Offshore Banks

A Barbados Offshore Bank offers investors a secure, well regulated banking structure for conducting business in foreign funds. Many investors are attracted to the international banking sector on the island by the low tax rates that range from 2.5% down to 0.5% of taxable profits. In addition, there are no withholding taxes on dividends and interest, as well as no capital gains tax. The banks can also operate freely without any exchange controls in place on foreign currency transactions.

What is an Offshore Bank?

An offshore bank or international bank is distinguished from other banks in Barbados by dealing exclusively in foreign funds and by conducting transactions involving these funds.

It is described in detail by the International Financial Services Act as a bank in the business of receiving foreign funds through:

1. the acceptance of foreign money deposits payable upon demand or after a fixed period or after notice;

2. the sale or placement of foreign bonds, foreign certificates, foreign notes or other foreign debt obligations or other foreign securities; or

3. any other similar activity involving foreign money or foreign securities;

The bank’s funds can be used for:

1. loans, advances and investments;

2. the activities of the licensee for the account of or at the risk of the licensee;

3. the purchase or placement of foreign bonds, foreign certificates, notes or other foreign debt obligations or other foreign securities; or

4. any other similar activity involving foreign money or foreign securities;

The bank can accept the following in trust from individuals outside of Barbados:

1. amounts of money in foreign currencies or in foreign securities or both;

2. foreign personal property or foreign movable property;

3. foreign real property or foreign immovable property.

View the Barbados International Financial Services Act

Major Benefits

An International Bank offers many benefits including:

• A low tax rate from of 2.5% of taxable income down to 0.5% as 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)

• A foreign tax credit is available for taxes paid outside of the country and can be used to reduce tax payable in Barbados. The credit cannot reduce the total tax payable to less than the 0.5% minimum tax rate.

• Capital gains are exempt from tax

• There are no withholding taxes on dividends, interest, royalties or fees

• No exchange controls on foreign currencies

• Strong confidentiality provisions protect the privacy of the bank’s customers

• Accounting records may be kept in foreign currencies

• Tax rates and exemptions can be guaranteed for the future

• Income tax concessions for qualified employees

• Single shareholder owned banks are eligible

Qualification Requirements

• To qualify, the international bank must submit an application to the Central Bank of Barbados for approval, the Minister of Finance then gives consent and a license is authorized by the Director of Bank Supervision

• Minimum capital requirement of US $2 million for banks accepting third party deposits and US $500,000 for those that do not accept third party deposits

• At least one of the directors must be a resident of Barbados

• Annual shareholder meeting is required, representation by proxies is permitted

• Accounting records, minutes and resolutions must be maintained at the local office

• License must be renewed annually and license fee paid

• An annual financial audit is required and the audited statements must be filed with the Central Bank of Barbados

• Quarterly financial statements must also be submitted to the Central Bank

Costs

The annual costs of running an offshore bank in Barbados are as follows:

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 these fees can vary a great deal depending on if the bank does or does not accept third party deposits. Some banks can be owned by just one individual and conduct a small number of annual transactions whereas others can be quite large, serving thousands of customers.

Barbados Offshore Banks: Strength, Stability and Low Taxation

A Barbados Offshore Bank combines the strength and stability of the well regulated banking sector on the island with very attractive benefits and tax incentives making it a world class choice for international banking activities and foreign currency transactions.

The banking system in Barbados withstood the recent worldwide financial turmoil unscathed; a testimony to the strength that a well regulated banking system can offer potential investors during times of economic uncertainty.

The total freedom from exchange controls means that investors benefit from the flexibility that comes with using the island as a hub for international financing and banking transactions.

Finally, tax incentives, special exemptions and guarantees regarding future taxation allow investors to enjoy some of the most attractive benefits offered worldwide.