-residents. If a non-resident uses foreign funds and pays for the property in Barbados, the Central Bank will normally endorse the transaction. The sale of property is subject to a 2.5% Property Transfer Tax in addition to a 1% stamp duty. Brokerage and legal fees are not included in those levies. It is recommended that you work with an attorney during the purchase process.

The Commissioner of Land Tax charges an annual fee based on the assessed property value. The government taxes hotels on 50% of the improved value at 0.7% and residential properties on:

  • 0% on the first USD $75,000
  • 0.10% on next USD $150,000
  • 0.45 % on next USD $275,000
  • 0.75 % on excess of USD $500,000
  • 0.8% on vacant land

Barbados is ranked 134th for the ease of registering property in the Doing Business Report for 2016. The report highlighted the length of time needed to register property in Barbados which on average takes a minimum of 118 days as an area of concern.

Intellectual Property Rights

Barbados has a legislative framework regarding its commitment to the protection of intellectual property rights. While the legal structures governing intellectual property (IP) could be considered strong, enforcement is weak. Barbados signed the Paris Convention on Intellectual Property Rights (IPR), the Nice Agreement, and is a member of the United Nations World Intellectual Property Organization (WIPO). The Government of Barbados adopted a new Copyright Act in August 1998 and amended it in 2004 to provide for tougher penalties. In the early 2000s, the government also approved legislation for Integrated Circuits Topography, Geographical Indications, and Protection against Unfair Competition. In addition, the government revised The Trademark and Industrial Designs Acts to meet world standards.

Article 66 of the Revised Treaty of Chaguaramas (2001) establishing the Caribbean Single Market and Economy (CSME) commits all 15 members to implement stronger Intellectual Property protection and enforcement. The Economic Partnership Agreement (EPA) signed between the CARIFORUM States and the European Community in 2008 contains the most detailed obligations in respect of intellectual property in any trade agreement to which Barbados is a party. The EPA gives recognition to the protection and enforcement of intellectual property. Article 139 of the EPA requires parties to “ensure an adequate and effective implementation of the international treaties dealing with intellectual property to which they are parties and of the Agreement on Trade Related Aspects of Intellectual Property (TRIPS).”

In spite of this, Barbados remained on the Office of the United States Trade Representative’s Special 301 Report Watch List Watch List in 2015. The United States continues to have concerns about the interception and retransmission of U.S. cable programming by local cable operators in Barbados without the consent of, and without adequately compensating, U.S. rights holders. The United States also has continuing concerns about the refusal of Barbadian TV and radio broadcasters and cable and satellite operators to pay for public performances of music. Barbados’ slow legal system, inert state of enforcement, and lack of reform contribute to their inclusion.

It is the responsibility of the importer to pay and destroy counterfeit goods. There are certain standards that must be met with the Barbados National Standards Institute regarding the importation of goods. If those standards are not met, the Institute will make the recommendation to the Comptroller of Barbados’ Customs and Excise Department to have the goods destroyed. If the goods fall under the Ministry of Health, the goods are destroyed under the guidance of that Ministry. If the imported goods are prohibited goods and do not fall under the Ministry of Health, the Customs and Excise Department will destroy when appropriate. Information on the prevalence of counterfeit goods in the local market is not readily available as there is no tracking method in place to collect data. However, dependent on if the goods are imported by agreement with a particular distributor and the manufacturer; the Customs and Excise Department has the right to seize and destroy the unauthorized imported goods in question.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Resources for Rights Holders

Contact at Mission:
U.S. Embassy Barbados and the Eastern Caribbean
Name: Stephen Simpson
Title: Economic/Commercial Officer
Telephone Number: (246) 227-4274
Email address: SimpsonSC@state.gov

Country/Economy Resources:
American Chamber of Commerce for Barbados and the Eastern Caribbean
Name: Dustin Delany
Title: Chairman and President
Telephone: (246) 228-2260
Email: dd@amchambec.com

Local attorneys list: http://barbados.usembassy.gov/barbados_attorneys.html .

7. Transparency of the Regulatory SystemShare    

Barbados uses transparent policies and effective laws to foster competition and establish clear rules for foreign and domestic investors in the areas of tax, labor, environment, health, and safety. These rules are in keeping with international standards. The regulatory system can be slow and not forthcoming on information regarding the refusal of a license.

Accounting, legal and regulatory procedures are transparent by policy. Publicly listed companies publish annual financial statements as well as any changes in the shareholder portfolio such as value of shares.

All draft bills are circulated to stakeholders, government ministries, and departments and are published in the Official Gazette. They are also uploaded to the Barbados Parliament website prior to debate for public perusal.

