DEPARTMENT OF STATE 

WASHINGTON 

July 14, 2004 

Excellency: 

I have the honor to refer to the Second Protocol Amending the 

Convention Between the United States of America and Barbados for the 

Avoidance of Double Taxation and the Prevention of Fiscal Evasion with 

Respect to Taxes on Income Signed on December 31, 1984, which was 

signed today and inform you on behalf of the Government of the United 

States of America of the following: 

During negotiations leading to the conclusion of the Protocol signed 

today, the negotiators developed agreed Understandings that are attached to 

this note. The Understandings are intended to give guidance both to 

His Excellency 

Michael Ian King, 

Ambassador of Barbados. 

DIPLOMATIC NOTE 
taxpayers and tax authorities of our two countries in interpreting Article 22 

(Limitation on Benefits). 

If the attached Understandings are acceptable to the Government of 

Barbados, this note and your note in reply thereto will indicate that our two 

Governments share a common understanding in this matter. 

Accept, Excellency, the expression of my highest consideration. 

For the Secretary of State: 

Attachment: 

As stated. 
Embassy of Barbados 

2144 Wyoming Avenue, N.W. 

Washington, D.C 20008 

July 14, 2004 

The Secretary of State 

U.S. Department of State 

2201 C Street, N.W. 

Washington, D.C. 20520 

Excellency: 

I have the honour to confirm receipt of your Note of today’s date which 

reads as follows: 

“DEPARTMENT OF STATE 

WASHINGTON 

July 14, 2004 

Excellency: 

I have the honor to refer to the Second Protocol Amending the 

Convention Between the United States of America and Barbados for the 

Avoidance of Double Taxation and the Prevention of Fiscal Evasion with 

Respect to Taxes on Income Signed on December 31, 1984, which was 

signed today and inform you on behalf of the Government of the United 

States of America of the following: 
2 

During negotiations leading to the conclusion of the Protocol signed 

today, the negotiators developed agreed Understandings that are 

attached to this note. The Understandings are intended to give guidance 

both to taxpayers and tax authorities of our two countries in interpreting 

Article 22 (Limitation on Benefits). 

If the attached Understandings are acceptable to the Government 

of Barbados, this note and your note in reply thereto will indicate that our 

two Governments share a common understanding in this matter. 

Accept, Excellency, the expression of my highest consideration. 

For the Secretary of State: 

Attachment: 

As stated.” 

I have the honour to inform you that my Government agrees to the 

above. 

Accept, Excellency, the assurances of my highest consideration. 
UNDERSTANDINGS REGARDING THE LIMITATIONS ON BENEFITS 

ARTICLE IN THE U.S.-BARBADOS PROTOCOL 

1. The Protocol, signed December 18, 1991, Amending the Convention Between the 

United States of America and Barbados for the Avoidance of Double Taxation and the 

Prevention of Fiscal Evasion with Respect to Taxes on Income Signed on December 31, 

1984, was accompanied by Understandings Regarding the Scope of the Limitation on 

Benefits Article in the U.S.-Barbados Protocol. Those Understandings continue to apply 

for purposes of applying Article 22 (Limitation on Benefits) of the Convention, as 

amended by this Protocol, except to the extent the Understandings are inconsistent with 

the provisions of Article 22. 

2. Paragraph 3 of Article 22 provides that a person that is not entitled to the benefits of 

this Convention pursuant to the provisions of paragraph 1 of Article 22 may, 

nevertheless, be granted the benefits of the Convention if the competent authority of the 

State in which the income in question arises so determines. In making determinations 

under paragraph 3 of Article 22, it is understood that the Competent Authority will take 

into account all of the relevant facts and circumstances. In the case of an organization 

that fails to satisfy the requirements of paragraph 1(f) of Article 22 solely because 50 

percent or less of its beneficiaries, members or participants are persons entitled to the 

benefits of this Convention, the U.S. Competent Authority will favorably consider the 

following factors: 

(a) the organization is established in Barbados; 

(b) the sponsoring employer of the organization is a resident of Barbados 

entitled to the benefits of the Convention (other than a person described in 

paragraph 6 of Article 22); 

(c) more than 30 percent of the beneficiaries, members or participants of 

the organization are persons entitled to the benefits of this Convention; 

and 

(d) more than 70 percent of the beneficiaries, members or participants of 

the organization are individuals resident in a member of the Caribbean 

Community. 

3. For purposes of paragraph 6 of Article 22, a “special tax regime” shall mean: 

(a) in the case of Barbados: 

(1) the Exempt Insurance Act, Cap. 308; 
(2) the International Financial Services Act, 2002; 

(3) the International Business Companies Act, Cap. 77; 

(4) the Societies with Restricted Liability Act, Cap. 318B; or 

(5) the Insurance (Miscellaneous Provisions) Act, 1998; or 

(b) in the case of either Contracting State, any legislation or 

administrative practice enacted or adopted after the signing of this 

Protocol pursuant to which the income of a person is entitled to the same 

or substantially similar tax benefits to those granted under the legislation 

referred to in paragraph (a).