The Government of Barbados’ overhaul of its insurance law is expected to give the domicile a competitive advantage and enhance its international reputation, according to Kenneth Campbell, director, investment promotion, at Invest Barbados.
“Barbados converged its domestic and international tax regimes and introduced three new classes of insurance, among other measures, significantly boosting the country’s competitive advantage,” said Campbell. “The changes were not specifically targeted to bolster the domicile but have, without exception, been accepted by the OECD and should enhance our international reputation.”
Effective January 1, 2019, the legislative changes were part of Barbados’ commitment to ensure it is compliant with the Organisation for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Shifting (BEPS) programme, in particular Action 5. Under the new law, captives are zero taxed and pay a license fee instead.
Action 5 is one of the four BEPS minimum standards, and involves process for reviewing preferential tax regimes to ensure they are not harmful, and a transparency framework that applies to tax rulings (the transparency framework).
Barbados remains one of the top ten captive domiciles globally, and ended 2018 with 276 captives, up from 262 at the end of 2017.
Campbell added that Barbados has never focused on “controversial” microcaptives, which he says can have a bearing on new formations across different domiciles.
He suggested that Barbados has been able to keep competitive against other offshore domiciles by offering quality at a lower cost, along with a robust regulatory framework.
“A very well educated and trainable population means that the significantly higher ex-patriate employment costs are avoided, as well as the availability of suitable office accommodation with materially lower lease costs. Of note is that our insurance management companies are staffed by well qualified Barbadian professionals,” he said.
Barbados is seeking to attract additional business in area including, but not limited to mainstream property and casualty, medical malpractice, general liability, US workers’ compensation, directors and officers liability.
Campbell added: “As more businesses seek to effectively direct their risk financing strategies, it is expected that more captive formations will take place. Barbados is open for business and will ensure that as a top tier domicile for captive business, our jurisdiction not only grows, but thrives.”
The Government of Barbados, Kenneth Campbell, Invest Barbados, CICA 2019, Barbados, Cayman, North America