Foreign investors are allowed to participate in private sector organizations that fall under the rubric of the Barbados Private Sector Association

8. Efficient Capital Markets and Portfolio InvestmentShare    

Barbados has a small stock exchange, an active banking sector, and opportunities for portfolio investment. Local policies seek to facilitate the free flow of financial resources, unless there is a shortage of funds. The government intervenes in the local credit market to control interest rates, limit the volumes of funds available for borrowing, and borrow on the local market. However, the CBB raised or lowered interest rates in the past without any government intervention. There are a variety of credit instruments in the commercial and public sectors that local and foreign investors may access.

The government implemented a continuous review process for legislation in the financial sector in an effort to strengthen and improve the regulatory regime in order to attract and facilitate retention of foreign portfolio investments. During 2013, the Bank underwent a Financial Sector Assessment Program (FSAP) assessment by the International Monetary Fund and The World Bank, and the resulting Financial System Stability Assessment Report was published in February 2014. The Report noted that since the 2008 FSAP Update, Barbados substantially improved its legal, regulatory, and supervisory frameworks to support the banking system. The International Financial Services Act, which replaced the Offshore Banking Act in June 2002, incorporates Basel standards, and provides for on-site examinations of offshore banks. This allows the Central Bank to augment its offsite surveillance system of reviewing anti-money laundering policy documents and analyzing prudential returns.

Under the authority of the Money Laundering and Financing of Terrorism Prevention and Control Act, Cap 129, the government established the Anti-Money Laundering Authority and its operating arm, the Financial Intelligence Unit, in 2000. In 2001, the Bank Supervision Department of the Central Bank of Barbados, in conjunction with the Anti-Money Laundering Authority the Anti-Money Laundering Guidelines for Licensed Financial Institutions, which were revised in 2006, 2011, and most recently in October 2013.

The Securities Exchange Act of 1982 established the Securities Exchange of Barbados (SEB), which was re-incorporated as the Barbados Stock Exchange (BSE) in 2001. The 1982 Act was replaced by the Securities Act, Cap 318A, which removed regulatory responsibility for the securities market activity from the BSE. This Act helped to strengthen the regulatory framework and development of the capital market. In 1987, the BSE began trading corporate stocks and fixed income securities, including government bonds (not commercial paper). Activities on the BSE include regional cross-border trading arrangements for shares listed on the Trinidad and Tobago and Jamaica stock exchanges.

The BSE operates a two-tier electronic trading system comprised of a Regular Market and a Junior Market. Companies applying for listing on the Regular Market must observe and comply with certain requirements. Specifically they must inter alia have assets of not less than USD $500,000 and adequate working capital based on the last three years of their financial performance, as well as three-year projected performance. Companies must also demonstrate competent management and be incorporated under the laws of Barbados or other regulated jurisdiction approved by the Financial Services Commission (FSC). Applications for listing on the Junior Market are less onerous, requiring minimum equity of one million shares at a stated minimum value of USD $100,000. Reporting and disclosure requirements for all listed companies include interim financial statements, and an annual report and questionnaire. Non-nationals must obtain exchange control approval from the Central Bank of Barbados to trade securities on the BSE.

The BSE stated its intent to fully immobilize traditional share certificates where clearance and settlement is computerized through the Barbados Central Securities Depository Inc., which is a wholly owned subsidiary of the Barbados Stock Exchange Inc. The Financial Services Commission under the Property Transfer Tax Act can accommodate investors requiring a traditional certificate for a small fee. The Financial Services Commission also regulates Mutual Funds in accordance with the Mutual Funds Act, Cap 320B.

During the last two years, the BSE introduced new rules in accordance with International Organization of Securities Commission designed to protect investors, ensure a fair, efficient, and transparent market, and reduce systemic risk. Public companies now have only 90 days from the close of their financial year to file audited financial statements with the BSE, 30 days fewer than before. Companies have 60 days to file quarterly statements. Additionally, a fine not exceeding USD $5,000 was added to the list of possible penalties for any person under the jurisdiction of the BSE who contravenes or is not in compliance with any of the requirements.

In March 2016, the BSE launched the International Securities Market (ISM). This will operate as a separate market, thus allowing issuers from not only Barbados but other international markets. This is aimed at developing the International business and financial services sector, which is a key contributor to Barbados’ economy. The ISM is founded on strong regulatory framework that includes the BSE, the CBB and the FSC.

