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Posted On Saturday, March 21, 2020 By dev-admin
There have been a number of changes to both the Companies Act and the Income Tax Act that came into effect from late 2019 into 2020.
On December 3rd, 2019, a number of amendments were made to the Companies Act, which impacts each of your respective companies. I have noted the key changes below as follows:
1) All companies whose annual revenue exceeds BDS$1 million are no longer required to file annual returns at Corporate. Instead, they must register with a Corporate Services Provider (CSP) which must perform their corporate services for them. These services include providing the services of a registered office or otherwise acting as a person authorized to accept service or correspondence and filing of statutory forms, resolutions, and notices.
2) All registrations must be completed on or before May 31st, 2020.
3) All external companies must register with a CSP.
The fees to engage a Corporate Service Provider are annual fees paid at the beginning of each year and the fee you can expect to pay for the general service in Barbados is USD$1,500.00 per year per company.
With respect to the amendments to the Income Tax Act and the tax system in Barbados, the following are the key changes:
1) Every individual or company (in your case property) which is used as a rental property, must register with the Barbados Revenue Authority via their Tax Administration Management Information System (commonly known as TAMIS) to obtain a unique 13 digit number.
2) Each property which has rental income must register to pay the room rate levy or shared economy levy.
3) Once revenue from rentals or other income exceeds the threshold of BDS$200,000.00 (USD$100,000.00 or GBP$75,000.00) a company must also register for Value Added Tax (commonly known as VAT).
4) The maximum corporation tax rate has reduced from 15% and 25% (non-residential rental properties) to 5.5% of revenue thus making our Barbados a very attractive place to own property and conduct business.
5) Removal of withholding tax on dividends paid to non-residents.
It is important to engage the services of a CSP and an Accounting Firm to ensure that both your corporate and local statutory obligations are met in a timely manner.
We are affiliated with Mr. Kirk Smith, a certified accountant, who is the Principal of Turnstone Solutions Inc and KS Consulting Inc, a CSP and accounting firm respectively, which currently services our requirements at Barbados Sotheby’s International Realty and who we are assured will provide a timely, efficient, and most importantly, professional service to you, our clients.
The recent changes to the Companies Act and the Income Tax Act in Barbados have been to ensure the country is and remains compliant with global standards and regulations.
With respect to the Companies Act, the requirement to register with a CSP is for licenced professionals to take on the administrative undertaking of ensuring that a company complies with ALL requirements under the Companies Act. These include ensuring shares are issued, annual general meetings are held and minuted, and if you are above the audit threshold, that audits are being done, and those audited financials filed. This also includes having adequate records on each director and shareholder, which is similar to what the commercial banks request now when opening or making amendments to your bank account. These are KYC (know your client) information – up to date identification records, updated personal address, source of funding, for both directors and shareholders.
Why is this now important? The Act which governs CSP’s has also been amended and each CSP will be periodically audited to ensure that each of their clients’ records is being maintained and are in compliance with our anti-money laundering legislation on an ongoing basis. Any non-compliance on their client’s end will result in penalties to the CSP and potential loss of licence, which will, in turn, mean the company, which is in breach of being struck off the register at corporate affairs, and as such, basically, the company ceases to exist.
With regard to the Income Tax Act amendments, the introduction of TAMIS was critical for the local tax authorities to ensure that one system was capturing the key taxes that pertain to companies and individuals generated either via either being employed by a company or self-employment. It is commonplace that high taxes are usually a deterrent to compliance for filing and paying taxes, and with the combination of the integrated TAMIS system with the reduction in the corporation tax rate, it is expected that each taxpayer will now contribute in a more equitable way to the tax revenue of the country, as they work to ensure that all registered businesses are accounted for in the pool of taxpayers from which the various taxes are generated.
Turnstone Solutions Inc is our Corporate Service Provider that can manage your corporate affairs to ensure that your documentation is complete and all the necessary due diligence that is required as per today’s regulations is satisfied and updated as is necessary to ensure compliance with the Companies Act and for good corporate governance. We are affiliated with an experienced accounting team that we work with to ensure that your accounting needs and statutory obligations are managed efficiently and effectively.