Foreign Affairs

Although Barbados thought about becoming a part of the North American Free Trade Agreement (NAFT), thus far it has instead kept its membership in the Association of Caribbean States. This situation is not likely to change in the future as a formal single Caribbean market economy, known as CSME, is developed. Caribbean governments took the first steps towards developing CSME in 2006 and experts expect that most of the CARICOM member states will have signed on before the end of 2008. Generally speaking, CSME will be more of a showpiece than a serious economic union for the foreseeable future. The first tangible evidence of the union will be freedom of movement for specific groups of people and a few mutual reductions of tariffs. Later on, we can expect moves towards a common currency and a regional stock exchange.

It is not possible to enter Barbados without a valid passport. Nationals of CARICOM member states, Canada, the United Kingdom, the United States, and some Commonwealth countries are able travel directly to Barbados with acceptable proof of nationality and identity in the form of a valid passport and/or original birth certificate with national photo identification and may be allowed to enter for up to ninety days. All visitors are required to have onward or return tickets in order to enter Barbados.

Non-residents must have work permits in order to be legally employed in Barbados. Work permits are typically issued quite readily and are normally processed in between six to eight weeks. There are no legislative limitations on the amount of foreign employees on the payroll of a company at any time, but employers are required to establish that the position in question cannot be filled satisfactorily by a Barbados resident or national. Long-term work permits are valid for up to three years and the cost per approval is between $1,800 and $2,000. Short-term work permits are valid for up to six months and are necessary for company personnel entering the country to assist with the setting up of the operation and training employees. Approval will cost approximately $300.00.

It is possible for non-residents to buy real estate in Barbados with foreign currency provided it has been has been registered with the Central Bank.

The World of Business

Barbados has an admirable business environment that is stable and well organized and boasts a fairly diverse set of professional services in proportion to the recent growth of the financial sector. These sources of human capital are supplemented by a modern telecommunications system and other forms of business infrastructure. In fact, Barbados’s active support of the informatics sectors translates into an above average availability of computer services and professionals, which means that Barbados is likely to be an especially good place in which to base e-commerce operations.

As mentioned before, foreign investors and investment are look upon favorably by the Barbados government and provided with assistance by the Barbados Industrial Development Corporation. In addition to this, there are numerous corporate forms to choose from when establishing a business within Barbados. The government has further assisted foreign development with a flexible and liberal legislative structure and a light offshore taxation scheme. Despite these incentives, Barbados has a stringent, expensive onshore taxation scheme.

The one area of the economy that may cause trouble for foreign investors is employment. Despite high unemployment and a well-educated labor pool, which means a highly saturated labor market, comparatively restrictive employment legislation may pose a problem for foreign businessmen. The roots of such tough employment legislative history lie in Barbados checkered social history.

As a rule, Barbados is not known for providing its investors with a particularly high level of privacy or confidentiality. It is relatively easy for foreign investigators to breach confidentiality even in the case of fiscal crimes.

A non-resident or foreign investor is required to register funds that are earmarked to be used for making investments into shares or debt of companies incorporated in Barbados with the Central Bank. Moreover, there are controls over their subsequent repatriation. Also, the Central Bank must formally give permission for a non-resident (Barbadian or otherwise) to buy real estate in Barbados. Such permission is typically granted provided that the funds are foreign and if the money is received in Barbados.

As of June 2004, the country’s commercial banks may, without the prior consent of the Central Bank, approve all investment transactions in private unlisted equities in CARICOM countries. This new measure is part of the general liberalization of exchange controls that is being carried out in order to facilitate the execution of foreign exchange transactions in the CARICOM region. Under the new regulations, commercial banks are obligated to request and examine the relevant supporting documentation such as sale/purchase agreements, proforma of the investment transactions, confirmation slips, etc. to ensure authenticity. Commercial banks are also required to record details of the parties to transactions.

Also as of June 2004, commercial banks in Barbados have the authority to approve applications to transfer funds from Barbados to CARICOM countries in respect of personal loans, maintenance and financial assistance without reference to the Central Bank. If authorized dealers are not satisfied with the authenticity of transactions, those wishing to make transactions must be referred to the Central Bank of Barbados.

At present Barbadian residents and CARICOM nationals resident in Barbados who earn foreign exchange are permitted to have foreign currency accounts with a limit equivalent to $10,000 without exchange control permission, as long as the accounts are funded by foreign exchange of at least $25,000 annually. Exchange control permission will be required for amounts greater than $10,000. Moreover, returning Barbadian nationals may hold foreign currency accounts with a limit up to the equivalent of $50,000 as long as the funds credited to such accounts represent foreign currency earnings from abroad in the form of pensions, rental income, interest, dividends or other foreign income.

In addition to loosening exchange controls, the Barbadian government offers an extensive variety of investment incentives that largely apply to the manufacturing industry offered by the Barbados Investment and Development Corporation.