Money and Banking System, Hostile Takeovers

The Barbados domestic financial sector consists of five commercial banks and twelve trust and finance companies and merchant banks. There are also 34 credit unions and two money remitters. The offshore sector includes 3,945 international business companies, 347 international societies with restricted liability, 189 exempt insurance companies, and 41 offshore banks. Starting in 2001, the government required Barbados institutions and legal entities to reveal the identity of beneficiaries receiving dividends and/or interest. The total assets for the banking system stood at USD $6.41 billion as of December 2015. The local cash reserve requirement was five percent, foreign cash reserve requirement was two percent, and the securities reserve requirement was 10% during the same period.

The Barbados Deposit Insurance Corporation, which was established under the Deposit Insurance Act (2006), provides protection for depositors of deposit taking financial institutions. Oversight of the entire financial system is conducted through the Financial Oversight Management Committee, which consists of the CBB, BDIC and the FSC.

In April 2015, the CBB announced the decision to deregulate the interest rates for savings accounts by removing the minimum saving deposit rate. Commercial banks and other deposit taking institutions are now entrusted to set their own interest rates.

In February 2016, Bitt, a Barbadian based company introduced the block-chain based electronic mobile wallet which is considered to be cheaper to use, more secure and more traceable than cash. Officially launched in 2015, Bitt is digital asset exchange, remittance channel, and merchant-processing gateway available via a mobile application. Bitt is widely seen as the frontrunner in the Caribbean’s burgeoning cryptocurrency ecosystem.

9. Competition from State-Owned EnterprisesShare    

State Owned Enterprises in Barbados are governed by their respective Legislation. They are headed by Boards of Directors to which the Senior Management reports. Statutory or state owned enterprises include the National Insurance Scheme and the National Assistance Board. These companies do not generally pose a threat to investors as they are designed to support government programs such as the national pension plan and the national welfare program.

OECD Guidelines on Corporate Governance of SOEs

While Barbados recognizes the Organization of Economic Cooperation and Development (OECD) guidelines, SOEs in Barbados are not found in the key areas earmarked for investment.

Sovereign Wealth Funds

Barbados does not maintain a Sovereign Wealth Fund.

10. Responsible Business ConductShare    

In Barbados, producers and consumers alike demonstrate awareness of responsible business conduct. The private sector is involved in projects that benefit society, including in support of environmental, social and cultural causes. Individuals benefit from business sponsored initiatives when local and foreign owned enterprises pursue volunteer opportunities and make monetary or in kind donations to local causes.

The Non-Governmental Organisation community, while comparatively small, is involved in fundraising and volunteerism in gender, health, environmental and community projects. The government at times partners with NGOs in activities. The government encourages philanthropy.

11. Political ViolenceShare    

Barbados has not experienced political violence since the 1930s.

12. CorruptionShare    

Corruption is generally not a major problem in Barbados, but some U.S. companies have reported unfair treatment by Barbados’ Customs and Excise Department. Other U.S. companies have reported efforts by political actors to trade political support for payment or partial project ownership.

In 2012, Barbados enacted the Prevention of Corruption Act (2010), which repealed an outdated law from the 1920s. The Prevention of Corruption Act (2010) contains some provisions for Integrity in Public Life. There is no separate Integrity legislation.

In June 2015, twelve Commonwealth Caribbean countries including Barbados established a new regional body to enhance transparency and to help fight corruption. The formation of the Association of Integrity Commissions and Anti-Corruption Bodies in the Commonwealth Caribbean was heralded as a major step forward in regional efforts to support integrity and address corruption. It is hoped that the new body will help to further strengthen public confidence in cross-border initiatives to enhance accountability, knowledge sharing and coordination.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Barbados has not signed or ratified the Inter-American Convention on Mutual Assistance in Criminal Matters. Barbados signed, but not yet ratified, the UN Convention on Corruption and the Inter-American Convention against Corruption.

Resources to Report Corruption

  • ORGANIZATION: Financial Intelligence Unit
  • ADDRESS: P.O. Box 1372, Bridgetown
  • TELEPHONE NUMBER: 246-436-4734
  • EMAIL ADDRESS: fiu@barbadosfiu.gov.bb
  • ORGANIZATION: Anti-Money Laundering Authority
  • ADDRESS: P.O. Box 1372, Bridgetown
  • TELEPHONE NUMBER: 246-436-4734
  • EMAIL ADDRESS: amla@sunbeach.net

13. Bilateral Investment AgreementsShare    

Bilateral Taxation Treaties

Barbados has no bilateral investment treaty with the United States, but has a double taxation treaty and tax information exchange agreement. Barbados has bilateral investment treaties with Canada, China, Cuba, Germany, Italy, Mauritius, Switzerland, the United Kingdom, and Venezuela. Tax Information Exchange Agreements with Denmark, the Faroe Islands, Greenland, and South Africa are also in force. Bilateral investment treaties with Luxembourg and Ghana are awaiting ratification. Barbados is also party to the following:

Caribbean Community (CARICOM)

The Treaty of Chaguaramas established CARICOM in 1973 to promote economic integration among its fifteen Member States. Investors operating in Barbados are given preferential access to the entire CARICOM market. The Revised Treaty of Chaguaramas goes further to establish the CARICOM Single Market and Economy (CSME), by permitting the free movement of goods, capital, and labor within CARICOM States.

