Barbados - Income Tax

Barbados - Income Tax

Taxation of international executives.

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Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

For individuals without a tax agent, Jersey income tax returns are due on the last Friday in May following the end of the tax year. For individuals with a tax agent, the deadline to file the Jersey income tax return is the last Friday in July following the end of the tax year.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Jersey?

Residents

Jersey income tax returns must be filed with the Comptroller of Taxes annually.

Non-residents

N/A.

Tax rates

What are the current income tax rates for residents and non-residents in Jersey?

Residents

20% plus a long-term care contribution of 1%

Income tax table for 2017

Taxable income bracket Total tax income below bracket Tax rate on income in bracket
From GBP To GBP GBP GBP
Standard rate: 0 162,504 21 21%
Income in excess of long term care:  162,505 20 20%
Single marginal: 0 14,550 0 0%
Married Marginal: 0 Over 0 26%

Non-residents

20%.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Jersey?

  • If you have been in Jersey for longer than 183 days in a calendar year
  • If you have or retain a place of abode and stay in the available accommodation
  • If you intend to make substantial habitual visits (3 months on average over a 4 year period)
  • If the intention to make Jersey your home is shown

Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.

Yes – 1 night spent in available accommodation (i.e. available to you to use as and when you wish)

What if the assignee enters the country before their assignment begins?

The residency threshold addresses the aggregate days spent in the year.

Termination of residence

Are there any tax compliance requirements when entering or leaving the country?

The assignee is required to complete a registration and exit form.

Departure tax

No.

What if the assignee comes back for a trip after residency has terminated?

The assignee will not be classed as resident as long they do not spend a night in available accommodation or the individual spends no longer than 183 days in Jersey and shows no intention of remaining in Jersey permanently.

Communication between immigration and taxation authorities

Do the immigration authorities in Jersey provide information to the local taxation authorities regarding when a person enters or leaves Jersey?

No.

Filing requirements

Will an assignee have a filing requirement in the host country after they leave the country and repatriate?

If they are resident in Jersey for part of the year of assessment, the assignee will be required to complete a Jersey income tax return for the relevant period spent in Jersey.

Economic employer approach

Do the taxation authorities in Jersey adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Jersey considering the adoption of this interpretation of economic employer in the future?

No.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?

No.

Types of taxable compensation

What categories are subject to income tax in general situations?

  • Salaries
  • Wages
  • Perquisites
  • Benefits in kind
  • Termination payments (subject to £50,000 cap)

Tax-exempt income

Are there any areas of income that are exempt from taxation in your country? If so, please provide a general definition of these areas.

  • income support
  • disablement allowances
  • incapacity benefit
  • food cost and cold weather bonus (paid by social security)
  • the 'boarding out allowance' part of foster care payments
  • insolvency benefit paid by social security (only the part that does not relate to unpaid wages, holiday pay or pay in lieu of notice)
  • hospitality incentive paid to employees by social security (incentive payments made to employers are taxable)
  • wounds and disability pensions (in respect of service in the armed forces)
  • war widow's pension
  • old age pensioners' Christmas bonus (paid by social security or UK national insurance)
  • maintenance paid under an agreement made on or after 1 January 1997
  • Exemption in respect of States of Jersey securities held by non-residents – the interest on securities issued with the outlined condition will be exempt from Jersey tax
  • Exemption from income, profit or gains of a non-resident in respect of the following income of a person not resident in Jersey;
    • Interest paid in respect of or credited to a deposit with a person registered under the Banking Business (Jersey) Law 1991
    • Distributions made by a company to the extent that distributions were made out of profit or gains charged on the company at a rate of 0%
    • Dividends on preference shares of a company regarded as resident in Jersey to the extent that such dividends were declared out of profits or gains charged on the company at the rate of 0%
    • Income arising from a pension payable under the Social Security (Jersey) Law 1974
    • Income arising or accruing from a purchashed life annuity
    • Interest paid by a company regarded as resident in Jersey
    • The profits and earnings of the office of Director of a company
    • Any royalty or other sum paid in respect of the user of a patent
    • A person who is not resident in Jersey and is paid a dividend from which tax is deducted at 10% shall be exempt from the balance of tax that would be due in respect of the dividend
  • Exemption of profit or gains of an eligible investment scheme
  • Exemption in respect of UK savings certificates

Per Special Enactment
No tax is payable under the Income Tax Act by a person who is exempted from paying income tax by any other enactment in force in Barbados. For example, statutory instruments under Cap. 67B of the Laws of Barbados.

