As Caribbean nations compete for nearshore investment it has become essential for them to streamline the business registration process and aid foreign investors in overcoming any legal or logistical obstacles. In order to facilitate what was once a slow and complicated process involving numerous different bodies, some of the region’s most prominent nearshore destinations have begun implementing one-stop shops and online registration pages, officials tell Nearshore Americas.
We recently checked in with four of the most prominent markets in the Caribbean, to do our own assessment. The markets we chose were Barbados, the Dominican Republic, Jamaica and Trinidad & Tobago. Given that it has the joint-quickest business registration time and the shortest wait to complete the entire process – all handled by a one-stop shop – Jamaica stood out as the fastest country – among those analyzed – to set up a business.
Jamaica leads the Caribbean in terms of the ease of setting up a business operation and it is currently ranked 23rd in the World Bank’s Starting a Business index. On average it takes just four working days to set up a foreign-owned business in Jamaica. A year ago the process took six days but it has been streamlined by the recent implementation of electronic business registration forms, Shullette Cox, Jamaica’s Vice President of Corporate Development and Competitiveness, told Nearshore Americas.
In order to set up a business, foreigners must obtain a taxpayers’ registration number and a national insurance registration, but they no longer need to approach the relevant departments individually. The Companies Office of Jamaica (COJ) serves as a one-stop shop for registration, although companies can still approach the specific entities should they wish to, explained Judith Ramlogan, CEO of the COJ. There is a registration form downloadable from the COJ website and the cost of registering a company is 25,000 Jamaican dollars or around US$250, Ramlogan added. The process is the same for any kind of business, including ITO, BPO, shared services and global in-house centers.
If foreign businesspersons want to establish a brand-new company in Jamaica then at least one director must be named on the registration and they must obtain the taxpayers’ registration number prior to registering. But if they want to register an existing overseas company in Jamaica then they are required to provide certified copies of their incorporation documents in order to initiate the registration process. If the original documents are not in English then the COJ requires a certified translation of said documents.
“In some foreign countries the certified copies are not issued by the registrar of copies; they’re issued by notaries and sometimes that causes a little issue,” Ramlogan noted. However, in order to avoid any difficulties, the COJ can provide informal advice on whether they would accept certain documents, she explained. Cox added that investment promotion agency JAMPR also assists its clients through the business registration process, liaising with the COJ to ensure that any potential problems are dealt with and that the process is as “quick and seamless as possible.”
Trinidad & Tobago
Having created an online “self-service” one-stop shop over the last two years, Trinidad & Tobago’s investment promotion agency InvesTT says it has transformed the process of setting up a business “from red tape to red carpet.” Whether setting up a foreign or domestic business, it takes one day to register the business name with the company registry and then another three business days to register the company itself. This can be done through TTBizLink, a single electronic window designed to facilitate business and trade.
“The process is quite simple: companies or individuals who wish to register a business, import or export goods, apply for permits and licenses, or conduct other business related activities can submit their documents online via this website,” said Kimya Valentine, senior facilitation officer at InvesTT.
Business registration costs up to 450 TTD, less than US$100, Heidi Nobie, manager of investor facilitation at InvesTT, told Nearshore Americas. Beyond the four-day registration period, the latest World Bank study says it takes a total of 37.5 days to complete the entire process of setting up a business. Nobie put this down to the wait for Inland Revenue to check contracts, verify that the business is legitimate and complete the tax registration – which is “typically the longest piece of the process” – but noted that this now takes less time because it is done online.
“Businesses can do everything themselves on TTBizLink or they can work with InvesTT which will do it for them,” Nobie added. The process is “exactly the same” for setting up outsourcing operations, she said, with the only difference being that the owners of call centers or other BPO operations may be eligible to apply for additional incentives.
“Once we understand what the project is we really guide them through the process … if there are any questions, rather than just having a generic government phone number, we can actually research the answer to any specific question that the investor has, based on the nature of their business or investment,” Nobie explained. “So if a foreigner comes and says ‘we’re interested in setting up a BPO operation or a call center’ we would completely customize the level of service that we would provide to each investor in terms of walking them through the site visit and working to understand the project and all the requirements.”
To establish a new company in the Dominican Republic takes up to 30 days in total, Sharon Cabral, the investment coordinator of the Dominican Republic Center for Exportation and Importation (CEI-RD), told Nearshore Americas.
The entire process involves purchasing and registering a trade name; drafting and execution of the corporate documents (bylaws, articles of incorporation, minutes of the shareholder meeting, etc); filing all documents, including personal identification, with the Chamber of Commerce; and filing for the national taxpayers registry at the Internal Revenue Service. The process can be quickened by five days through the Chamber of Commerce’s VIP process, but this entails a much higher cost.
