International Business Company
A Barbados International Business Company (IBC) is the most common type of Barbados offshore company. The IBC provides a versatile vehicle for worldwide companies who want to headquarter their international operations on the island. Registering an IBC will benefit international operations since they have a low tax rate of 2.5% down to 0.5% of their income.
What is an International Business Company?
An International Business Company is licensed to conduct international manufacturing, trade and commerce activities.
International manufacturing includes:
• The business of making, processing, preparing or packaging within Barbados any product that is exclusively for export
International trade and commerce activities include a broad range of functions including:
• The business of being a broker, agent, dealer, seller, buyer or factor within Barbados of goods existing outside Barbados or of goods to be trans-shipped through or from Barbados
• The business of the selling of services which, if originating in Barbados, are to or for, or on account of, persons resident outside Barbados
• The business of providing from within Barbados a prescribed service for a company carrying on an international business
The wide variety of activities facilitated by an IBC mean that it meets the needs of most international businesses.
The IBC offers many benefits including:
• A very low tax rate from of 2.5% of income down to 0.5% depending on the income level in the table below:
Taxable Profits in US Dollars Tax Rate
Under $5 million 2.5%
$5 million to $10 million 2%
$10 million to $15 million 1.5%
Over $15 million 0.5% (2012), 0.25% (2013)
• Taxes paid outside of Barbados are eligible for a foreign tax credit to reduce taxes payable in Barbados, once it does not reduce total tax to less than the 0.5% minimum tax rate
• Capital gains are tax exempt
• There are no withholding taxes on dividends, interest, royalties and management fees paid to nonresidents
• Exempt from import duties and taxes on materials, machinery, plant and equipment intended for business use
• Exempt from exchange controls on foreign currency
• No minimum capital requirements
• Incorporation is easy and inexpensive
• Single shareholder companies are eligible
• Privacy is protected and there is no need to publicly file financial statements
• No investment restrictions
• Accounting records may be kept in foreign currencies
• All benefits and exemptions are guaranteed for a minimum of 15 years
There are a number of requirements and rules that an IBC must adhere to, including:
• Must be registered in Barbados with registered local address
• Annual license fee of US $425 required
• Filing of annual financial returns with audited statements required for companies with revenues and assets over US $1 million
• It must not conduct business trading goods and services nationally within Barbados
• It may not conduct business under other offshore incentive legislation
• Mind and management should be located at the Barbados office
The annual costs of running an IBC in Barbados are relatively low, especially considering the significant benefits received. Here is a list of estimated costs:
• Registration fee – US $425
• Incorporation costs/legal – Approximately US $1,500 to US $5,000
• Annual license fee – US $425
• Corporate secretary fee – US $2,500
• Annual audit fee – US $5,000
• Annual management/accounting fees – Approximately US $18,000 to US $50,000
The IBC: A Versatile Tax Vehicle
The IBC is the most popular and versatile Barbados offshore tax vehicle. Rightfully so, its wide-ranging functionality coupled with its many benefits, low costs and limited requirements mean that it is the ideal business structure for most international businesses to use.
It is the perfect structure for businesses involved in selling products and services worldwide, even if they are not manufactured in Barbados. Examples of the products, services and manufacturing operations that IBCs are used for include selling pharmaceuticals, software and oil, offering investment management services and financing, and the manufacture of clothing, contact lenses and much more. A Barbados IBC can also be used as a holding company for both intellectual property and for investments in foreign subsidiaries.
The low tax rates offered mean that establishing an IBC in Barbados will allow international businesses to be more competitive in today’s marketplace. Worldwide companies must now compete by lowering taxes in order to preserve profits and drive shareholder wealth. The Barbados International Business Company provides management with the perfect vehicle for this.