Expatriate concessions

Are there any concessions made for expatriates in your country?

Concession P7 – under this published concession, no assessment will be raised upon a bonus paid to an assignee whilst living in Jersey, subject to the following conditions;

  • The bonus has been subject to tax in another jurisdiction
  • The individual gives a written undertaking to pay Jersey income tax on any bonus relating to duties carried on in Jersey which is paid after they cease to be resident

Salary earned from working abroad

Is salary earned from working abroad taxed in Jersey? If so, how?

If an individual is classed as Jersey resident and ordinarly resident, the individual will be taxed on their worldwide income, however, if an individual is Jersey resident but not ordinarily resident, they will only be subject to Jersey tax on Jersey source income as well as any income remitted into Jersey.

To be considered resident but not ordinarily resident, the individual may be in Jersey on a short-term contract, generally less than 2 years, whose centre of life is abroad.

To be considered resident and ordinarily resident, the individual will spend a substantial amount of time on the island during the year, and have available accommodation. Available accommodation is considered to be accommodation which you spend any amount of time in and is available as and when you wish.

Accomodation provided by your employer is regarded as available if the contract is for 2 years or more.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in your country? If so, how?

Dividends, interest, and rental income

Investment income is taxed at a rate of 20%.

Gains from employee stock option exercises

Stock options are taxed on grant on the difference between the exercise price and the normal market value (discounts are available dependant on the vesting period).

Foreign exchange gains and losses

Foreign exchange losses which arise from capital transactions will be outside the scope of tax in Jersey as capital gains tax is not levied in Jersey.

Principal residence gains and losses

Capital gains are not taxed in Barbados; therefore there is no tax on gains arising from the sale of an individual’s principal residence.

Capital losses

There is no capital gains tax in Barbados. Accordingly, capital losses are irrelevant for tax purposes.

Personal use items

Gains or losses realized on the disposition of personal use items are generally on account of capital. Therefore, there is no tax assessable on such gains or losses.

Gifts

There are no gift taxes levied in Jersey. Benefits in kind are however subject to income tax in Jersey subject to certain limits.

Foreign property reporting

If you are resident in Jersey and classed as ordinarily resident, you will be subject to Jersey income tax at a rate of 20% on income arising from foreign property. If you are resident but not ordinarily resident, you will only be taxable on property income remitted into Jersey.

Non-resident trusts

Not applicable.

Additional capital gains tax (CGT) issues and exceptions

Are there capital gains tax exceptions in your country? If so, please discuss.

Pre-CGT assets

Not applicable.

Deemed disposal and acquisition

Not applicable.

General deductions from income

What are the general deductions from income allowed in your country?

A deduction is permitted in relation to all losses and outgoings to the extent that they are incurred in gaining or producing assessable income, or are necessarily incurred in carrying on business for the purpose of gaining or producing such income, except to the extent to which they are losses or outgoings of a capital, private, or domestic nature, or are incurred in relation to the gaining or producing of exempt income. In addition, deductions are specifically permitted for certain types of expenditures such as the following :

  • Costs incurred in the course of employment (for example, subscriptions to professional associations and journals).
  • Amounts expended by that person and not subsequently reimbursed for travelling expenses or maintaining and operating a vehicle to the extent that the amounts expended may reasonably be regarded as representing the cost to the person of travelling in the performance of the duties of an office or employment.
  • Subscriptions paid to a Registered Trade Union (maximum BBD240).
  • Spousal allowance of BBD3,000 if spouse had no income or income from dividends and interest of BBD800 or less, and habitually lives with the taxpayer.
  • Interest paid or payable on borrowed money used for the purpose of the production of assessable income.
  • Portion of foreign taxes paid which is not allowed as a foreign tax credit.
  • Child allowance of BBD1,000 per child under the age of 18 years or over 18 years but under 25 years at the end of the income year and in full time attendence at an educational establishment (maximum claim is two children).
  • Certain gifts to charities registered in Barbados (maximum claim is limited to 10 percent of assessable income).

