Barbados, the most easterly island in the Eastern Caribbean, is a member of the Caribbean Community (CARICOM). Established in 1972, the Central Bank of Barbados (CBB) regulates the Barbados dollar. Barbados’ Gross Domestic Product (GDP) was USD 5.03 billion in 2018 with forecast growth of 0 to 0.25 percent in 2019, according to CBB estimates. The government of Barbados entered into a standby arrangement with the International Monetary Fund (IMF) in late 2018. The USD 290 million Barbados Economic Recovery and Transformation (BERT) program aims to decrease the debt to GDP ratio, strengthen the balance of payments, and stimulate growth in the economy. In the early stages of implementation, however, the program has dampened income and spending power due to public sector layoffs, the introduction of new indirect taxes, and a decline in the construction sector. However, there are new and previously announced projects in the pipeline that are expected to strengthen Barbados’ economic position in the near term.
Barbados ranks 129th out of 190 countries rated in the 2019 World Bank Doing Business Report. The report highlights some positive changes in improving the ease of starting a business but highlights that paying taxes has become more difficult due to the introduction of new indirect taxes.
The services sector continues to hold the largest potential for growth, especially in the areas of international financial services, tourism, information technology, global education services, health, and cultural services. The gradual decline of the sugar industry has opened up land for other agricultural uses. Investment opportunities exist in the areas of agro-processing and alternative and renewable energy
Barbados recently revised its tax regime, in which there was a convergence of domestic and international tax rates. This was in response to the Organization for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) Action 5 Initiative that addressed harmful tax practices. Some Acts were repealed or amended, while others were newly enacted. For further details, see https://investbarbados.org/revisedtaxregime.php .
Barbados bases its legal system on the British Common Law System. It does not have a bilateral investment agreement with the United States, but it does have a double taxation treaty and tax information exchange agreement.
In 2015, Barbados signed an Intergovernmental Agreement in observance of the United States’ Foreign Account Tax Compliance Act (FATCA), making it mandatory for banks in Barbados to report the banking information of U.S. citizens.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||25 of 175||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2019||129 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2018||$20,368||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita (USD)||2018||$15,270||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
3. Legal Regime
Transparency of the Regulatory System
Barbados’ legal framework fosters competition and establishes clear rules for foreign and domestic investors with regard to tax, labor, environmental, health, and safety concerns. These regulations are in keeping with international standards. The Ministry of Finance and Economic Affairs and Invest Barbados provide oversight aimed at ensuring the attraction and channeling of investment occurs transparently.
Rulemaking and regulatory authority rest with the bicameral parliament of the government of Barbados. The House of Assembly consists of 30 members who are elected in single seat constituencies. The Senate consists of 21 members who are appointed by the Governor General.
Foreign investment into Barbados is governed by a series of laws and their implementing regulations. These laws and regulations are developed with the participation of relevant ministries, drafted by the Office of the Attorney General, and enforced by the relevant ministry or ministries. Additional compliance supervision is delegated to specific agencies, by sector, as follows:
- Banking and financial services – CBB
- Insurance and non-banking financial services – Financial Services Commission (FSC)
- International business – International Business Unit, Ministry of International Business
- Business incorporation and intellectual property – CAIPO
The Ministry of Finance and Economic Affairs monitors investments to collect information for national statistics and reporting purposes.
All foreign businesses must be registered or incorporated through CAIPO and will be regulated by one of the other aforementioned agencies depending on the nature of the business.
Although Barbados does not have legislation that guarantees access to information or freedom of expression, access to information is generally available in practice. The government maintains a website and an information service to facilitate the dissemination of information such as government office directories and press releases. The Government Information Service (BGIS) website is available at: http://gisbarbados.gov.bb/ . The government also maintains a parliamentary website where it posts legislation prior to parliamentary debate and live streams House sittings. The government budget is also available on this website, http://www.barbadosparliament.com/ .
