How is the income of a non-resident person determined for the purposes of the Income Tax Act?
In calculating the assessable income of a non-resident person for an income year, only income derived from Barbados shall be included, income not derived from Barbados shall not be included and no deductions or allowances in respect of the calculation of assessable income shall be made in respect of income or the production of income not derived from Barbados.
For the purposes of subsection (1) income derived from Barbados includes :
Any amount payable or paid to a non-resident person by a person resident in Barbados on account or in satisfaction of liability for fees or charges arising under a contract for the provision of services, whether such contract is oral or in writing and whether or not it is made in Barbados
Amounts received from an office in Barbados or from employment exercised therein under a contract of employment whether made within or outside Barbados
Income from Royalties is deemed to arise in Barbados where the use of or the right to use a right or property occurs in Barbados

Section 16
Further, where in an income year a non-resident person :
produced, grew, mined, created manufactured, fabricated, improved, patched, preserved or constructed in whole or in part, anything in Barbados, whether or not he exported that thing without settling it prior to exportation
solicited orders or offered anything for sale in Barbados through a factor, agent or servant, whether the contract or transaction was to be completed inside or outside Barbados or partly in and partly outside Barbados
he shall be deemed to have been carrying on business in Barbados in that income year and the income of that business shall be deemed to be income derived from Barbados for that income year. Section 85(2)
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Every person paying to a non-resident person-
1. interest, or
2. rents, or
3. maintenance, or
4. dividends from profits that are exempt from tax or have not been taxed, other than dividends paid to a non-resident person
in respect of shares issued by a mutual fund under the Mutual Funds Act; or
with respect to whom the Commissioner has issued a certificate that the non-resident is exempt from income tax on such dividend under the Pioneer Industries Act, or the Industrial Development (Export Industries) Act or the Industrial Incentives Act, or the Industrial Incentives (Factory Construction) Act, or
5. an amount that may be deducted by the person making the payment under Sections 24C and 24D in calculating his assessable income; or
6. an amount on account or in satisfaction of liability for fees or charges arising under a contract for the provision of management or administrative services or of technical or managerial skills, whether such a contract be oral or in writing and whether or not made in Barbados; or
7. royalties,
shall deduct or withhold therefrom such amount as is prescribed and shall at such time as is prescribed pay the amount so deducted or withheld to the Commissioner as a prepayment of tax of the person (non-resident) to whom that amount would otherwise have been paid. Section 64(1). It must be noted that for the purposes of subparagraph (6) of subsection (1)(e), tax shall be deducted or withheld whether or not the fees or charges to which that subparagraph refers have been paid. Section 64 (1A)
It must further be noted that in respect of items (1) (2) and (7) of subsection 1(e) the tax required to be prepaid by virtue of this section constitute payment in full of the tax due on the income described in those terms, of the non-resident person (Sec 64(B). The above conditions as outlined in subsection (1)(e), 6 or (1B) shall not apply where a professional accounting firm carrying on business in Barbados pays to its associate firm outside Barbados an amount on account or in satisfaction of liability for fees or charges for providing professional services in assisting the firm in Barbados in servicing the international, financial and business section. Section 64(5).
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1. The promoters of entertainment provided by non-resident entertainers shall withhold the prescribed amount from the gross earnings of those entertainers and shall immediately thereafter or at such other time as the Commissioner prescribes, pay to the Commissioner the amount withheld as payment in full of the tax payable in respect of those earnings.

2. Tax under this section and section 64E is payable notwithstanding that the earnings described therein have not been paid to non-resident entertainers or persons as the case may be.

3. Subsections (2) to (4) of section 64 apply in respect of amounts withheld under this section and section 64E as they apply to tax withheld under that section. Section 64D

Income of Non Resident Persons is Subject to Withholding Taxes –

1. Where services are contracted, whether directly or indirectly to be performed in Barbados by non-resident persons other than by way of carrying on business through a fixed base, the persons in Barbados who are under a contractual liability to pay for those services shall withhold the prescribed amount from the gross earnings of those non-resident persons and shall immediately thereafter or at such other time as the Commissioner prescribes, pay to the Commissioner the amount withheld as payment in full of the tax payable in respect of those earnings.

