Barbados is the largest economy in the Eastern Caribbean. Barbados’ Gross Domestic Product (GDP) was USD 5.03 billion in 2018. 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. While the government met its IMF targets, the program dampened income and spending power due to public sector layoffs, the introduction of new indirect taxes, and a decline in the construction sector. The coronavirus pandemic has reduced the gains that were expected to strengthen Barbados’ economic position in the near term. The impact of the pandemic on tourism, a mainstay of Barbados’ economy which generates almost 40 percent of GDP, has had ripple effects across the economy. The IMF agreed to reduce Barbados’ primary surplus targets and to augment its Extended Fund Facility.
Barbados ranks 128th out of 190 countries rated in the 2020 World Bank Doing Business Report. The report highlights some positive changes in getting electricity, trading across borders, and enforcing contracts but highlights that registering property has become more difficult.
The services sector continues to hold the largest potential for growth, especially in the areas of international financial services, 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 agroprocessing and alternative and renewable energy. Uncertainty about the recovery prospects of the tourism, commercial aviation, and the cruise industry impacts the potential for projects in those sectors.
Barbados recently revised its tax regime to harmonize its domestic and international tax rates. This was in response to an Organization for Economic Cooperation and Development (OECD) initiative that addressed harmful tax practices. Some acts were repealed or amended, and some new measures were introduced. 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.
|TI Corruption Perceptions Index||2019||30 of 175||http://www.transparency.org/
|World Bank’s Doing Business Report||2019||128 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2019||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country (M USD, historical stock positions)||2018||20,368||http://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita (M USD)||2018||15,410||http://data.worldbank.org/
2. Bilateral Investment Agreements and Taxation Treaties
Barbados does not have a bilateral investment treaty with the United States, but it does have a double taxation treaty and a tax information exchange agreement. Barbados has bilateral investment treaties with Canada, China, Cuba, Germany, Italy, Mauritius, Switzerland, the United Kingdom, and Venezuela. In addition to the United States, Barbados also has tax information exchange agreements with Denmark, the Faroe Islands, Greenland, and South Africa. Bilateral investment treaties with Belgium-Luxembourg and Ghana are awaiting ratification. Barbados has a vast double taxation agreement network of 40 countries including Spain, Italy, the United Kingdom, Bahrain, Qatar, the United Arab Emirates, Singapore, China, Austria, Iceland, San Marino, Mexico, Panama, and Canada, with others awaiting ratification or signature. Additional information is available from Invest Barbados. Barbados is also party to the following:
Caribbean Community (CARICOM)
The Treaty of Chaguaramas established the CARICOM in 1973. Its purpose is to promote economic integration among its 15 member states. Investors operating in Barbados have preferential access to the entire CARICOM market. The Revised Treaty of Chaguaramas (RTC) establishes the CSME, which permits the free movement of goods, capital, and labor among CARICOM states. CARICOM has bilateral agreements with Cuba, Colombia, Costa Rica, the Dominican Republic, and Venezuela. In 2013, CARICOM entered into a Trade and Investment Framework Agreement with the United States.
CARIFORUM-EU Economic Partnership Agreement (EPA)
The Caribbean Forum of African, Caribbean and Pacific States (CARIFORUM) and the European Community signed an EPA in 2008. The overarching objectives of the EPA are to alleviate poverty, promote regional integration and economic cooperation, and foster the gradual integration of the CARIFORUM states into the world economy by improving 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 the protection of personal data.
Caribbean Basin Initiative
The Caribbean Basin Initiative facilitates the economic development and export diversification of the Caribbean Basin economies. It promotes economic development through private sector initiatives in Central America and the Caribbean by expanding foreign and domestic investment in non-traditional sectors, diversifying country economies, and expanding their exports. The Caribbean Basin Initiative provides beneficiary countries with duty-free access to the U.S. market for most goods. It permits duty-free entry of products manufactured or assembled in Barbados into 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 originating in Commonwealth Caribbean countries.
3. Legal Regime
Transparency of the Regulatory System
Barbados’ legal framework fosters competition and establishes clear rules for foreign and domestic investors regarding 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 transparency of investment.
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 – The Central Bank of Barbados (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. The Official Gazette is also available on the BGIS website.
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, International Standards on Auditing, and International Public Sector Accounting Standards 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 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) 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. In November 2019, the government revealed plans to upgrade its governance structure and laboratory systems to bring it in line with international testing and certification standards. 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 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. In 2019, Barbados implemented the Automated System for Customs Data which streamlined document compliance and inspections by port authorities. However, the government increased the issuance fees for certificates of origin which has made trade more expensive. In the 2020 World Bank Doing Business report, Barbados is ranked 132nd out of 190 countries for trading across borders.
