Dear Stakeholders
Public Consultation -Barbados Corporate Tax Reform 2024
The Government of Barbados is inviting all interested parties to provide written comments on the draft legislation implementing the 2024 Corporation Tax Reform
and in particular on the aspects identified below:
I. Draft Bill - Income Tax Act Amendment 2023
II. Draft Bill -Top Up Tax
As announced by the Prime Minister and Minister of Finance, the Honourable Mia Amor Mottley M.P. S.C. to the House of Assembly on November 7, 2023, the Government of Barbados is undertaking Corporate Tax Reform. The Reform aims to modernise the Corporate Income Tax and to align the Corporate Tax Framework with the OECD Inclusive Framework GloBE Rules.
The Government of Barbados is determined to ensure a conducive business environment for domestic and global businesses, which includes full compliance with international standards, appropriate levels of taxation and compatible tax incentives to foster growth and employment in the country.
Following the Ministerial Statement of November 7, 2023 two draft bills have been prepared. Aligned with international best practice, these are released for public comment until January 5, 2024. The Government of Barbados will carefully review the comments and draw on them as appropriate to improve the legislation which is expected to be adopted by the end of January, 2024.
The objective of the tax reform is to modernise the corporate tax system, to ensure that it is conducive to doing business in Barbados while ensuring full compliance with international tax standards. In particular, it provides for the following:
• Companies operating in Barbados will be subject to a new corporate income tax rate of 9%. Small business companies (below BBD$2M revenue) will remain subject to a lower rate of 5.5% and insurance companies will continue to be taxed at 0% or 2% depending on their classification.
• A Qualified Minimum Top-Up Tax is introduced to ensure that companies in scope ofthe new 15% Global Minimum Tax benefit from a qualified regime and a safe harbour.
• As a transition, existing rates (the 5.5% to 1% sliding scale) will apply to companies not subject to an Income Inclusion Rule in their headquarter country and to international shipping activities which are exempt from the Global Minimum Tax. Further consultation will take place on the future tax regime of these activities and therefore input on the future taxation regimes of international shipping and airline activities is also welcome.
• Tax credits: In order to foster economic activity and employment in Barbados, and in addition to existing allowances, new tax credits are proposed. They are designed to be compatible with the GloBE Rules (they will be qualified refundable tax credits). The Draft Legislation introduces: (i) a Jobs Credit, between 25% and 100% of eligible payroll expenses and (ii) a Research & Development Credit, of 50% of eligible expenses. The quantum of the Jobs Credit is lower than announced in the Ministerial Statement.
• Payment schedule: Barbados is also moving towards a monthly payment of corporate income tax for some businesses from January 1, 2024.
In addition to the tax reform, new measures will be announced in March 2024 to promote investment in Barbados, particularly in the field of sustainable investments, including in the blue and green economy, related to financing the fight against the climate crisis and new risk assurances.
The Government of Barbados looks forward to receiving your comments and to improving and ensuring that the legislation is fit for purpose. Technical drafting comments as well policy comments are welcome on all aspects of the draft bills to the extent they serve the policy purpose of improving doing business in Barbados, attracting more activities and jobs in full compliance with international tax standards.
We are inviting comments on the draft, which should be provided on or before January 5, 2024 in the comments section below or for persons submitting documents please email to
CorpTaxReform@barbados.gov.bb.