Although some bills are not subject to public consultation, input from various stakeholder groups and agencies is enlisted during the initial drafting of legislation. Public awareness campaigns, through print and electronic media, are used to inform the general public. Copies of regulations are circulated to stakeholders, and government ministries and departments, and are published in the Official Gazette after passage in parliament.
Accounting, legal, and regulatory procedures are transparent. Publicly listed companies publish annual financial statements and changes in portfolio shareholdings, including share values. Service providers are required to adhere to international best practice standards including International Financial Reporting Standards (IFRS), International Standards on Auditing (ISA), and International Public Sector Accounting Standards (IPSAs) for government and public sector bodies. They must also comply with the provisions of the Money Laundering and Financing of Terrorism Prevention and Control Act. Accounting professionals in particular must engage in continuous professional development. The Corporate and Trust Service Providers Act regulates Barbadian financial service providers. Failure to adhere to these laws and regulations may result in revocation of the business license and/or cancellation of work permit(s). The most recent Caribbean Financial Action Task Force (CFATF) Mutual Evaluation assessment found Barbados to be largely compliant.
The Office of the Ombudsman is established by the constitution to guard against abuses of power by government officers in the performance of their duties. The Office of the Ombudsman aims to provide quality service in an impartial and expeditious manner when investigating complaints by Barbadian nationals or residents who consider the conduct of a government body or official unreasonable, improper, inadequate, or unjust.
The Office of the Auditor General is also established by the constitution and is regulated by the Financial Administration and Audit Act. The Auditor General is responsible for the audit and inspection of all public accounts of the Supreme Court, the Senate, the House of Assembly, all government ministries, government departments, government-controlled entities, and statutory bodies. The Office of the Auditor General’s annual reports can be found on the parliament of Barbados website.
International Regulatory Considerations
The OECD recognized Barbados as largely compliant with international regulatory standards. Barbados is a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, the Multilateral Competent Authority Agreement, and the Multilateral Convention to Implement Tax Treaty Related Matters to Prevent Base Erosion and Profit Shifting.
The Barbados National Standards Institution (BNSI) was established in 1973 as a joint venture between the government of Barbados and the private sector. It oversees a laboratory complex housing metrology, textile, engineering, and chemistry/microbiology laboratories. The primary functions of the BNSI include the preparation, promotion, and implementation of standards in all sectors of the economy, including the promotion of quality systems, quality control, and certification. The Standards Act (2006) and the Weights and Measures Act (1977) and Regulations (1985) govern the work of the BNSI. As a signatory to the World Trade Organization (WTO) Agreement on the Technical Barriers to Trade, Barbados, through the BNSI, is obligated to harmonize all national standards to international norms to avoid creating technical barriers to trade.
Barbados ratified the WTO Trade Facilitation Agreement (TFA) in 2018. With full implementation, the Agreement improves the speed and efficiency of border procedures, facilitates trade costs reduction, and enhances participation in the global value chain. Barbados has implemented the Automated System for Customs Data (ASYCUDA).
Legal System and Judicial Independence
Barbados’ legal system is based on the British common law. Modern corporate law is modeled on the Canada Business Corporations Act. The Attorney General, the Chief Justice, junior judges, and magistrates administer justice in Barbados. The Supreme Court consists of the Court of Appeal and the High Court. Parties may appeal to the Court of Appeal. The High Court hears criminal and civil (commercial) matters and makes determinations on the interpretation of the constitution.
The Caribbean Court of Justice (CCJ) is the regional judicial tribunal. The CCJ has original jurisdiction to interpret and apply the RTC. In 2005, Barbados became a full member of the CCJ, making the body its final court of appeal and original jurisdiction of the RTC.
The United States and Barbados are both parties to the 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.
Laws and Regulations on Foreign Direct Investment
Invest Barbados’ foreign direct investment policy is to promote Barbados as a desirable investment location, to provide advice, and to assist prospective investors. The main laws concerning investment in Barbados are the Barbados International Business Promotion Act (2005), the Tourism Development Act (2005), and the Companies Act. There is also a framework of legislation that supports the jurisdiction as a global hub for business including insurance, ships’ registration, and wealth management.