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 Revised Treaty of Chaguaramus (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: 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 170th out of 190 countries in enforcing contracts according to the 2020 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. In 2019, the Supreme Court of Judicature Act was amended to include the establishment of a commercial division in the High Court which will oversee proceedings regarding arbitration. 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. In 2019, two new court protocols in the Supreme and Magistrate courts were introduced for alternative dispute mechanisms in mediation and arbitration to be available to judges and attorneys to remedy civil matters. The law courts also increased the number of mediators and mandatory training.
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. In 2019, the Supreme Court of Judicature Act was amended to include the establishment of a commercial division in the High Court which will oversee proceedings connected to bankruptcy and insolvency. Barbados ranked 35th out of 190 countries in resolving insolvency in the 2019 World Bank Doing Business Report. The bankruptcy resolution process takes about 15 percent of the estate costs within 1.8 years.
5. Protection of Property Rights
There are no restrictions on foreign ownership of property in Barbados. Foreign investors and locals are treated equally regarding property taxes. Civil law protects physical property and mortgage claims. The CBB must verify real property purchases for non-residents. If a non-resident uses foreign funds and pays for the property in Barbados, the CBB will normally endorse the transaction. The sale of property is subject to a 2.5 percent property transfer tax in addition to a 1 percent stamp duty. Brokerage and legal fees are not included in those levies. Buyers should seek the advice of a local attorney when purchasing property.
With respect to commercial, industrial, hotel and villa properties, the applicable rate of land tax is 0.65 percent on the improved value of the property. Holders of a certificate from the Barbados Tourism Authority enjoy rebate of 50 percent for hotels and 25 percent for villas. The Commissioner of Land Tax charges an annual fee based on the assessed property value on residential property as follows:
- 0% on the first USD 75,000
- 10% on amounts between USD 75,001 and USD 225,000
- 70% on amounts between USD 225,000 and USD 425,000
- 1% on excess of USD 425,000
- 8% on vacant land under 4,000 sq. ft.
- 0% on vacant land over 4,000 sq. ft.
Barbados ranks 118th of 190 countries in ease of registering property in the 2020 World Bank Doing Business Report. It takes approximately 50 days to complete seven procedures and the cost is about 4.5 percent of the property value. The government has included an additional procedure that has increased the time to record the conveyance at the Land Registry and to pay transfer fees and stamp duties. This has made transferring property more onerous.
Intellectual Property Rights
Barbados has a good legislative framework governing intellectual property rights (IPR), but enforcement need improvement. Barbados is a member of the World Intellectual Property Organization (WIPO) and is party to the Berne Convention, the Paris Convention, the Nice Agreementand others.a The government of Barbados adopted a new Copyright Act in 1998 and amended it in 2004 to provide tougher penalties. In the early 2000s, Barbados also approved legislation covering integrated circuits topography, geographical indications, and protection against unfair competition. In addition, Barbados revised its Trademark and Industrial Designs Acts to meet international standards.
Article 66 of the Revised Treaty of Chaguaramas (2001) establishing the CSME commits all 15 members to implement stronger intellectual property rights protection and enforcement. The CARIFORUM-EU EPA contains the most detailed obligations regarding intellectual property in any trade agreement to which Barbados is a party. The EPA provides for the protection and enforcement of IPR. 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).”
Barbados remains on the Office of the United States Trade Representative (USTR) Special 301 Report Watch List in 2020. Barbados acceded to the WIPO Internet Treaties in December 2019 but has not proposed IPR legislation to implement its treaty obligations. It is also not clear that there is a strong commitment to enforce existing legislation. In the realm of copyright and related rights, continuing concerns include the unauthorized retransmission of U.S. broadcasts and cable programming by local cable operators in Barbados, including state-owned broadcasters, without adequate compensation to U.S. right holders, and the refusal of Barbadian TV and radio broadcasters and cable and satellite operators to pay for public performances of music. The longstanding failure to enforce judgments and other successful outcomes for right holders and the resulting lack of deterrence are additional sources of concern.
It is the responsibility of the importer to pay for and destroy counterfeit goods. Failure to observe certain standards regarding the importation of goods may result in a recommendation to the Comptroller of Barbados’ Customs and Excise Department to have the goods destroyed. If the goods fall under Ministry of Health’s jurisdiction, they are destroyed under that ministry’s guidance. If the goods are prohibited and do not pertain to the Ministry of Health, the Customs and Excise Department will destroy them as 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. Barbados is not on the Notorious Markets List.
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/ .
10. Political and Security Environment
Barbados does not have a recent history of politically motivated violence or civil unrest.