Barbados Mexico Tax Treaty
The Barbados Mexico Tax Treaty creates promising opportunities for business and investment between the two countries and internationally.
The Barbados Mexico Double Taxation Agreement (DTA) was signed on April 7th, 2008 and came into full effect on January 1st, 2010.
The Prime Minister of Barbados, David Thompson, signed the DTA along with Mexico’s Minister of Finance and Public Credit, Augustin Guillermo Cartens.
“The Government of Barbados is optimistic that investors will take advantage of the opportunities offered by this agreement, not only to increase their competitiveness through the reduction of the tax burden associated with cross-border trade but more importantly, to enjoy benefits of the facilitated access to both Latin American and CARICOM markets,” Thompson said. “It is only in doing so that the significance, and hopefully impact of this agreement will extend beyond both of our national boundaries to impact an entire hemisphere.”
Barbados Mexico Double Taxation Agreement Details
The Barbados Mexico Tax Treaty applies withholding taxes as follows:
• Dividends: The withholding tax charged shall not exceed 5% if the beneficial owner is a company which owns at least 10% of the capital of the company paying the dividends. In all other cases, the maximum withholding tax is 10%.
• Interest: The withholding tax charged shall not exceed 10%.
• Royalties: The withholding tax charged shall not exceed 10%.
Double taxation is avoided as follows:
• Tax payable in Mexico on profits or income from sources within Mexico shall be allowed as a credit against any Barbados tax computed by reference to the same profits or income.
• In the case of a dividend paid by a company that is a resident of Mexico to a company that is a resident of Barbados and which owns at least 10% of the capital of the company paying the dividend, the credit shall take into account the Mexican tax payable in respect of the profits out of which such dividend is paid.
• Tax payable in Barbados on income arising in Barbados shall be allowed as a credit against the Mexican tax payable.
• In the case of a dividend paid by a Barbados company to a company that is a resident of Mexico and which owns at least 10% of the capital of the company paying the dividend, the credit shall take into account the Barbadian tax payable by the distributing company in respect of the profits out of which such dividend is paid.
Barbados Company Types
Barbados offers a variety of tax efficient international business vehicles that Mexican investors can use in order to receive tax relief and asset protection.
These Barbados company types include:
Barbados Tax Rates
Barbados companies benefit from very competitive international tax rates. The tax rates for IBCs, SRLs and international banks start at 2.5% and are reduced on a sliding scale to 0.5%. Trusts are tax exempt.
There are no withholding taxes on dividends, interest and royalties. In addition, capital gains are exempt from taxation.
Barbados Tax Treaty Network Benefits
The Barbados Mexico Tax Treaty gives Mexican residents access to Barbados’ large tax treaty network with over 30 partner countries. This means that Mexican companies can use Barbados as a tax efficient gateway to the world for business, trade and investment.
For example, a Mexican company can setup a Barbados company in order to use the Barbados China Tax Treaty to minimize the international tax burden on business and trade in China. The company would also benefit from the protections offered through the Barbados China Bilateral Investment Treaty upon entering China.
The Barbados treaty network offers access to foreign markets, low tax rates and asset protection to investors that choose to register a Barbados company to serve as a hub for international business.
Register a Barbados Company Today
Mexican companies that wish to expand internationally can benefit from the Barbados Mexico Tax Treaty by registering a Barbados offshore company.
The Barbados Offshore Advisor can serve as a useful point of contact in Barbados, offering free assistance to Mexican companies that wish to setup a Barbados company. In addition, the Advisor provides world class management and accounting services to Barbados offshore companies.