Barbados Embraces ‘New Normal’

In the Caribbean, tourism, a key contributor to our GDP, has been significantly impacted; this has had a domino effect on many of the supporting industries including food and beverage, agriculture, short term real estate, and car rentals etc. But are we crying in desperation? No! The light at the end of the tunnel is our people.

As a small island state, we are adaptable, innovative, and resilient. In Barbados for example, most of the companies outside the tourism market, including those in the international business and financial services industry, adapted quickly to working remotely, minimising layoffs and continuing business functions. Legislation quickly came into place and developments for a digital environment accelerated to allow key government agencies to service the business community. The Ministry of International Business and Industry, Corporate Registry, Barbados Revenue Authority, and other key and essential agencies jumped into action to minimise disruption to the island’s operations.

Whilst this article is not focused on the pandemic or the health industries, it would be remiss not to mention the brave professionals and support staff in the healthcare and other essential services, whose prompt action assisted the region to minimise the impact on the health infrastructure. We appreciate that as this has been a global phenomenon, the shocks in the Caribbean are sure to resonate loudly.

What can we do? How do we begin to recover from this ongoing period of crisis? How does a country and its people rebuild? Good leadership, a focused strategy, and direction are integral to a prudent start. Through cooperation with like-minded partners, innovation to expand on current product or service offering, digitisation in the age of social distancing, as well as maintaining social, economic and work/life balance, can be some of the key cornerstones to success.

Innovation

Barbados has always enjoyed a positive image in the marketplace as a reputable international business and financial services centre of choice and has been successfully attracting foreign direct investment for decades. Its original premise for global business has been to create jobs for Barbados and CARICOM nationals. With an advanced network of double taxation and bilateral investment treaties, Barbados has always been a unique jurisdiction for business where companies can thrive in a highly competitive global marketplace. Investors have ready access to services from a number of local professional firms with a full gamut of skill sets.  Here, families can choose to have their estate and succession planning completed whilst enjoying a beautiful summer home, vibrant culture, and generous hospitality for which the island is famous.

Barbados continues to be a leader in business through enhanced commitment to service, not just within the global community but inviting its domestic and regional market to take advantage of all the country offers including: professional services; competitive tax regime; cross border structures for international investment and export; and various legislation to encourage the seamless planning for future generations. Our value proposition for global business has expanded across education, technology, research and development, and logistics expertise in the Caribbean, Latin and North America.

Developing A Digital Society

COVID-19 has forced us to adapt. By working (and playing) from home through iCloud, email, virtual platforms like Zoom, Skype and Hangouts, and streaming services like Netflix, Hulu, and Apple TV, we have dived full into a digital society, adapting and integrating information to include home, work, education, and recreation. Online banking continues to be seamless as we conduct our personal affairs as well as managing business commitments to employees, suppliers, clients, and our investments. Household needs are met with online shopping and door-to-door delivery.

Our children are being schooled from home using platforms such as Google Classroom with daily updates on classes, homework, progress, feedback and test results. Recreation and education are being integrated in a way which is finally embracing the uniqueness of each child. Now, customised classes can be held to meet learning needs in a cost-effective way. There is the potential for greater parent engagement to shape the hearts and minds of our children, and family time and bonding has resurfaced with everyone looking forward to family lunches, dinners, and cooking projects.

As disastrous as COVID-19 has been on employment and the traditional work environment, it has left a legacy unlike any we could ever have imagined; offices without walls, school outside of the physical classrooms, learning without limits, and a return to more engaging relationships with friends and family. The future looks a lot more integrated. The opportunities are endless. As technology continues to evolve, there are skillsets that are not yet being taught in classroom and future careers that are not being considered. With digital technology and its accompanying expanded mindset, there can be a greater collaboration of education with practicality and reality.

