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International Business: Foreign Sales Companies (FSC)

A FSC is a foreign corporation established in an approved location by a U.S. export oriented corporation and which allows US exporters to permanently exempt a portion of their profits derived from export sales from US taxes.

Barbados qualified as one of the first jurisdictions for Foreign Sales Corporations following the conclusion of an exchange of information agreement between Barbados and the United States of America. The FSC must meet certain United States requirements in order to qualify in the United States.

The FSC must meet certain conditions:

  • Be designated as an FSC in the USA
  • Be incorporated in Barbados
  • Be engaged in foreign trade transactions as its principal objective and activity
  • Ensure that its shareholders are not residents of Barbados or any other CARICOM country.

These requirements are not difficult to establish and Barbados has the infrastructure and the legislation that has made it a very attractive place to establish a FSC.

Barbados provides the following advantages for a FSC location:

  • Exemption from all taxes on income and all withholding taxes.
  • Exemption from property transfer tax on sale or transfer of shares.
  • No requirement to file tax retums, annual registry returns or to publish financial information.
  • Exemption from exchange control.
  • Annual fees of Bds$2,000(US$1,000) and Bds$1,000(US$500) for a regular, large and small FSC respectively.
  • Bearer shares are not permitted.

After incorporation or registration, an FSC licence must obtain a license from the Ministry of Economic Development.
 

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