Barbados Economic Substance Guidelines

The Companies (Economic Substance) Act 2019-43 (ESA), which introduces economic substance requirements for companies in Barbados, was approved by the Barbados Parliament on 27 November 2019 in response to the work of the Organization for Economic Cooperation and Development (“OECD”) as part of the Base Erosion and Profit Shifting (“BEPS”) Action 5 and the European Union (“EU”) Criterion 2.2 initiatives.

These standards require geographically mobile activities to have economic substance regardless of whether the activities are conducted in a no or nominal tax jurisdiction or in a preferential tax regime of a jurisdiction that has corporate income tax.

The ESA applies to all Barbados resident companies conducting relevant activities and is effective for fiscal periods commencing on the dates prescribed in the Regulations.

This document provides guidance on the scope and application of the ESA.