WORLD TRADE
ORGANIZATIONG/SCM/N/71/BRB
1 March 2002
(02-1025)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
SUBSIDIES
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994
and Article 25 of the Agreement on Subsidies and
Countervailing Measures
BARBADOS
The following communication, dated 27 February 2002, has been received from the
Permanent Mission of Barbados.
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This notification is submitted by the Government of Barbados in accordance with Article 27.4
of the Agreement on Subsidies and Countervailing Measures and the provisions contained in
document G/SCM/39.
Barbados submitted an initial notifi cation (G/SCM/N/74/BRB) on 28 December 2001
requesting an exemption for a number of programmes.  It has been determined that certain
programmes referred to in the initial notification for which extension was sought are of a form other
than tax or duty exemption.  The programmes for which exemption is now being sought under
Article 27.4 and the provisions of document G/SCM/39 are as follows:
(i) Fiscal Incentive Programme
(ii) Export Allowance
(iii) Research and Development Allowance
(iv) International Business Incentives
(v) Societies With Restricted Liability
Details of these programmes are contained in Section I of the attachment to this
correspondence.
Section II of the attachment contains details of the following programmes which are being
notified under Article 27.4 :
(i) Export Grant and Incentive Scheme
(ii) Export Rediscount Facility
(iii) Export Credit Insurance Scheme
(iv) Export Finance Guarantee Scheme
It has been determined that Article 27.4 is not relevant to those programmes notified in
G/SCM/N/74/BRB but not now referred to in Section I or Section II of this notification.
It is to be noted that this notification is made taking account of Article 25.7 of the Agreement
on Subsidies and Countervailing Measures.G/SCM/N/71/BRB
Page 2
                                SECTION I
Programme 1
1. Title of Programme
Fiscal Incentives Programme.
2. Period covered by Notification
As of September 2001.
3. Policy Objective
To stimulate greater levels of production of selected products required for domestic use and in
demand extra-regionally, as well as to utilize raw materials or skills in Barbados.
4. Background and Authority of Subsidy
Fiscal incentives are provided under the authority of the Fiscal Incentives Act and are
administered by the Barbados Investment and Development Corporation.
5. Form of Subsidy
Approved enterprises are granted exemption from corporation tax, and customs duties on
plant, equipment, machinery, spare parts, raw materials or components as well as the 15 per cent
Value Added Tax.
6. To whom and how is the subsidy provided
Under the Fiscal Incentives Act Cap 71, Barbadian or foreign owned companies may qualify
for benefits under this legislation.  A company which satisfies specific criteria may be granted
‘Approved Enterprise’ status by the Minister resp onsible for Economic Development. An  ‘Approved
Enterprise’ is therefore defined as an enterprise which is approved by the Minister for the purpose of
conferring a benefit under the Act and which is or will be engaged in the production of an ‘approvedproduct’.
The Act requires that the applicant must produce evidence of the availability of financing,
technical expertise and the other resources required to set up a viable operation.
The Minister will declare a product to be an ‘approved product’ if he considers that it will:
(a) be of benefit to the island, both economic and non-economic considerations being
taken into account; and
(b) have a beneficial effect on employment in numbers and gross wages.
An ‘Enterprise’ means any company registered in Barbados.  ‘Industry’ means a
manufacturing or processing industry and includes deep-sea fishing and shrimping where they form
part of an integrated processing operation but does not include agriculture or tourism  (this does not
exclude agro-industry).G/SCM/N/71/BRB
Page 3
The main benefits which are offered to prospective investors are exemption from income tax
and relief from customs duty over a period of betwee n 11 and 15 years which is referred to as the tax
holiday period.
Section 21  (1) of the Act provides that during the period of its tax holiday an approved
enterprise will receive relief from customs duty on all imports of plant, equipment, machinery, spare
parts, raw materials or components thereof which are required for the following purposes where such
articles are not available in the CARICOM region:
(a) for constructing, altering reconstructing or extend the approved enterprise, or
(b) for use by the enterprise in the manufacture of an approved product
The Act sets out the maximum number of years tax holiday which an approved enterprise
may receive, depending on its classification.  The following table shows the maximum number of
years for which an approved enterprise may receive relief from income tax and customs duty.
