International Business: Offshore Banking

International banking and financial houses have been attracted to Barbados as a result of its tax incentives, the high quality of professional services and the reputation of Barbados as a reputable Offshore Banking Center.

In order to establish an offshore bank in Barbados, details of the proposed bank must first be submitted to the Central Bank of Barbados for approval. Approval must be sought from the Ministry of Finance prior to the incorporation of a company. A company must have a licence before engaging in the offshore banking business. Applications for a licence are submitted to the Central Bank who may issue the licence, subject to the approval of the Minister of Finance. A licence to operate is issued only to qualified foreign bank's and eligible companies. Licences are under the overall control and oversight of the Central Bank of Barbados. Offshore Banks are subject to audit, an annual licence of US$12,500 and income tax on a sliding scale of 2.5% - 1%.

The Offshore Banking Act provides that dividends, royalties, interest, foreign securities funds, gains and assets generated or managed by a licensee are automatically exempt from the provisions of the Exchange Control Act.

Summary of benefits

Tax at the rate of 1% (on profits over US$15 million), up to 2.5% (profits up to US$5 Million)
No direct tax or capital gains
No withholding tax
No exchange control