Barbados has evolved into a reputable jurisdiction for international business, particularly favored by Canadian investors due to the advantages of the Canada–Barbados Double Taxation Agreement. In recent years, however, the island nation has implemented extensive legislative reforms to meet global standards set by the OECD and European Union. These reforms aimed to eliminate preferential tax regimes once deemed harmful, reshaping the business environment and increasing compliance with international tax transparency and fairness.

A pivotal shift was the repeal of the International Business Companies (IBC) Act and the amendment of the Societies with Restricted Liability Act. As a result, since October 17, 2017, new IBCs and ISRLs are incorporated under the standard Companies Act and are taxed as regular domestic entities. Pre-existing companies were given a transition period, ending June 30, 2021, to align with the updated framework.

In support of international business, Barbados introduced the Foreign Currency Permits Act in 2018. Companies earning all their income in foreign currency can apply for a Foreign Currency Permit (FCP), exempting them from local exchange controls and facilitating smoother cross-border operations.

Today, company formation in Barbados is governed by the Companies Act, with limited companies being the most common structure. These entities operate on a share-based model, where ownership, profit rights, and voting power are determined by the number and class of shares held. Management is overseen by a Board of Directors, appointed by shareholders, and directors can be individuals or corporate entities of any nationality, with no residency or physical presence required.

Barbados offers a simple and efficient incorporation process. A company can be formed with just one shareholder and one director, and there is no minimum capital requirement. Shares can be issued with or without par value, and capital does not need to be deposited during formation, offering flexibility to investors. Full foreign ownership and control are permitted, making the jurisdiction especially appealing for global entrepreneurs.

Corporate taxation has also undergone a major overhaul. Since January 1, 2019, all companies—excluding those grandfathered under the old regime—are subject to a unified tax system. This progressive structure ranges from 5.5% on income under BBD 1 million to as low as 1% for income exceeding BBD 30 million, replacing the previous dual system where IBCs enjoyed preferential rates.

To further align with international standards, Barbados has enacted economic substance rules through the Business Companies (Economic Substance) Act. Companies engaged in certain activities must demonstrate real economic activity within Barbados, including having staff, physical offices, local expenditures, and strategic control within the jurisdiction.

Despite these reforms, Barbados remains a strategic hub for international operations, supported by a robust legal framework, tax treaty network, and efficient incorporation timeline of approximately 2 to 3 weeks. This includes name approval, preparation of corporate documents, and issuance of the Certificate of Incorporation. For companies operating in foreign currency, the Foreign Currency Permit can be obtained alongside bank account setup, ensuring a streamlined and business-friendly start.

The full corporate document package provided upon incorporation includes:

• Certificate of Incorporation
• Articles of Incorporation
• Notice of Address
• Notice of Directors
• Bylaws
• Resolutions of the Shareholders
• Resolutions of the Directors
• Register of Beneficial Owners
• Register of Directors
• Share Ledger
• Foreign Currency Permit

Learn more about companies in Barbados:

• Barbados Company Taxation & Legal Structure Report

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