On 1 September 2005, Income Tax (Amendment) Regulations 2005 was enacted by Parliament. This amendment adjusts the rate of withholding on dividends from untaxed profits paid to a non-resident from 40% to:

-		33% in respect of income year 2004;
-		30% in respect of income year 2005; and
-		25% in respect of income year 2006 and subsequent years.

Income Tax (Amendment) Act 2005-22 enacted

On 1 September 2005, the Income Tax (Amendment) Act 2005-22 was enacted by Parliament. The following amendments were made to the Income Tax Act (ITA):

General double taxation relief

In addition to "Commonwealth double taxation relief" and "Double taxation relief by international agreement", the ITA now makes provision for a "general double taxation relief" to include those countries with which Barbados has no agreement for the avoidance of double taxation. The new section (83A) to be inserted states:

-		"(1) Notwithstanding any other provision of this Act, with effect from income year 2005, where tax is payable in a country other than Barbados on profits, income or gains derived from sources in that country, the tax so payable in that country shall be allowed as a credit against the tax payable in Barbados on such profits, income or gains.
-		2) Where dividends are paid by a non-resident company to a resident company which holds directly not less than 10 per cent of the capital of that non-resident company, the credit referred to in subsection (1) shall take into account, the tax payable by the non-resident company on the profits out of which the dividends are paid.
-		(3) The tax credit referred to in subsection (1) shall not exceed the amount of the tax, as computed before the credit is given, which is attributable to the income derived outside Barbados."

Tax credit in respect of foreign currency

The list of services included in "qualifying overseas professional services" eligible for foreign currency tax credit has been extended to include information, education, investment management and e-commerce services.