Income tax

Income tax rates

Basic Rate

12.5% – applies to the first BBD $50,000

Higher Rate

28.5% – applies to amounts in excess of BBD $50,000

Personal allowance

Any person who is resident in Barbados is entitled to a Personal Allowance of—

• BBD $25,000 per year if that person is of working age; or
• BBD $45,000 per year if that person is of retirement age (60 or over) and in receipt of a pension.

If you are entitled to a Personal Allowance, only income exceeding that amount is liable to income tax.

Spousal allowance

Any person who is resident in Barbados is entitled to a Spousal Allowance of BBD $3,000 per year if their spouse—

• was either fully supported by, or habitually lived with, that person; and
• had no income from any source (except investment income not exceeding BBD $800 per year).

If you are entitled to a Spousal Allowance, only income exceeding that amount is liable to income tax.

Compensatory income credit

Any person who is resident in Barbados and earns more than BBD $25,000 but not exceeding BBD $35,000 a year may be eligible for an income tax refund via compensatory income credit.

Foreign currency earnings allowance

Any person who is resident in Barbados and earns income from sources outside Barbados may be eligible for a tax rebate of up to 65% on the income tax payable on their foreign earnings. To qualify, such income must be transferred through the banking system of Barbados.

The rate of the allowance is calculated on the percentage of those earnings which are foreign earnings—

Foreign earnings . . . . . . . . . . . . . . . . . . Rebate on income tax

20% and under . . . . . . . . . . . . . . . . . . . . 24%

Over 20% but under 41% . . . . . . . . . . . . 31%

41% or more, but under 61% . . . . . . . . . 45%

61% or more, but under 81% . . . . . . . . . 55%

81% and over . . . . . . . . . . . . . . . . . . . . . 65%

Persons subject to income tax

Any person who is resident and domiciled in Barbados is subject to income tax on—

• income derived in Barbados, and
• income derived from foreign sources whether or not such income is remitted to Barbados.

Any person who is resident but not domiciled in Barbados is subject to income tax on—

• income derived in Barbados, and
• income derived from foreign sources but only such income remitted to Barbados or from which a benefit is derived in Barbados.

Any person who is not resident in Barbados is subject to income tax on—

• income derived in Barbados only.

For persons who are self employed, certain expenses incurred in connection with their trade or business may be deductible from the portion of their income which may otherwise be liable to income tax.

Foreign nationals residing in Barbados on the Welcome Stamp visa are exempt from income tax.

Who is deemed 'resident' for income tax purposes

Any person who—

• spends in the aggregate more than 182 days in Barbados during a given tax year, or
• has a permanent home in Barbados and has given notice to the Revenue Commissioner that he or she intends to reside therein for a period not less than two consecutive tax years (including the tax year in which notice is given)

is deemed 'resident' for income tax purposes. ^[1]

Who is deemed 'domiciled' for income tax purposes

'Domicile' is a general law concept and Parliament has not defined what this means even though the law makes reference to it. A person's domicile status is independent of their nationality or citizenship.

In general, the 'domicile' of a person is understood to be referring to the country to which a person belongs. This is usually established at a person's birth, known as domicile of origin.

In some cases, a person's domicile may change during their life. For example, if a person made Barbados their permanent home and renounced their native land, they might eventually be deemed 'domiciled' in Barbados even if they were originally 'domiciled' in another country.

A person who is domiciled in Barbados and moves overseas is likely to remain domiciled in Barbados even if they live overseas for many years. For example, if a Barbadian moves to the United Kingdom as an adult, the tax authorities in both countries are likely to deem that person to be domiciled in Barbados for at least 15 years.

You cannot change your domicile status merely by deciding to do so. It usually only changes if it is patently clear over a very long period of time that you abandoned your place of origin.

Persons exempt from income tax

Welcome Stamp visa holders

Any person who resides in Barbados on the Welcome Stamp visa is treated as non-resident for income tax purposes, even if they spend in the aggregate more than 182 days in Barbados during that tax year. ^[2] If this applies to you, please note that you may be liable or become liable to income tax and/or withholding tax in the country from which your income is derived. In the case of any doubt, please consult a qualified tax advisor.

If a person on the Welcome Stamp visa resides in Barbados for an extended period of time, they may eventually deemed to be non-resident for tax purposes worldwide. This may give rise to unexpected tax liabilities in the country from which the income is derived, such as withholding tax and/or double taxation. In the case of any doubt, please consult a qualified tax advisor.