2. Where payment for services to which subsection (1) refers is made by a company resident in Barbados to a non-resident affiliate company, the resident company, shall withhold the prescribed amount from the gross earnings in accordance with subsection (1) and pay the amount withheld as payment in full of the tax payable as specified in that subsection.

3. For the purposes of this section –

one company is affiliated with another company if one of them is the subsidiary of the other or both are subsidiaries of the same holding company or each of them is controlled by the same person

if 2 companies are affiliated with the same company at the same time they are affiliated with each other at that time.

4. Where a person fails to withhold the prescribed amount, in accordance with this section, the payment for services to which this section refers, may not be claimed as an expense or deduction for the purposes of this Act or the Petroleum Winning Operations Taxation Act. Section 64E

Every resident company shall withhold or deduct an amount equal to 15 per cent thereof from any amount paid by it as dividends, other than dividends referred to in paragraph (iv) of section 64(1)(e) dividends or other distribution paid by a mutual fund in respect of shares, unit or other equity interest held in that mutual fund and preference dividends, to a non-resident person and shall within such time as is prescribed pay the amount so withheld or deducted to the Commissioner as payment in full of the tax, in respect of the income represented by the dividend, of that non-resident person. Section 65(4)

Where in respect of the income year 1976 and every subsequent income year an office, branch or agency of a non-resident company engaged in trade or business in Barbados remits or is deemed to remit any part of the profits of such non-resident company accruing in or derived from Barbados, such office branch or agency shall deduct or withhold therefrom an amount equal to 10% thereof and shall within such time as is prescribed pay the amount so deducted or withheld to the Commissioner.

For the purposes of the above subsection (5) an office, branch or agency of a non-resident company shall be deemed to have remitted the profits thereof, except to the extent that the office, branch or agency has reinvested to the satisfaction of the Commissioner such profits or any part thereof in Barbados, other than in the replacement of fixed assets. Section 65 (5 & 6)

Payments to non-residents are subject to withholding tax as provided below.

Interest – a withholding tax at the rate of 15%. Note however that no amount shall be withheld as tax from any amount payable to a non-resident person as interest on bonds, debentures or stock of the Government beneficially owned by that non-resident person. Section 90 of Regulations

Rents – Payments of rents are subject to a 25% withholding tax. However this deduction may not apply where the Commissioner has issued a certificate that was not revoked to the effect that this requirement does not apply in respect of certain payments to a non-resident person because either –

that non-resident person has habitually filed returns of income in respect of similar payments in prior income years; or

that non-resident person is exempt from income tax on such payments under an enactment in force in Barbados Section 90A of Regulations

Royalties - Payments of Royalties are subject to a 15% withholding tax.

Covenanted payments- a withholding tax of 20% is to be deducted from payments made to non-resident under a settlement in accordance with sections 24C and 24D of the Act. Section 90B of Regulations

Dividends from Untaxed Profits - Payments of dividend out of profits that are exempt from tax or have not been taxed – 40% withholding tax.

Management Fees - A withholding tax of 15% is to be deducted from an amount paid to a non-resident person on account or in satisfaction of liability for fees or charges arising under a contract for the provision of management or administrative services or of technical or managerial skills, whether such contracts be oral or in writing and whether or not made in Barbados and whether or not the fees or charges have been paid.

Section 93A of Regulations - Payments for service other than for the provision of management, administrative, technical or managerial skills under 64D(1) and 64E(1) is subject to a 25 % withholding tax on gross earnings.

Section 93B of Regulations - NEW SHARES IN PUBLIC COMPANIES - A non-resident person who purchased new shares in a public company under conditions defined in Section 37B (1) & (2) of the Act is not entitled to claim a deduction for said shares from his assessable income.

Section 37B (3)(a) - CREDIT - No credit is allowed for an income year to a person who is a non-resident for that income year. Income Tax Regulations Section 11.

A non-resident person is not entitled to claim any deductions under Section 38B of the Act and may not file a declaration with an employer. Section 57 (2)(a) of Income Tax Regulations. However a proportionate part of the deduction(s) may be claimed where the person’s world income is declared. Section 39(1)(2)
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A non-resident person who is a commonwealth citizen is entitled to commonwealth relief as set out under Section 82(1).
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Where the non-resident person is a resident of another state with which Barbados has a double taxation agreement, then the non-resident person may claim double taxation relief in accordance with Section 83 of the Act and the double taxation treaty in force with the state of residence.
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