Visiting the Caribbean is at the top of most vacation lists. However, smart business owners are leveraging the liberal tax systems in the region to grow their businesses.

Take Antigua and Barbuda, for example, a twin-island country with a population of 97,000 people. This country ended personal income (payroll) taxes in 2016 to improve the general standard of living and secure foreign investments.

Furthermore, Antigua and Barbuda residents are not subject to wealth, inheritance, or capital gains tax. However, employers pay a total of 6% to 9% of their employees’ salaries for social security, while employees pay 4% to 6% for the same purpose.

Doing business in Antigua and Barbuda is pretty easy thanks to its liberal tax laws. However, you should know that these laws are strictly enforced by the local authorities, and non-compliance could mean heavy fines for your business.  

Before you hire or open a business, let’s understand what payroll and income taxes look like in Antigua and Barbuda.

Antigua and Barbuda Payroll Tax

Payroll tax is a percentage of salary payable by residents of a country to the government. To spur economic growth and increase the standard of living in Antigua and Barbuda, Prime Minister Gaston Brown abolished Personal Income (Payroll) taxes in April 2016.

At the state house address, Brown said abolishing personal income tax will help reestablish Antigua and Barbuda as one of the most competitive economies in the Caribbean while putting over $30 million back in the pockets of the people.

Even though there are no taxes levied on your income, you still have to make contributions towards social security schemes. For this reason, Antigua and Barbuda residents are charged 14% of their insurable earnings.

To become a tax resident of Antigua and Barbuda, you have to legally reside in the country for up to 183 days, have a registered address, and engage in economic or social activities.

Antigua and Barbuda Social Security Board

In Antigua and Barbuda, the body responsible for collecting contributions is the Social Security Board. The ABSSB began operations on April 2, 1973, and they are responsible for managing social contributions and ensuring cash benefits are paid to contributors.

According to the ABSSB, contributions must be deducted from the employees’ wages/salaries at the end of each pay period.

For the private sector, the contribution rate of insurable earnings was 14%, with the employer paying 8% while the employee pays 6%. For the public sector, the employees pay 8% while the employer pays 5%, bringing the total contribution rate to 13%.

Antigua and Barbuda will only tax up to $78,000 of your total annual insurable earnings, which makes it an attractive country for remote high-income earners.

Aside from salaries and wages, employers also contribute to overtime payments, cost-of-living bonuses, vacation pay, shift work, housing allowance, bonuses, holiday pay, service charges, and commissions.

On the flipside, ABSSB contributors are exempted from making payments on maternity benefits, severance packages, travelling allowances, and sick leave benefits.

What Is the Antigua and Barbuda Social Security Fund Used for?

The money contributed to Antigua and Barbuda’s social security program is used to fund:

  • Retirement pensions
  • Sick leave benefits
  • Invalidity benefits
  • Maternity benefits
  • Survivor’s benefits
  • Funeral services

Each category has its specific requirements. However, you have to be a net contributor to the SSB and a citizen/tax resident of Antigua and Barbuda to qualify for any of these benefits.

Registering With the Antigua and Barbuda Social Security Board

As an employer in Antigua and Barbuda, you have to ensure all your employees are registered with the ABSSB before taking up a role in your business.

Citizens are to present their passports for registration, while tax residents are required to submit their home passports along with a verified work permit from their registered employer.

After you register with the ABSSB, you will be given a social security card with your SSN, name, date of birth, sex, nationality, place of birth, signature, issuance date, and expiry date.

How to File Social Security Contributions in Antigua and Barbuda

Social security payments to the ABSSB commence immediately after you hire an employee. The monthly remittance (R5A) forms are used to file contributions, and the form contains a ton of information, including;

  • Employer’s name and SS registration number
  • The names and SSNs of all employees
  • The month and year being paid for – weekly/fortnightly payment should be indicated for clarity
  • Total contributions collected
  • Total insurable earnings
  • Total gross salary
  • Vacation/sick days, if any
  • The name and signature of the employer, authorizing officer, or approved agent

As an employer, make sure your compliance officers carefully file the R5A form. According to ABSSB regulations, erring employers are fined $100 for every page of incomplete or incorrect information on their R5A forms.

Additionally, employers are to pay the contributions within 14 days after the preceding month. If the 14th day is a weekend or a public holiday, employers are required to make the payment by the next business day.

Failure to pay before the deadline will lead to a 10% surcharge on the total contributions owed for that month. Also, the ABSSB might decide to take legal action against you in certain cases where fraud is suspected to have occurred.

If you overpaid or made excess contributions at any point, you can write to the director of the ABSSB to request a refund. Your money will be returned upon approval.

Also, keep in mind that employees have the right and opportunity to confirm the remittance of their contribution payments. They can request at the Social Security office to find out if you (their employer) have been making the right payments on their behalf.

Corporate Taxes in Antigua and Barbuda

In Antigua and Barbuda, corporate (company income) tax is the major tax levied on locally owned businesses. The Inland Revenue Department is in charge of this tax, and the government uses it to fund expenditure and other infrastructural projects.

Companies in the twin islands pay a flat rate of 25% per annum. However, some industries such as banking, insurance, oil, and telecommunications were granted tax reliefs due to their strategic importance.

Banks are required to pay 22.5% provided they maintain an interest rate of 7% or below and provide mortgage loans to Antigua and Barbuda citizens during the year under review. Insurance, telecommunication, and oil companies only pay a 10% fee.

On the other hand, businesses registered as International Business Corporations (IBCs) are exempted from this tax for their first 50 years. In Antigua and Barbuda, an IBC is recognized as a foreign-owned organization with at least one director and one shareholder. 

Antigua and Barbuda Payroll Tax Calculator

While there are no payroll taxes in Antigua and Barbuda, the Remote People Global Payroll Calculator can help you compile social contributions for your employees faster and with greater efficiency.

All you need to do is:

  • Input your country (Antigua and Barbuda)
  • Select your employee type (citizen, tax resident, or non-resident)
  • Select the period (monthly)
  • Input the gross salary
  • Obtain the total contribution payable

Instead of burdening your tax and HR professionals with repetitive tasks, this tool can be a viable alternative when navigating the murky waters of Caribbean hiring.

Enjoy Smooth Payroll Operation and Regulatory Compliance in Antigua and Barbuda

Aside from compiling social contributions and other hidden taxes, Remote People will also help you simplify your hiring and salary payment process in Antigua and Barbuda.

As an international employer, you can automate payments and keep a record for possible compliance audits in the future. You can also generate pay slips for local, foreign, and remote employees.