 The
Barbados Exempt Insurance act of 1983 was designed to encourage
the "Captive" insurance market in Barbados. These
are companies who are not normally in the business of insurance
but are established to insure the risk of their owners. To
be granted a license the licensee must be self-managed or
managed by a licensed insurance management company.
Barbados was late onto the captive insurance sector and this
business did not take off until 1984 when the Barbados-US
tax treaty was signed. This legislation allowed an exemption
of the 1% to 4% Federal Excise Tax (FET) normally applied
to re-insurance or insurance paid to a non-U.S. corporation,
so long as the non-U.S, corporation was domiciled in Barbados.
While this particular exemption expired in 1991, Barbados
had in the process established its reputation as a good place
to establish captive insurance corporations. This was especially
true for the Canadian market, because of the Canada-Barbados
tax treaty of 1980. This treaty allowed a Canadian Company
with an established domicile in Barbados to take a tax deduction
for its insurance premium and still accrue tax free income
from the insurance business.
The Barbados Exempt Insurance Act states that for a company
to qualify as an Exempt Insurance company it must be incorporated
in Barbados with a minimum capital of US$ 125,000, and at
least one of its directors must be a resident citizen of Barbados.
Exempt Insurance companies are taxed on their profits at the
rate of 0% for the first 15 years and thereafter, 2% on the
first $250,000 of profits. They are also exempt from withholding
tax and exchange control restrictions.
Contact
Office of the Supervisor of Insurance
Ministry of Finance and Economic Affairs
Nicholas House, Broad Street, Bridgetown Barbados
Tel: (246) 426-3815
Fax: (246) 436-2699
Email: sofi@caribsurf.com
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