Barbados

Executive Summary

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  Some Acts were repealed or amended, while others were newly enacted.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

Measure Year Index/Rank Website Address
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 

Lithuania

Executive Summary

Lithuania is strategically situated at the crossroads of Europe and Eurasia.  It offers investors a diversified economy, EU rules and norms, a well-educated multilingual workforce, advanced IT infrastructure, low inflation, and a stable democratic government.  The Lithuanian economy has been growing steadily since the 2009 economic crisis. The country joined the Eurozone in January 2015, and completed the accession process for the Organization for Economic Cooperation and Development (OECD) in May 2018.  Lithuania’s income levels are lower than in most of the EU, with per capita GDP (at purchasing power parity) of approximately 45.8 percent of the EU average. According to preliminary data from the Lithuanian Statistics Department, at the end of 2018, the United States was Lithuania’s 15th largest investor, with cumulative investments totaling USD 337.9 million (1.8 percent of total FDI).

Following its election at the end of 2016, the current Lithuanian government focused on lowering barriers to investment, partnering with the private sector, and offering financial incentives for investors.  In 2013, the government passed legislation which streamlined land-use planning, saving investors both time and money, and in July 2017, the government introduced the new Labor Code which is believed to better balance the interests of both employees and employers.

The government provides equal treatment to foreign and domestic investors, and sets few limitations on their activities.  Foreign investors have the right to repatriate or reinvest profits without restriction, and can bring disputes to the International Center for the Settlement of Investment Disputes.  Lithuania offers special incentives, such as tax concessions, to both small companies and strategic investors. Incentives are also available in seven Special Economic Zones located throughout the country.

U.S. executives report burdensome procedures to obtain business and residence permits, as well as some instances of low-level corruption in government.  Transportation barriers, especially insufficient air links with European cities, remain a hindrance to investment, as does the lack of access to open, transparent information on tax collection and government procurement.  Energy costs in Lithuania are declining as a result of energy source diversification upgrades and lower global oil prices.

Lithuania offers many investment opportunities in most of its economy sectors.  The sectors which attracted most investment include Information and Communication Technology, Biotech, Metal Processing, Machinery and Electrical Equipment, Plastics, Furniture, Wood Processing and Paper Industry, Textiles and Clothing.  Lithuania also offers opportunities for investment in the growing sectors of Real Estate and Construction, Business Process Outsourcing (BPO), Shared Services, Financial Technologies, Biotech, and Lasers.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 38 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 14 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 40 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2018 $154 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2018 $15,200 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 
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