There is an opportunity for the region to quickly adapt syllabuses to encompass new skills at all levels. Will English and Mathematics continue to be major ‘important’ subjects to teach at the primary level or is this where we introduce writing code? Do our accountants, lawyers, and other professionals learn ones and zeros, or will they introduce technology into that undergraduate degree? What will post graduate education look like? How will we seize the opportunities for companies adopting AI into the business process where certified professionals were once used? Who will write the code for will writing and estates? Will physicians now add a year to their study for customised medicine? How will this new normal embrace social media, robotics, predictive analysis, machine learning, and logistics for example? 

Working With Like-Minded Partners

Barbados and the wider Caribbean will continue to be partners for global companies’ cross border investments and operations, wealthy, modern, global families’ succession and estate planning, and families investing in legacies, generational success, education and personal safety.

Specific benefits to working, investing and planning through Barbados include:

• A stable government, well-developed legal system, and a wide network of professional service providers including tax advisors, reputable international banks, global accounting firms, lawyers, accountants, and management companies offering a full range of corporate, trust and investment services due to a distinct competitive advantage of Barbados' excellent human resources. Barbados' world class educational system produces a well-educated, English-speaking work force comprising approximately 147,000 people.

 

• Barbados is considered a transparent planning jurisdiction driven by a network of Double Taxation Treaties (DTAs) spanning over 40 countries, which were mutually negotiated by partner countries including Canada, China, Mexico, Panama, Spain, and the USA. Key features of DTAs include reduced withholding tax on foreign dividends paid to Barbados holding companies and zero tax on capital gains on the sale of foreign subsidiaries held by Barbados holding companies.

 

• Barbados also has a network of Bi-lateral Investment Treaties (BITs) governed through the Washington, D.C. based International Centre for Settlement of Investment Disputes which allows countries to advance and protect their interests in foreign countries (including China, Cuba, Germany, Italy, Venezuela, etc.)

 

• The use of a Barbados company as a treasury centre to centralise or decentralise treasury management for multinationals is a well-established practice due to tax efficiency of DTAs, mature banking systems, regulations, and political stability.

Some additional points of note: 

• BITs between Barbados and a number of countries provide protection for investments in both Barbados and the partner countries.
• Close proximity to opportunities within the Caribbean, Latin America and the Americas, including air and sea cargo and multiple commercial flights.
• For some foreign countries, time zones can be an issue. Using a Barbados subsidiary to service operations in the Region, Latin and North America allows for better efficiency.
• Local expertise, experience and talent allow for easy staffing and services to support international operations.
• DTAs allow for tax only in one place (Barbados) where staff, economic substance and mind and management are located, meaning the foreign or regional operation will be taxed in Barbados only with no further taxes in the home country. Current tax rates fall on a sliding scale from 5.5 per cent to one per cent and are inversely related to revenue (i.e. the higher the revenue the lower the taxes).
• No tax on distributions from subsidiaries that may be located in treaty countries and no tax in Barbados for distribution from overseas subsidiaries. 
• No withholding taxes on profit distributions from a Barbados company to the overseas or regional company.
• Staggered personal income tax rates in Barbados with zero per cent on the first US$12,500; 16 per cent on the next US$25,000 and 28.5 per cent thereafter.

 

Healthcare/Wellness Tourism

As we work hard to keep our families fed, safe, and comfortable, the work/life balance is critically important particularly after an experience like COVID-19. Where would you rather be than the Caribbean to promote health and well-being physically, psychologically and/or spiritually? Whether you are basking in the sun and wiggling your toes in the coral white sand of Barbados whilst looking at the aquamarine ocean and hearing the soothing sound of the splashing waves, or de-stressing in the hot springs of St. Lucia, exploring the rivers and lush greenery of Dominica, or meditating on one of the many secluded islands of British Virgin Islands. There is no other place to be whether it is for convalescence, recuperation, or general relaxation.

Barbados, and by extension the entire Caribbean region, remains not just open for business but as a partner and tool to assist in the global restart of businesses and economies. As we emerge from this crisis, our perspectives have expanded, our hunger is stronger, and our need for cooperation and innovation will be necessary for survival.