Barbados was one of the first English speaking countries in the Caribbean to establish diplomatic relations with China over 40 years ago. Whilst Barbados’s most used Double Taxation Agreement (DTA) is with Canada, well-informed and discerning investors have for many years also been profiting from the benefits afforded by the Barbados/China DTA.
The Barbados/China DTA is used in particular for inward investments into China. It is also advantageous for Chinese business groups for structuring their intra-group company loan arrangements. Properly organised and administered transactions can result in significant savings on Chinese withholding taxes payable on loan interest and on dividends.
Additionally, and in support of the DTA, the Barbados/China Bilateral Investment Treaty (BIT) (1998) gives vital asset protection to foreign investors making investments into China. The BIT ensures compensation for loss of property and provides for international arbitration to settle disputes. The BIT allows for the transfer of returns on investments made. Third parties investing into China can avail themselves of this commercially important legal safeguard by investing through a Barbados company.