Local Value Added Years
Group I 50% and over 15
Group II 25% and under 50% 13
Group III 10% and under 25% 11
Enclave and Highly Capital
Intensive Industries15
Group I Enterprises - these are enterprises whose local value added in respect of the approved
products amounts to 50 per cent or more of the value of sales ex-factory of the product.
Group II Enterprises - these are enterprises whose local value added in respect of approved
products amounts to 25 per cent but less than 50 per cent of the receipts from sales ex-factory.
Group III Enterprises - these are enterprises whose local value added in respect of the
approved products amounts to 10 per cent but less than 25 per cent of the receipts from sales ex-
factory.
An Enclave Enterprise is one which manufactures products exclusively for export outside
CARICOM.
Highly Capital Intensive Industries - these are enterprises which involve a capital investment
not less than US$25 million and are eligible for a 10-year tax holiday irrespective of their local value
added.
The extent of benefits under the Fiscal Incentives Act to be enjoyed by an approved enterprise
is determined by the contribution of the enterprise to the national and regional economy measured interms of local value added.
7. Subsidy per Unit or the Total Amount Budgeted for that Subsidy
For the period 1999-2001 a total of BDS$32,797,440 in revenue remitted for fiscal incentives
was recorded by the Customs Department.G/SCM/N/71/BRB
Page 4
8. Duration of a subsidy and/or time limits attached to it
Indefinite
9. Statistical data permitting an assessment of the trade effects of a subsidy
For the period 1999-2001 fourteen (14) companies received fiscal incentives.G/SCM/N/71/BRB
Page 5
Programme 2
1. Title of Programme
Export Allowance
2. Period covered by Notification
As of September 2001
3. Policy Objective
To stimulate exports to foreign markets.
4. Background and Authority of Subsidy
Allowances are provided under the authority of the Income Tax Act (section 14A and first
schedule of the Income Tax Act) and are admini stered by the Commissioner of Inland Revenue.
5. Form of Subsidy
Income tax credit is in the form of a tax rebate of tax payable on taxable income.
6. To whom and how is the subsidy provided
Under this Act, enterprises exporting to a non-CARICOM country and which do not obtain
benefits under the Fiscal Incentives Act is entitled to a rebate of income or corporation tax on theexport profits of the business. This rebate is based on the percentage of export sales to total sales. In
computing the tax payable for any income year of su ch an enterprise an allowance is granted against
the tax payable on the taxable income. The rates are as shown below:
Export Profits as % of Total
ProfitsRebate of Income Tax as % of
Income Tax on Export ProfitsEffective Rate of Tax
Up to 20% 35% 26.0%
21 to 40% 45% 22.0%
41 to 60% 64% 14.4%
61 to 80% 79% 8.4%
Over 80% 93% 2.8%
Businesses entitled to this allowance may also claim a 40 per cent investment allowance
instead of the normal initial allowance of 20 per cent.
Similarly, companies in the manufacturing and refining of sugar and in the manufacture of
products from clay or limestone for the domestic and export markets are also entitled to a 40 per cent
investment allowance.G/SCM/N/71/BRB
Page 6
7. Subsidy per Unit or the Total Amount Budgeted for that Subsidy
Income Year Amount of Export
Allowance Granted(BDS$)
1998 2,907,255
1999 2,723,894
2000 4,277,737
8. Duration of a subsidy and/or time limits attached to it
Indefinite
9. Statistical data permitting an assessment of the trade effects of a subsidy
Income Year Number of Companies
1998 186
1999 82
2000 51G/SCM/N/71/BRB
Page 7
Programme 3
1. Title of Programme
Research and Development Allowance.
2. Period covered by notification
As of September 2001.
3. Policy Objective
To encourage/facilitate and promote the development of export sales while assisting exporters
in penetrating new and existing markets.
