Various investment incentives, administered through the Barbados Investment and Development Corporation (BIDC), are available to both domestic and foreign investors. These include exception from custom duties, tax reduction and exceptions, and training grants. The government favors productive foreign investments with an emphasis on tourism and banking because of their employment and foreign exchange generating potential. Special incentive packages exist for the hotel industry, manufacturing, and offshore business sectors. The Fiscal Incentives Act of 1974 provides for tax holidays up to 10 years for investment in manufacturing, plus a schedule of rebates on income tax is available for any manufacturing company deriving profits from exports. There is full exemption from all income and withholding taxes for investors in some offshore industries (captive insurance, foreign sales corporations), while most International Business Corporations (IBCs), provided they export 100% of their manufactured output, pay 1% to 2.5% corporate tax rate, can import production equipment duty free, and are free of exchange controls. Foreign ownership of Barbadian enterprises or participation in joint ventures must be approved by the Central Bank. The offshore sector offers many opportunities, particularly given the island's strong educational base. The government is stable, labor relations are comparatively tranquil, political violence is unknown, and corruption is not considered a problem.
Barbados has concluded double taxation treaties with the United States, Canada, the United Kingdom, CARICOM, Cuba, China, Venezuela, Sweden, Finland, Norway, and Switzerland.
The government does not keep statistics on foreign investment. According to UNCTAD estimates, the annual flow of foreign direct investment (FDI) peaked in 2000, at $19.4 million, up from $14.8 million in 1997. The global slowdown and decline in tourism after the 11 September 2001 terrorist attacks in the United States helped bring a decline to $17.5 million in 2001. FDI inflow is estimated to have declined further in 2002 and in the first half of 2003. US direct investment in Barbados in 2002 was a negative divestment of -$243 million. About $1 million in equity shares in Barbados companies was held by US investors in 2001.