Barbados: International Tax Planning Entities

International Societies with Restricted Liability (ISRL)

A Society with Restricted Liability (“SRL”) is an entity that is established under the Societies with Restricted Liability Act. An SRL is very similar to what is known in the US as a Limited Liability Company (LLC). An SRL that is entitled to special Barbados tax benefits is called an “International Society with Restricted Liability” (“ISRL”) whereas entities subject to regular Barbados taxes are referred to as SRLs. ISRLs are designed to be used mainly for international transactions and are prohibited from transacting business with persons resident in Barbados.

Other Characteristics of an SRL

Limited liability.

The rights, powers and privileges of an individual.

Stipulation that the transfer of quotas in a society will not confer on the transferee the right to become a member or participate in the management of the society without the written consent of all the members.

Quotas similar to shares and bearer shares are not permitted.

Why Consider An ISRL In Barbados?

The general benefits of an ISRL are identical to those of an IBC, except that an ISRL’s tax and duty exemptions are guaranteed for 30 years.

Benefits

Limited liability.

Can be treated as a corporation, a partnership or a disregarded entity for US tax purposes.

Simplified corporate mobility into and out of Barbados

Simple winding -up provisions.

Taxed on income on a sliding scale, from a maximum of 2.5% to a minimum of 1%.

Taxes paid in a foreign country may be credited against tax payable in Barbados, provided that the credit does not reduce the tax payable in Barbados to less than 1% of taxable income.

Exempt from all import duties on machinery or equipment for use in its business

Tax concessions for specially qualified non-residents whose services are required for the business.

May apply for a guarantee that benefits and exemptions will be valid for 30 years

Duration of ISRL cannot exceed 50 years.

Ease of organisation with no minimum capital requirements

Corporate directorship and secretary permitted with certain restrictions

Provision for redeemable quotas and for pre-incorporation contracts

An ISRL may purchase, redeem or otherwise acquire quotas issued by it, subject to solvency test

 

Establishing An ISRL

Organisation of an ISRL is achieved by filing articles of organisation and prescribed information as to managers and registered agent, along with the fee of Bds $ 780.00 (US$390.00), to the Registrar of Companies. A certificate of organisation is issued by the Registrar, on filing of the organizational documents.
The formation procedures are essentially the same for both types of SRLs, except that an ISRL must obtain a licence from the Minister responsible for International Business to operate as such. This license must be renewed annually. See licence application at Appendix III.

Annual Requirements

An ISRL license must be renewed annually on or before December 31st. See renewal form at Appendix IV.

Annual Licence fee of Bds. $850.00 (Approx. US $425.00).

Audit requirement where the gross assets and revenues of the SRL exceeds the statutory threshold of Bds $1M (US $0.5M).

Financial statements are to be filed with the regulatory authorities

Annual return to be filed by 31st January of each year.