4. Background and Authority of Subsidy
Allowances are provided under the authority of the Income Tax Act (Section 12D and Part I
of the schedule of the Income Tax Act) and are administered by the Commissioner of Inland Revenue.
5. Form of Subsidy
Deduction from taxable income.
6. To whom and how is the subsidy provided
Under this Act businesses engaged in exporting to a country outside of the CARICOM
Common Market which make an expenditure on market research and development for the purpose of
promoting the export sales of the business, is entitled to deduct from taxable income an amount equal
to 150 per cent of the actual expenditure incurred.
7. Subsidy per Unit or the Total Amount Budgeted for that Subsidy
Unavailable.
8. Duration of a subsidy and/or time limits attached to it
Indefinite.
9. Statistical data permitting an assessment of the trade effects of a subsidy
Information of the trade effects is not available.G/SCM/N/71/BRB
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Programme 4
1. Title of Subsidy
International Business Incentives.
2. Period Covered by Notification
As of September 2001.
3. Policy objective and/or purpose of the subsidy
One of Barbados’ key objectives is the continuing diversification of the economy with an
increasing focus on the provision of high quality goods and services from Barbados.  The aim is to
ensure the creation of employment, the earning of foreign currency and the encouragement of
technology transfers.
The International Business Companies (IBC) legislation is intended to encourage this
development through the provision to local and international investors of incentives by way of tax
reduction, exemptions and benefits for international manufacturing and international trade and
commerce from within Barbados.
4. Background and authority of the subsidy
Incentives are provided under the authority of the International Business Companies Act
Cap.71 and administered by the Ministry of Economic Development and the Commissioner of InlandRevenue.
5. Form of subsidy
Tax and duty concessions.
6. To whom and how the subsidy is provided?
The incentives/concessions are provided to entities licensed under the International Business
Companies (IBC) legislation.  Tax on income on a sliding scale is administered through the
Department of Inland Revenue when tax returns are filed with that Department. Exemptions from the
withholding tax are also administered by the Commissioner of Inland Revenue.
A 35 per cent income tax exemption may be granted to individuals who meet the criteria of
specially qualified individuals and where the IBC is unable to acquire their skills within CARICOM.
This concession is administered by the Ministry of Economic Development, which makes
recommendations to the Ministry of Finance, the latter having the authority to grant tax concessionsunder the Act.
The IBC Act also makes provision for duty-free concessions to licensed IBCs for the
importation of plant, machinery, equipment, fixtures, appliances, apparatus, tools and spare parts and
such raw materials, goods, components and articles, as is necessary for the company to carry on itsinternational business.  The grant of a licence allo ws this concession, which is administered by the
Customs Department under the customs legislation.G/SCM/N/71/BRB
Page 9
The Act makes provision for a guarantee period of 15 years, for which timeframe the licensed
entity would be guaranteed the concessions.
7. Subsidy per unit, or in cases where it is not possible, total amount or the annual amount
budgeted for that subsidy.
Tax Concessions.
Year Value of Subsidy (BDS$)
1998 2,244,105
1999 9,986,550
2000 19,215,780
The value of the subsidy was computed by subtracting the tax payable from the total tax
payable if the tax rate of 40 per cent were applicable to the companies registered under the IBC Act.
Duty Concessions
The amount of duty forgone annually for companies registered under the IBC Act over the
past three years is as follows:
Year Duty Foregone (BDS$)
1999 9,236,976
2000 9,057,199
2001 6,761,844
8. Duration of the Subsidy
Indefinite.
9. Statistical data permitting an assessment of the trade effects of the subsidy
Year No. of  Companies
1998 4
1999 8
2000 9
2001 6G/SCM/N/71/BRB
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Programme 5
1. Title of Subsidy
Tax and Duty Concessions- Societies with Restricted Liability.
2. Period covered by notification
As of September 2001.