All proposals for investment concessions are reviewed by Invest Barbados to ensure proposed projects are consistent with the national interest and provide economic benefits to the country.
Invest Barbados provides complimentary “one-stop shop” facilitation services to investors to guide them through the investment process. It offers a website useful for navigating the laws, rules, procedures, and registration requirements for foreign investors. This is available at http://www.investbarbados.org .
Competition and Anti-Trust Laws
Chapter 8 of the RTC outlines the competition policy applicable to 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 (CCC) applies the rules of competition. The CARICOM competition policy addresses anticompetitive 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 codified the establishment of the Barbados Fair Trading Commission (FTC) in 2001. The FTC is responsible for the promotion and maintenance of fair competition and participates in the CCC. The FTC regulates the principles, rates, and standards of service for public utilities and other regulated service providers. The Telecommunications Act regulates competition in the telecommunications field.
Expropriation and Compensation
The Barbados constitution and the Companies Act (Chap. 308) contain provisions permitting the government to acquire property for public use upon prompt payment of compensation at fair market value. U.S. Embassy Bridgetown is not aware of any outstanding expropriation claims or nationalization of foreign enterprises in Barbados.
ICSID Convention and New York Convention
The government of Barbados wrote the New York Convention’s provisions into domestic law, but did not ratify the convention. The 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, are the main laws governing dispute settlement in Barbados.
Barbados is also a member of the International Center for the Settlement of Investment Disputes (ICSID), also known as the Washington Convention. Individual agreements between Barbados and multilateral lending agencies also have provisions calling on Barbados officials to accept recourse to binding international arbitration to resolve investment disputes between foreign investors and the state.
Investor-State Dispute Settlement
The Barbados Arbitration Act (1976) and the Foreign Arbitral Awards Act (1980) provide for arbitration of investment disputes. Barbados does not have a Bilateral Trade Treaty or a Free Trade Agreement with an investment chapter with the United States. U.S. Embassy Bridgetown is not aware of any current investment disputes in Barbados.
Barbados ranks 170 out of 190 countries in enforcing contracts according to the 2019 World Bank Doing Business Report. Dispute resolution in Barbados generally takes an average of 1,340 days. The slow court system and bureaucracy are widely seen as the main hindrances to timely resolution of commercial disputes. Through the Arbitration Act of 1976, local courts recognize and enforce foreign arbitral awards issued against the government. Barbados does not have recent cases of investment disputes involving either U.S. or foreign investors.
International Commercial Arbitration and Foreign Courts
The Supreme Court of Barbados is the domestic arbitration body. Local courts enforce foreign arbitral awards.
Under the Bankruptcy and Insolvency Act (2002), Barbados has a bankruptcy framework that recognizes certain debtor and creditor rights. The Act gives a potentially bankrupt company three options: bankruptcy (voluntary or involuntary), receivership, or reorganization of the company. The Companies Act provides for the insolvency and/or liquidation of a company incorporated under this Act. Barbados was ranked 34 out of 190 countries in resolving insolvency in the 2019 World Bank Doing Business Report.
The law provides criminal penalties for official corruption, and the government generally implemented these laws effectively. Barbados signed but did not yet ratify the United Nations Convention on Corruption and the Inter-American Convention against Corruption.
In 2012, Barbados enacted the Prevention of Corruption Act (2010), which includes standards of integrity in public life. The Integrity in Public Life Bill 2018 is pending in parliament. This Bill seeks to establish an integrity commission, to promote the integrity of government officials, and strengthen measures for the prevention, detection, investigation, and prosecution of acts of corruption.
Barbados is a member of the regional Association of Integrity Commissions and Anti-Corruption Bodies in the Commonwealth Caribbean.
Resources to Report Corruption
The Director, Financial Intelligence Unit
P.O. Box 1372, Bridgetown
The Chairman, Anti-Money Laundering Authority
P.O. Box 1372, Bridgetown
10. Political and Security Environment
Barbados does not have a recent history of politically motivated violence or civil unrest.