However, the recent creation of a one-stop shop will soon streamline the process for all applicants. “The one-stop shop was created last year. It incorporates the filing of the company name, the filing of the mercantile registry and they’re trying to get together also with Internal Revenue … which is a more difficult institution to get integrated into the one-stop shop,” Cabral said. “They say that [the total process] will take one to two weeks, but right now they’re still working with the timeframe of up to 30 days.”
“The costs depend on the size of the capital,” Cabral added. There are two main costs: a 1% incorporation tax to be paid to Internal Revenue and the registration fee for filing the company before the Chamber of Commerce. Both are established and calculated in accordance with the capital of the company, while there are additional minor costs, including the filing and publication of the trade name. By way of example, Cabral said that for an LLC with the minimum capital of 100,000 pesos (US$2,317), the total cost for the entire process would amount to US$460. “Typically an attorney will charge these costs within the proposed legal fees,” she noted.
“If you bring a foreign company here and you’d like to establish a branch then that process will take about three to four weeks,” Cabral added. In such a case, translated and certified documents would have to be submitted, with the costs to be paid to Internal Revenue and the Chamber of Commerce again both dependent on the capital of the company.
When it comes to registration, there are several different business classifications available, Cabral explained – the most common being the LLC for small and medium businesses and Corporation for larger investments. Law firms typically have shelf companies available, which may result in higher costs, but the process would be quicker because the only operation involved is a transfer of shares.
“We are of the opinion that a simple outsourcing company may operate by means of an LLC. Nevertheless this will have to be confirmed by a local counsel taking into consideration that they may recommend any other structure depending on the details of the business,” Cabral said. Regardless of the business classification, the general process would be the same for setting up any kind of outsourcing operation, she explained, “but depending on the sector, we have a lot of incentives that require some further registration.”
“From a legal standpoint I wouldn’t say there are any common complications,” Cabral told Nearshore Americas, but “at the CEI-RD we provide assistance to all foreign investors, there’s a department here that will handle any difficulty if investors that are established in the Dominican Republic have any inconvenience with any institution.”
It takes approximately six weeks to set up a foreign-owned business in Barbados, according to Kenneth Campbell, director of investment promotion and facilitation at Invest Barbados (IB). The first step is the legal registration and/or incorporation with The Corporate Affairs and Intellectual Property Office. This takes two to three days and typically entails incorporation under Barbados’ Companies Act. “It is strongly suggested that legal advice be sought to inform on the legal implications of company formation,” Campbell told Nearshore Americas.
In order to complete the incorporation, applicants must submit a minimum of two proposed company names (in order of preference); the official address in Barbados where the share registers, minute books and other statutory information will be kept; the minimum and maximum number of directors; the full name and residential address of each of the proposed directors; details of the particular business that the company proposes to carry on; the classes of shares (if more than one) that the company is authorized to issue; and the full name and residential address of each shareholder.
Aside from the registration and incorporation process, it takes two weeks for licenses to be approved; four to five weeks to obtain the necessary work permits; and four to six weeks to set up the operating facilities.
Although there is no one-stop shop, “IB, in close cooperation with government ministries and agencies, helps investors navigate the necessary processes. There are also a number of qualified service providers on the island who will be able to act as an agent to complete all of the registrations required by the relevant agencies,” Campbell said.
The most common complication is incomplete documentation, which can delay processing of applications. “Working with IB and a selected service provider can help eliminate this challenge.” Campbell said. “While IB facilitates in the establishment process, it is advised that legal expertise be secured to avoid these complications. There are a number of service providers on the island that can be recommended in this area,” he explained.
When it comes to setting up outsourcing operations, Campbell said “the process is generally the same. From a structural, regulatory and infrastructural standpoint these companies will have many similarities. The differences will come in the management of the delivery of services.”
“Many of the international information communication and technology (ICT) companies in Barbados are structured as International Business Companies (IBCs) or International Societies with Restricted Liability (ISRLs), providing their service outside of Barbados. Should either of these entities be utilized a license must be obtained from International Business Unit, Ministry of International Business,” Campbell added.
The government fees for incorporation are approximately US$400, while the associated professional fees typically range from US$1,500 to US$2,800. The government fees for registering an external company are approximately US$1,520, with professional costs between US$1,500 and US$2,800. The application fee for IBCs is US$425, while the application fee for ISRLs is US$425 and the fees for articles of organization for ISRLs are approximately US$400.