Barbados, the most easterly island in the Eastern Caribbean, is a member of the Caribbean Community (CARICOM). Established in 1972, the Central Bank of Barbados (CBB) regulates the Barbados dollar. Barbados’ Gross Domestic Product (GDP) was USD 5.03 billion in 2018 with forecast growth of 0 to 0.25 percent in 2019, according to CBB estimates. The government of Barbados entered into a standby arrangement with the International Monetary Fund (IMF) in late 2018. The USD 290 million Barbados Economic Recovery and Transformation (BERT) program aims to decrease the debt to GDP ratio, strengthen the balance of payments, and stimulate growth in the economy. In the early stages of implementation, however, the program has dampened income and spending power due to public sector layoffs, the introduction of new indirect taxes, and a decline in the construction sector. However, there are new and previously announced projects in the pipeline that are expected to strengthen Barbados’ economic position in the near term.
Barbados ranks 129th out of 190 countries rated in the 2019 World Bank Doing Business Report. The report highlights some positive changes in improving the ease of starting a business but highlights that paying taxes has become more difficult due to the introduction of new indirect taxes.
The services sector continues to hold the largest potential for growth, especially in the areas of international financial services, tourism, information technology, global education services, health, and cultural services. The gradual decline of the sugar industry has opened up land for other agricultural uses. Investment opportunities exist in the areas of agro-processing and alternative and renewable energy
Barbados recently revised its tax regime, in which there was a convergence of domestic and international tax rates. This was in response to the Organization for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) Action 5 Initiative that addressed harmful tax practices. Some Acts were repealed or amended, while others were newly enacted. For further details, see https://investbarbados.org/revisedtaxregime.php .
Barbados bases its legal system on the British Common Law System. It does not have a bilateral investment agreement with the United States, but it does have a double taxation treaty and tax information exchange agreement.
In 2015, Barbados signed an Intergovernmental Agreement in observance of the United States’ Foreign Account Tax Compliance Act (FATCA), making it mandatory for banks in Barbados to report the banking information of U.S. citizens.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index||2018||25 of 175||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2019||129 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2018||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, stock positions)||2018||$20,368||http://www.bea.gov/international/factsheet/|
|World Bank GNI per capita (USD)||2018||$15,270||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|