3. Policy and objective and/or purpose of subsidy
The Societies with Restricted Liability (S LR) Act was developed in keeping with the
Government policy to widen the range of products av ailable to investors in the international business
and financial services sectors.  In its efforts to harmonize incentives in this sector, the SRL Act makes
provisions for similar incentives as those granted in the International Business Companies (IBC) Act.
4. Background and authority of the subsidy
The Societies with Restricted Liability Act was enacted in 1995.  This Act created the Society
with Restricted Liability as a hybrid entity, which has the features of a company as well as apartnership.  Incentives are provided under the authority of the Societies with Restricted Liability Act
1995-7 and are administered by the Ministry of Ec onomic Development and the Ministry of Finance
(Department of Inland Revenue and the Customs Department).
5. Form of subsidy
Tax and duty concessions.
6. To whom and how is the subsidy provided?
The incentives are provided to entities licensed under the Societies with Restricted Liability
Act.  Tax on income on a sliding scale is administered through the Department of Inland Revenuewhen tax returns are filed with that Department. Exemptions from withholding tax are also
administered by the Inland Revenue Department.
A 35 per cent income tax exemption may be granted to individuals who meet the criteria of
specially qualified individuals and where the SRL is unable to acquire their skills within CARICOM.This concession is administered by the Ministry of Economic Development, which makes
recommendations to the Ministry of Finance, the latter having the authority to grant tax concessions
under the Act.
The SRL Act also makes provision for duty-free concessions to licensed SRLs for the
importation of plant, machinery, equipment, fixtures, appliances, apparatus, tools and spare parts and
such raw materials, goods, components and articles, as is necessary for the company to carry on its
international business.  The grant of a licence allo ws this concession, which is administered by the
Customs Department under the customs legislation.
One of the characteristics of the SRL is that it has a maximum life of 50 years, so that the
concession will not exceed that period.  The Act however makes provision for a guarantee period of
30 years, for which timeframe the licensed entity is guaranteed the concessions.G/SCM/N/71/BRB
Page 11
7. Subsidy per unit, or in cases where it is not possible, total amount or the annual amount
budgeted for that subsidy
Year Taxes Remitted (BDS$)
2000 16,883
2001 545,839
8. Duration of a subsidy and/or any time limits attached to it
Indefinite.
9. Statistical data permitting an assessment of the trade effects of a subsidy
To date, there is one (1) manufacturing firm registered under the SRL Act.G/SCM/N/71/BRB
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Section II
Programme 1
1. Title
Export Grant and Incentive Scheme (EGIS)
2. Period covered by Notification
Measure as of September 2001.
3. Policy Objective
To facilitate the export marketing efforts of companies.
4. Background and Authority of Subsidy
The scheme is provided under the authority of the Fiscal Incentives Act and is administered
by the Barbados Investment and Development Corporation(BIDC) whose responsibility is to
encourage, promote and facilitate the development of export trade.
5. Form of subsidy
Grant
6. To whom and how is the subsidy provided
The EGIS is a reimbursable grant scheme which provides assistance to manufacturers and
service companies undertaking the fo llowing activities: trade missions, participation in international
exhibitions, market research, and advertising and sales promotion.
The scheme funds one company official per activity.  An application must be made to BIDC
giving full details of the proposed visit and cost s two weeks prior to the activity. Approvals and
support levels must be determined and a commitment letter issued to the company before the project
is implemented.
The level of support is 50 per cent or 75 per cent of the direct cost of each marketing activity.
Reimbursable costs include airfare, registration and booth space.  A standard per diem is used to
calculate the reimbursable expenses relating to hotel accommodation, ground transportation andmeals.
7. Subsidy per Unit or the Total Amount Budgeted for that Subsidy
Year Amount Budgeted (US$)
1999 65,000
2000 65,000
2001 75,000G/SCM/N/71/BRB
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8. Duration of a subsidy and/or time limits attached to it
Indefinite.
9. Statistical data permitting an assessment of the trade effects of a subsidy
Year # of Benefiting
CompaniesValue of Exports % of Domestic
Exports
2000 29 $11,149,453 2.94
2001 44 $52,904,392 15.34G/SCM/N/71/BRB
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Programme 2
1. Title of Subsidy
Export Rediscount Facility.
