At the beginning of the 1980s, the Barbados government made a policy determination that despite the country’s small size, it could leverage its international reputation for strong democratic traditions, prudent economic management, excellent quality of life and a 98% literacy rate to turn this Caribbean tourism gem into an international business centre of choice.
Although tourism continues to provide the main source of foreign exchange, economic activity and employment, Barbados is home to more than 7000 international business entities, ranging from information technology to financial services, and the outlook is promising as international investment continues to increase. The country also is popular with small and medium-sized corporations looking to outsource or expand.
International outlook
The government’s pro-international business stance has done much to advance the development of the country’s business scene. Government officials realised that in order for Barbados to become a premier international business jurisdiction in an increasingly competitive global environment, it would have to distinguish itself by international business service excellence. Special attention was given to the demands of the global economy for high standards of efficiency, creativity, confidentiality and corporate governance.
In structuring its international business regime, Barbados drew widely from international best practices, nurturing a business climate characterised by the pursuit of excellence in every area of its services delivery. This drive for excellence can be found in its international corporate legislation; the marketing of the Barbados business brand; the targeted niche markets that it pursues; and the high value-added services that it delivers to international business.
Barbados’ transition to a service-driven economy and a premier international business hub has been built on a programme of progressively upgrading its corporate legislation to keep pace with international business trends. Some of the new and re-engineered pieces of legislation implemented to provide flexibility, creativity and responsiveness to the needs of the international investor are:
- the Barbados Companies Act, patterned on the Canadian model;
- the International Business Company Act (IBC);
- the International Insurance Act; the Society with Restricted Liability (SRL); and
- the Qualifying Insurance Company Act (QIC).
In this process, Barbados has branded and marketed itself as an intelligent and active business centre offering mind, management and marketing capabilities. It also structured itself as an efficient tax jurisdiction that attracted active businesses that could derive considerable capital maximisation and value added from the Barbados business option, so would have no difficulties meeting minimum tax requirements, either under the Barbados regime or that of their respective governments.
Considerable effect was brought to the goals of developing Barbados as a respectable jurisdiction, characterised by principles of high integrity and transparency through the implementation of a mix of policies, comprising a strong regulatory framework, generous tax and non-tax concessions, and a growing international tax treaty network.
Sound regulations
Prime minister Owen Arthur, describing the impact of these policy decisions, says: “Barbados stands out as a sophisticated jurisdiction with a stable political and socio-economic climate, as well as a sound regulatory framework for domestic and offshore services. We have always instituted appropriate incentives and legislation to promote the country’s competitiveness as an international business centre.”
A major attraction of Barbados as an attractive international business domicile is the excellent network of double taxation treaties that it has negotiated with contracting countries across the globe. These treaties give investors certainty and confidence, particularly regarding tax rates paid, royalties and dividends. They also include dispute settlement mechanisms and provisions for exchange of information between contracting parties.
These provisions promote global economic stability and good corporate governance as companies pursue international business competitiveness. Barbados has recently negotiated the Second Protocol to the US/Barbados Tax Treaty and also has treaty status with Canada, the UK, Norway, Sweden, Finland, Switzerland, China, Malta and Venezuela.
Trevor Carmichael attorney and international business law expert, says: “Treaty expansion and effective treaty negotiations represent one of the better opportunities for Barbados to ensure its place in the first world of international centres. For a tax treaty jurisdiction it affords the opportunities not only to conform with the new international regulating ethos, but it also provides for a genuine ability to pursue creative and lawful multi-jurisdictional planning strategies.”
Barbados also has placed considerable emphasis on upgrading its technical capacity and leveraging its skills base to enhance its international service offerings. Marion Williams, governor of the Central Bank of Barbados, says of the country’s technical capability: “Our skilled financial professionals and other knowledge workers in the financial industry are of a sufficient calibre to push the level of operation of a financial service sector to a level comparable with that of New York City or London. We have already taken steps to ensure our payment system is comparable with that in the developed world.”
Barbados also has instituted comprehensive e-commerce legislation to enhance business activity, while ensuring privacy, intellectual property rights, security and digital flexibility.
In the government’s thrust to position Barbados as an international services provider it has recognised the vital importance of a robust and cost-efficient telecommunication infrastructure and has deregulated the Barbados telecoms system. This attracted international participants such as Digicel, AT&T and Antilles Crossing, alongside the traditional telecom carrier, Cable & Wireless.
Expanded services
The infusion of new players in the system has already resulted in significant cost reduction as well as more choice and a range of new services for local and international consumers. This process should bring an expanded range of broadband options to call centres, informational technology companies and international financial service companies. Barbados has attracted a growing base of local and international information and financial services companies. The information services sector provides a range of companies capable of offering a variety of business solutions. Companies are providing call centre activities, credit card-processing services, insurance claims processing and financial data capture services, and a range of software development services.
The financial services sector comprises a range of international commercial banks, international insurance companies, offshore trust structures and international management and marketing companies. Barbados has even begun to attract investment from neighbouring regional economies such as Trinidad and Tobago and Bermuda, particularly in the commercial banking, insurance and risk management sectors.
Barbados is regarded as the ideal international business centre. It is perhaps the one jurisdiction to offer such a diverse range of business options in a single location, and has truly emerged as the Caribbean’s hub for international business.
This article was contributed by the Barbados Investment and Development Corporation. (www.bidc.org)
