Barbados’ Regulatory Investment Framework
The sugar industry was the major foreign exchange earner from the 1630s when sugar was first introduced in the island until recent years. As a result, this created a mono crop economy with a narrow export base sector, fueled by an inter-colonial rivalry born out of the metropolitan struggle for the world sugar market.
Tourism began to develop in the 1950s as a natural feature of a tropical island. White sand, blue sea and wonderful weather conditions continue to draw thousands each year to the shores of Barbados. From around the 1950s, tourism took over from sugar as the main foreign-exchange earner.
From the late 1950s, the Barbados Government has deliberately pursued a diversification policy, in an effort to expand the country’s narrow resource base. In 1957, the Government established the Barbados Development Board to promote an organised form of manufacture and to woo investment by invitation. The policy adopted by this Board was one of ‘Industrialization by Invitation’. The Government offered incentives in an effort to stimulate investment, in the manufacturing sector in particular. These incentives took the form of tax holidays, duty-free concessions on equipment and raw materials, low-cost factory space and the presence of a facilitating agency. This development model utilizing foreign direct investment had as an overall objective, to supply the industrial sector with the institutional, technical, financial and policy support necessary to expand its output and improve its competitiveness, thereby enabling it to face successfully the challenges of international trade well into the 21st century.
The international business and financial services sector came into being with the passing of the first pieces of legislation in the early 1960s. It was recognized that this sector could be a new area of comparative advantage for Barbados, by virtue of the growing numbers of competently skilled professionals being produced by the island’s tertiary institutions on a yearly basis. Since its inception the sector’s growth and contribution to the island’s economy have been exceptional in spite of the various challenges which by virtue would have confronted the sector. The sector has grown since this time and Barbados is marketed as a low-tax jurisdiction rather than a “no-tax” jurisdiction with an expanding network of double taxation and bilateral investment treaties.
The regulatory investment framework, the spine of the international business and financial services sector is composed of a suite of legislation designed to support, protect and expand the international business sector. Barbados is known as a jurisdiction committed to the rule of law with a strong tradition of social political and economic stability. There is a sophisticated, appropriate and transparent regulatory environment with a long history of exchange of information. The investment framework is one that supports businesses of substance irrespective of whether the investment is local, regional or international.
Click here to learn more about Barbados’ international business legislation.