2. Period covered by Notification
As of September 2001.
3. Policy and Objective and/or Purpose of Subsidy
To encourage small and medium-sized Barbadian exporters to increase their exports by
discounting their export receivables and enhancing their cashflow cycle.
4. Background and authority of the Subsidy.
Central Bank Act.
5. Form of Subsidy
Exporters discount their export bills with commercial banks which in turn rediscount them
with the Central Bank.
6. To whom and how is the Subsidy provided?
Exporters who have export credit insurance and guarantee facilities can assign them to their
banks and use the discount mechanism to obtain finer raters for their export receivables.
7. Subsidy per unit, or in cases where it is not possible, total amount or the annual amount
budgeted for that subsidy
The facility is currently dormant.
8. Duration of a Subsidy and/or any time limits attached to it
Indefinite.
9. Statistical data permitting an assessment of the trade effects of a  Subsidy
The facility is currently dormant.G/SCM/N/71/BRB
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Programme 3
1. Title of Subsidy
Export Credit Insurance Scheme.
2. Period covered by Notification
As of September 2001.
3. Policy and Objective and/or Purpose of Subsidy
To provide insurance coverage for exporters to protest against unforeseen losses in overseas
markets.
4. Background and authority of the Subsidy
Section 41 of the Central Bank Act gives the Central Bank the authority to administer export
credit insurance.
5. Form of Subsidy
Export credit insurance.
6. To whom and how is the Subsidy provided?
The export credit insurance scheme provides insurance cover directly to exporters to cover
them against non-payment by overseas buyers and is available to any person or organization who
partly or wholly produces, processes or manufacturers goods in Barbados for export.  The Central
Bank is required to evaluate the commercial and political risks associated with doing business with
the individual buyer and/or his country.
The cost of the insurance is borne by the exporter directly or indirectly and varies according
to the level of cover required and the duration.  The amount of premium paid will also depend on the
level of individual buyer and country risks.  Premium rates for insurance falls within range of 0.5 per
cent of the gross invoice value of goods exported.
7. Subsidy per unit, or in cases where it is not possible, total amount or the annual amount
budgeted for that subsidy
Year Insurance (BDS$) Claims
1999 1,110,000 -
2000 800,000 -
2001 270,000 -
8. Duration of a Subsidy and/or any time limits attached to it.
Indefinite.G/SCM/N/71/BRB
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9. Statistical data permitting an assessment of the trade effects of a Subsidy
Year No. of Companies
1999 6
2000 5
2001 2G/SCM/N/71/BRB
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Programme 4
1. Title of Subsidy
Export Finance Guarantee Scheme.
2. Period covered by Notification
As of September 2001.
3. Policy and Objective and/or Purpose of Subsidy
To provide guarantee cover for local financial institutions to protect against unforeseen losses
in overseas markets.
4. Background and authority of the Subsidy.
Section 41 of the Central Bank Act gives the Central Bank the authority to administer export
finance guarantee schemes.
5. Form of Subsidy
Export finance guarantee.
6. To whom and how is the subsidy provided?
The export finance guarantee scheme provides pre-shipment and post-shipment export
finance guarantee cover to commercial banks for loans made to exporters to finance export orders and
receivables.
The cost of the guarantee is borne by the exporter directly or indirectly.  The amount of
premium paid will also depend on the level of individual buyer and country risks.  Premium rates for
guarantees average 1.5 per cent per annum on the outstanding balance.
7. Subsidy per unit, or in cases where it is not possible, total amount or the annual amount
budgeted for that subsidy
Year Guarantees (BDS$) Defaults
1999 120,000 -
2000 260,000 -
2001 270,000 -
8. Duration of subsidy and/or time limits attached to it
Indefinite.G/SCM/N/71/BRB
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9. Statistical data permitting an assessment of the trade effects of a Subsidy
Year No. of Companies
1999 1
2000 1
2001 2
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