Economic Partnership Agreement (EPA)

The Economic Partnership Agreement (EPA) was concluded between the CARIFORUM States and the European Community and its Member States in 2008. The EPA replaced the now expired transitional trade regime of the Cotonou Agreement. The overarching objectives of the EPA are to alleviate poverty in CARIFORUM, to promote regional integration and economic cooperation and to foster the gradual integration of the CARIFORUM states into the world economy by improving their trade capacity and creating an investment-conducive environment. The Agreement promotes trade related developments in areas such as competition, intellectual property, public procurement, the environment and protection of personal data.

Caribbean Basin Initiative (CBI)

The objective of the Caribbean Basin Initiative is to promote economic development through private sector initiative in Central America and the Caribbean islands by expanding foreign and domestic investment in non-traditional sectors, diversifying CBI country economies and expanding their exports. It permits duty free entry of products manufactured or assembled in Barbados into markets of the United States.

Caribbean / Canada Trade Agreement (CARIBCAN)

CARIBCAN is an economic and trade development assistance program for Commonwealth Caribbean countries in which Canada provides duty free access to its national market for the majority of products which originate in Commonwealth Caribbean countries.

14. OPIC and Other Investment Insurance ProgramsShare    

OPIC provides financing and political risk insurance to viable private sector projects, helps U.S. businesses invest overseas, and fosters economic development in new and emerging markets.

15. LaborShare    

Barbados’ labor force was approximately 126,200 people at the end of June 2015. The total average unemployment rate toward the end of June 2015 was approximately 11.9%.

Labor regulations in Barbados are guided by a framework of laws and accepted best practices. These include Holidays with Pay Act, Sick Leave Act, Public Holidays Act, Protection of Wages Act, Maternity leave, National Insurance contributions, unemployment benefits, and severance pay. Wages in Barbados are among the highest in the Caribbean. Minimum wages for only a few categories of workers are administratively established and enforced by law. The minimum wage for shop assistants is USD $3.13 per hour. The Ministry of Labor recommended that companies use this as the de facto minimum wage and most employees earn more than the minimum wage. The Labor Department within that ministry was charged with enforcing the minimum wage.

The standard legal workweek is 40 hours in five days and the law requires overtime payment for hours worked in excess. The law prescribes that all overtime must be voluntary. Workers are guaranteed a minimum of fifteen business days of holiday with pay and are covered by the unemployment benefits legislation and National Insurance (social security) legislation.

Trade unions, and the leaders of the trade union movement, enjoy a strong voice in the labor and economic affairs of the country through their participation in Barbados’ Social Partnership, a tri-partite consultative mechanism. Approximately 36% of the labor force belongs to trade unions, but this small percentage belies the power and importance of unions in Barbados: all key sectors are unionized, with all private and public employees in agriculture, tourism, and at the airport and seaport belonging to a single union confederation.

The major unions recognize the advantages accruing to Barbados from foreign investment and foreign expertise and they are generally flexible and accommodating in their dealings with employers. However, local labor leadership is sensitive when it perceives a lack of respect for Barbadian laws and customs by large, visible foreign employers. It is generally cooperative with management in unionized shops.

Barbados does not have labor legislation that mandates a legal process necessary for unions to achieve status as bargaining agents. Employers have no legal obligation to recognize unions under the Trade Act of 1954, but most employers do so when a majority (usually 50% plus one) of their employees desire representation. While there is no specific law that prohibits discrimination against union activity, the courts provide a method of redress for employees who allege wrongful dismissal. The courts commonly awarded monetary compensation but rarely ordered reemployment.

The Labor Department plays an important role in the conciliation of disputes that have not been resolved by the parties themselves. In cases where a dispute involves a key sector, the dispute may go to the Minister of Labor. On the occasion where a dispute may not be resolved through the Minister of Labor, the dispute may go to the Prime Minister and/or the Social Partnership.

