Barbados

Barbados has long held a prominent position as a destination for international business formation, particularly favored by Canadian investors due to the benefits available under the Canada–Barbados Double Taxation Agreement (DTA). However, in recent years, the jurisdiction has undergone significant legislative reforms in response to international pressures, notably from the OECD and the European Union, to eliminate what were deemed harmful preferential tax regimes. These reforms have reshaped Barbados’s corporate landscape, aligning it more closely with global transparency and fair taxation standards.

One of the most substantial changes was the repeal of the International Business Companies (IBC) Act, which previously governed entities that primarily served non-resident clients with preferential tax rates. Similarly, the Societies with Restricted Liability Act was amended to eliminate advantages granted to International Societies with Restricted Liability (ISRLs). As of October 17, 2017, newly licensed IBCs and ISRLs have been treated as regular Barbados companies under the Comapnies Act, subject to the domestic corporate tax regime. Entities that were incorporated before this date were granted a grandfathering period until June 30, 2021, after which they too were required to transition into the Companies Act.

In line with its modernization efforts, Barbados introduced the Foreign Currency Permits Act, 2018, offering companies that earn 100% of their income in foreign currency the option to apply for a Foreign Currency Permit (FCP). This designation allows qualifying entities to operate outside the constraints of the Exchange Control Act, offering greater operational flexibility in foreign investment and cross-border transactions.

Companies in Barbados are now established under the provisions of the Companies Act, which serves as the primary legal framework for corporate formation and governance. The most common type of entity is a limited company, characterized by its share-based structure. Ownership in such companies is divided among shareholders according to the shares they subscribe to, which also determine their voting power and entitlement to profits, subject to the rights attached to each class of shares.

Barbados limited companies are administered in accordance with their Articles of Incorporation and corporate Bylaws, which outline the internal rules and governance structure. These companies are overseen by a Board of Directors, appointed by the shareholders. Directors may be individuals or corporate entities, and they hold the authority to represent and legally bind the company in contractual matters.

Incorporation is flexible and accessible: a Barbados company may be formed with just one shareholder and one director, and there are no residency requirements for either. Foreign nationals can fully own and manage a Barbados company without holding a local visa or needing to physically travel to the country. This makes Barbados a favorable jurisdiction for international entrepreneurs and investors seeking an efficient and business-friendly corporate setup.

From a capital standpoint, Barbados does not impose a minimum share capital requirement. A company may be established by issuing a single share, either with a par value (e.g., USD 1) or no par value, at any agreed subscription price. Importantly, the subscribed capital is not required to be deposited into a bank account at the time of incorporation, offering further simplicity and flexibility during the setup process.

The tax regime has also been substantially overhauled. As of January 1, 2019, all companies in Barbados (excluding those under the grandfathering provision) are subject to a unified corporate tax system, which applies a sliding scale based on income: 5.5% for taxable income under BBD 1 million, reducing progressively to 1% for taxable income exceeding BBD 30 million. This replaces the former regime where IBCs and ISRLs benefited from rates as low as 0.25%, while domestic companies were taxed at a flat 25%. The new structure levels the playing field and complies with global tax fairness initiatives.

Lastly, Barbados has implemented economic substance requirements through the Business Companies (Economic Substance) Act, 2018. Entities engaged in relevant activities—including financial and insurance services, fund management, intellectual property holding, shipping, and headquarters operations—must now demonstrate actual economic presence in Barbados. This includes conducting core income-generating activities locally, maintaining adequate staff and premises, incurring operational expenses within the jurisdiction, and ensuring effective control and management is exercised from within Barbados.

Despite these comprehensive reforms, Barbados remains a strategic and attractive jurisdiction for international businesses. Its companies are frequently used for export-oriented operations, such as manufacturing, packaging, brokering, and providing services to non-residents. With a stable political environment, an extensive treaty network, and a transparent yet competitive tax regime, Barbados continues to offer a viable and compliant platform for cross-border investment and global business structuring.

The incorporation process for a company in Barbados typically spans approximately 2 to 3 weeks from start to finish. The first step involves securing approval for the proposed company name, which usually takes about five business days from the Companies Registrar. Once the name is approved, the Articles of Incorporation are drafted and submitted—along with accompanying organizational documents such as corporate bylaws, shareholder and director resolutions, and statutory registers—a process that can be completed within 1 to 2 days.

Following submission, the Registrar generally issues the Certificate of Incorporation within four to five business days, officially recognizing the company as a legal entity under Barbadian law.

In addition, companies planning to operate in foreign currency will need to apply for a Foreign Currency Permit under the relevant legislation. While this permit typically takes 3 to 4 weeks to be processed, the application can be filed concurrently with the bank account opening process, allowing for streamlined setup without unnecessary delays.