Barbados Seychelles Tax Treaty
The Barbados Seychelles Tax Treaty brings together two of the world’s leading low tax jurisdictions from across the globe.
Barbados is a leading low tax jurisdiction in the Caribbean and in the Americas while Seychelles is a key financial hub in the Indian Ocean. Both nations have large tax treaty networks and both are actively expanding their networks to benefit international business entities. The Barbados Seychelles Tax Treaty creates opportunities for parties in both jurisdictions as it grants access to additional jurisdictions through the treaty partner’s respective network.
Barbados Seychelles Double Taxation Agreement
Double Taxation Agreements (DTAs) are established to prevent double taxation between partner countries with the goal of minimizing the international tax burden on companies and investors operating internationally. By utilizing the DTA, the home country will allow the tax payable in the foreign partner country to be deducted at home as a tax credit. This process reduces the international tax payable and prevents the same profits from being subjected to undue taxation.
Double Taxation Agreements also establish the maximum withholding taxes that can be charged by the partner countries.
The Barbados Seychelles Tax Treaty applies withholding taxes as follows:
• Dividends: The maximum withholding tax charged shall not exceed 5%.
• Interest: The maximum withholding tax charged shall not exceed 5%.
• Royalties: The maximum withholding tax charged shall not exceed 5%.
Double taxation is avoided as follows:
• Tax payable in Seychelles, whether directly or by deduction, on profits or income from sources within Seychelles 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 Seychelles to a company that is a resident of Barbados and which holds directly at least 10% of the capital of the company paying the dividend, the credit shall take into account the Seychelles tax payable in respect of the profits out of which such dividend is paid.
• Where a resident of Seychelles derives income from Barbados, the Barbados tax payable may be credited against the Seychelles tax imposed on that resident.
Barbados Low Tax Rates
Barbados international companies qualify for very low tax rates. The tax rates for International Business Companies, Societies with Restricted Liability and International Banks begin at 2.5% and are reduced on a sliding scale down to 0.5%. Furthermore, trusts are tax exempt.
There are no withholding taxes on dividends, interest and royalties. Capital gains are also tax exempt.
Barbados International Company Structures
Barbados offers a number of low tax international company structures.
Tax Treaty Networks Create Opportunities
Barbados’ tax treaty network has over 30 treaty partners, creating opportunities for businesses and investors alike. Barbados’ tax network makes the island a leading business hub in the Americas while Seychelles plays a similar leading role in the Indian Ocean.
The Barbados Seychelles Tax Treaty is another positive step for both nations in expanding their reach and improving business opportunities worldwide. Businesses and investors in both countries benefit from easy access to the partner country’s sphere of influence on the opposite side of the globe, making both nations more competitive internationally.