The law also provides for the right to strike and workers exercised this right in practice. All private and public sector employees are permitted to strike, but essential workers may strike only under certain circumstances and after following prescribed procedures. Early contact and rapport with Labor Ministry officials and union leaders by foreign investors may be helpful in terms of fostering labor harmony.

The law provides for a minimum working age of 16 and this provision generally was observed in practice. Compulsory primary and secondary education policies reinforced minimum age requirements. The Labor Department had a small cadre of labor inspectors who conducted spot investigations of enterprises and checked records to verify compliance with the law. These inspectors may take legal action against an employer who is found to have underage workers. Additionally, legislation to prohibit sexual harassment is pending.

In April 2013, the Employment Rights Act came into force, regulating the relationship between the employer and the employee particularly in such areas as a written statement of particulars of payment, the right to a written statement of employment particulars, and hiring and dismissal. Under this new bill, a series of contracts renewed in succession without an intervening period of at least 42 days is seen as a period of continuous employment. This is to prevent employers from engaging in non-standard work arrangements to avoid and escape obligation imposed by standard work arrangements.

The Act also establishes an Employment Rights Tribunal to adjudicate on disputes over the new rights, though complaints must first be referred to the Chief Labor Officer (CLO) for an opportunity for a settlement to be reached by conciliation. The CLO is also given more power under the new Act.

Under the Severance Payments Act Cap, 355A; an employer is obligated to pay an employee a severance payment where the employee is terminated on account of redundancy. The Employment Rights Act 2012, section 31 provides that a dismissal of an employee on account of redundancy does not contravene the right not to be unfairly dismissed. Qualifying workers who are laid-off for economic reasons are generally entitled to receive a severance payment on a graduating scale which starts at 2.5 weeks’ pay for every completed year of employment with the employer. All workers who have become unemployed are eligible for unemployment benefit once that person meets the qualifying contribution periods as set out by the National Insurance and Social Security system.

The eight core conventions of the International Labor Organization (ILO) are among the 36 ILO Conventions ratified by Barbados. The Government of Barbados upholds the ratified Conventions and is constantly guided by other Conventions of the ILO.

The government introduced an Occupation Health at Work Act in 2013. This Act governs the general health and safety of workers in all workplaces except the military, armed forces, and private household domestic service. The law requires that in certain sectors and firms employing more than 50 workers create a safety committee that could challenge the decisions of management concerning the occupational safety and health environment. The Labor Department also enforces health and safety standards and follows up to ensure that management corrected problems cited. Trade union monitors can identify safety problems for government factory inspectors to ensure the enforcement of safety and health regulations and effective correction by management. The Labor Department’s Inspections Unit conducts routine annual inspections of government-operated corporations and manufacturing plants. Workers have the right to remove themselves from dangerous or hazardous job situations without jeopardizing their continued employment.

In January 2016, the new Shops Act (2015) came into force. Under the new law, shops that are subject to opening hours under the law can now remain open for business from 7 a.m. on Mondays, continuously through to 10 p.m. on Sundays. The closing hours are between 10 p.m. on Sundays and 7 a.m. on Mondays. The Act also removes general public holidays from being “closed days”, with the exception of Good Friday, Easter Sunday, Christmas Day and Independence Day. However, according to the Act, the Chief Labour Officer may grant permission on application for the opening of shops on closed days. The legislation also removes the four-and-a-half hour restriction on closed day opening.

The Government of Barbados will soon begin debate on current pending legislation notably the Employment Sexual Harassment (Prevention) Act and the Employment (Prevention of Discrimination) Act.

For more information, please see: http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm?year=2014&dlid=236664 and http://www.dol.gov/ilab/reports/child-labor/barbados.htm.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

There are no foreign trade zones or free ports in Barbados.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical source

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2014

$4350

2014

$4355

http://data.worldbank.org/country/barbados

Foreign Direct Investment

Host Country Statistical source

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)

2013

$298.6

2014

$1468.2

http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Host country’s FDI in the United States ($M USD, stock positions)

2013

$453.7

2014

$885

http://bea.gov/international/direct_investment_
multinational_companies_comprehensive_data.htm

Total inbound stock of FDI as % host GDP

2013

$115

2015

N/A

N/A

 

Table 3: Sources and Destination of FDI

Data not available

 

Table 4: Sources of Portfolio Investment

Data not available

 

18. Contact for More InformationShare    

  • TITLE: Commercial and Economic Affairs, Political/Economic Section
  • ADDRESS OF MISSION/AIT: U.S. Embassy to Barbados, the Eastern Caribbean and the Organization of Eastern Caribbean States.
  • TELEPHONE NUMBER: 246-227-4052
  • EMAIL ADDRESS: WatsonJM@state.gov