Barbados Offshore Costs

The costs of registering and operating a Barbados offshore company are relatively low given the attractive incentives and financial benefits received by running an international operation from the island. With a low tax rate of only 2.5% or less, it is easy to see the potential for large savings by moving offshore.

Costs can vary widely depending on the Barbados offshore company type registered and the size of the operation being run from the island. The low cost of operations presents opportunities for even small international businesses to benefit from a Barbados office. They can hire an offshore management service company to run their operation at a low cost, saving the company the cost of hiring a full-time manager and staff. Management service companies can provide experienced management while keeping expenses in check.

Barbados Offshore Cost-Benefit Analysis

Once a company is making upwards of US $100,000 in profits from their international operations, the prospect of registering an international business becomes more and more attractive.

For this example, take a company with US $100,000 in profits and a 30% tax rate in their current country of residence. This company will have to spend US $30,000 in taxes annually.

If the company was registered in an offshore jurisdiction and paid only 2.5% in taxes, the same company would immediately save US $27,500 annually.

A small company like this would need to hire a management service provider at an estimated cost of US $18,000 annually and hire an auditor if revenues exceed US $1 million. Therefore, a small company of this size will save US $9,500 annually as it benefits greatly from a reduced tax rate. Additional savings are possible if moving the international arm of the business overseas means that further costs can be cut in the home country.

Companies with profits greater than US $100,000 receive further benefits as their tax savings become much larger and their associated costs of running the international company will only increase gradually. Moving offshore presents owners and shareholders with an opportunity to increase returns by minimizing the company’s international tax burden.

Offshore Costs by Company Type

The costs associated with registering an offshore company can vary depending on the type of company registered. Trading companies can incur small government fees and have low operating costs while others company types such as offshore banks can be relatively more expensive to run.

Please follow the link to learn more about the different Barbados offshore company types available, their benefits and uses.

Here is an analysis of the various costs by company types:

International Business Companies & Societies with Restricted Liability

International Business Companies (IBCs) and Societies with Restricted Liability (SRLs) have a similar cost structure. These two company types are the most common ones registered on the island. They provide versatile company structures able to conduct business in wide range of sectors involving international trade and commerce as well as international manufacturing.

The estimated annual costs for these businesses are relatively low:

Initial costs:

• Registration fee – US $425

• Incorporation costs /legal – Approximately US $1,500 to US $5,000

Annual costs:

• Annual license fee – US $425

• Corporate secretary fee – US $2,500

• Annual audit fee – US $5,000

• Annual management/accounting fees – Approximately US $12,000 to US $50,000

Offshore Insurance

Offshore insurance companies can take the form of Exempt Insurance Companies (EICs) and Qualifying Insurance Companies (QICs) that serve as company structures for captive insurance and international reinsurance needs.

Annual Costs:

• Government license fee: US $10,000

• Audit fees: US $15,000 to US $50,000

Offshore Banks

Offshore banks deal exclusively in foreign funds and conduct international transactions involving these funds.

Initial costs:

• Registration fee – US $390

• Government license – US $50,000 for banks accepting third party deposits

– US $25,000 for banks not accepting third party deposits

• Central Bank application/Legal cost/Incorporation – Approximately US $25,000

• Opening audit – Approximately US $2,000 to US $3,000

Annual costs:

• Annual license fee – US $50,000 for banks accepting third party deposits

– US $25,000 for banks not accepting third party deposits

• Annual audit fee* – US $15,000 to US $50,000

• Annual management, administrative and accounting fees* – US $36,000 to US $500,000

*Please note that fees can vary a great deal. Some banks are owned by one individual and conduct a small number of annual transactions. Whereas, third party banks may be large, serving many customers.

Barbados Offshore: Attractive Incentives, Affordable Costs

Barbados offshore companies benefit from a low tax rate that is protected by a legal and regulatory framework in association with an extensive tax treaty network. These many benefits are the result of the country being a very mature, well regulated international business jurisdiction. It has a reputation as a jurisdiction of substance and quality which greatly benefit the international businesses that use the island as a hub for their worldwide operations.

The costs of registering and operating a Barbados international business are relatively low when consideration is given to the significant tax savings available.