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in your country?

Current year gross-up is the normal method of recognising tax reimbursements paid by the employer.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in your country? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

Pay-As-You-Earn Withholding

Deductions from employment income are covered under the PAYE system.

If an individual is paid and/or employed, the employer will be required to withhold tax from their salary and wages and remit the tax to Barbados Taxation Office.

At the end of the year the employer will provide the individual with a Statement of Remuneration paid and deductions during the year. The document is used to prepare the income tax return.

When are estimates/prepayments/withholding of tax due in your country? For example, monthly, annually, both, and so on.

For employed persons, the company is required to withhold and remit, the tax computed on a monthly basis and pay to the Barbados Revenue Authority by the 15th of the following month.

Withholding taxes on interest income derived is a final tax for the individual.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in your country? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Where tax is payable in a country other than Barbados on profits, income or gains derived from sources in that country, the tax so payable in that country shall be allowed as a credit against the tax payable in Barbados on such profits, income or gains.

The tax credit shall not exceed the amount of tax, as computed before the credit is given, which is attributable to the income derived outside Barbados.

General tax credits

What are the general tax credits that may be claimed in your country? Please list below.

In addition to the tax credits described in the deductions section, the following may also be claimed:

  • Foreign tax credits
  • Foreign currency earnings credits if the individual carries on business in Barbados and earns assessable income from fees, premiums, payments or rewards in respect of the undertaking of qualifying overseas construction projects or qualifying overseas professional services.

Sample tax calculation

This calculation assumes a married taxpayer resident in Barbados with two children whose 3 year assignment begins 1 January 2015 and ends 31 December 2017.

The taxpayer’s base salary is USD100,000 and the calculation covers 3 years.

  2015
GBP
2016
GBP
2017
GBP
Salary 100,000 100,000 100,000
Bonus 20,000 20,000 20,000
Cost-of-living allowance 0 0 0
Housing allowance 0 0 0
Company car 6,000 6,000 6,000
Moving expense reimbursement 7,500 7,500 7,500
Home leave 0 0
0
Education allowance 3,000 2,000 1,000
Interest income from non-local sources 6,000 6,000 6,000

Other assumptions

  • All earned income is attributable to local sources.
  • Bonuses are paid at the end of each tax year, and accrue evenly throughout the year.
  • Interest income is not remitted to Barbados.
  • The company car is used for business and private purposes and originally cost USD50,000.
  • The employee is deemed resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation.

Calculation of taxable income

Year-ended 2015
GBP
2016
GBP 
2017
GBP
Days in Jersey during year 365 365 365
Earned income subject to income tax      
Salary 100,000 100,000 100,000
Bonus 20,000
20,000
20,000
Cost-of-living allowance 0 0 0
Housing allowance 0 0 0
Company car 6,000 6,000 6,000
Moving expense reimbursement 0 0 0
Home leave 0 0 0
Education allowance 3,000 2,000 1,000
Total earned income 129,000 128,000 127,000
Investment income 6,000 6,000 6,000
Total income 135,000 134,000 133,000
Deductions 0 0 0
Total taxable income 135,000 134,000 133,000

Calculation of tax liability

Year-ended 2015 GBP 2016 GBP 2017 GBP
Taxable income as above 135,000 134,000 133,000
Income tax (federal and provincial) thereon 27,000 26,800 26,600
Long-term care (capped) 798.12 1,625.04 1,625.04
Less:      
Non-refundable tax credits 0 0 0
Total income tax 27,000 26,800 26,600
Employee contribution to Pension Plan      
Employee
contribution to Employment Insurance (EI)
2947.68 2947.68 3009.60

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