The Bahamas comprise of 700 islands, cays and islets scattered over 100,000 sq. miles of ocean, just 50 miles off the coast of Florida. It is an ecological oasis featuring 2000 breathtaking islands and cays.

Fiscal Advantages

• No income tax
• No corporation tax
• No capital gains tax
• No inheritance tax
• Does not levy any sales tax

Regulatory Advantages

• An International Business Company can merge with a foreign company and transact foreign exchange business without exchange control restrictions
• No disclosure requirements
• Shareholders and directors meetings need not be held in The Bahamas and can be held over a phone communication

Limitations

• Import duties are levied at a high rate of 35%
• Stamp duty, property taxes, social security on workers are levied
• Cost of living is very high
• Unless a special permission is not allowed by the Central Bank of The Bahamas, IBC status is granted subject to certain conditions: 
  
  
  • No business may be transacted with residents in The Bahamas
  • No ownership interest in real property in The Bahamas is permitted
  • Property may be leased for office use only
  • Banking, insurance or re-insurance business is not permitted
  • Engaging in the business of company management or providing registered facilities for Bahamian incorporated companies is not permitted

• Public Trading Companies
• Private Trading Companies
• Limited Liability Company (LLC)
• International Business Companies (IBC)
• Limited Liability Partnership
• Sole-Proprietorship
• Partnership

Limited Liability Companies are incorporated under the Companies Act 1992 for local LLC and under the International Business Companies Act 2000 for international business companies. A domestic resident company limited by shares is incorporated under the Companies Act 1992 for carrying out local business. At least 2 directors are required. Annual returns of the company will include a list of the members and is kept in the public register. Bearer shares can be issued with exchange control permission. There is no requirement of filing financial statements.

International Business Companies is one of the most widely used business entity for offshore operations in The Bahamas. It normally takes the form of a private company limited by shares. IBCs are required to submit their identities, addresses and names of directors and owners to the Registrar General’s Department, since the beginning of 2001. IBC is formed under the IBC Act 1989 and does not carry out business with Bahamian residents. 

IBC does not require business license and is exempt from business license fees. There is no fixed limit on the amount of authorised capital. Only one director who may be a corporate, and 2 shareholders are required. Shareholders, directors and officers need not be a resident in The Bahamas and there is no stipulation to their nationality. Shares must be registered and may be issued in any currency. Bearer shares are not permitted. No need to maintain accounts, even if it is maintained, there is no need of an audit. 

Shareholders and directors meetings need not be held in The Bahamas and can be held over a phone communication. Memorandum and Articles of Association are the only documents held in Public record. An IBC can also be established for a limited duration. It is exempt from Bahamian Exchange Control, from stamp duty and from other taxes and estate duties for 20 years from the date of incorporation.

Branch or Representative Offices may conduct business in The Bahamas by registering under the Companies Act 1992. Follows minimal requirements and doesn’t require registration unless it is recognised as an “undertaking” or as a “trading” branch.

A non-resident intending to incorporate a new business in The Bahamas will require approval from the Bahamian Investment Authority. Publicly Trading Companies, Limited Liability Partnerships and Limited Liability Company are registered at the Registrar General Office where they receive their certificate of incorporation.

When the Registrar has, in respect of a foreign company, received all the required documents and the prescribed fees, the Registrar shall —

• Issue a certificate showing that the company has been registered as a foreign company under this Act; and
• Publish in the Gazette a notice of the registration of the company as a foreign company

Segregated Account Companies (SAC) are commonly used by captive insurance and investment funds, a SAC is a company with a series of accounts with assets linked to one or more of the segregated accounts. An SAC must be incorporated under the Companies Act or the International Business Companies Act and then registered as an SAC by filing a request with the Company Registrar

Trusts, other than those holding Bahamian real estate, with non-resident beneficiaries are exempt from all taxes, including stamp duty on transfers into trust. The 1998 Act provides for the appointment of a 'protector of trust', effectively a supervisor of the trustee(s), and also managing and custodian trustees.

A company offering trust services must obtain a license under the Banks and Trust Companies Act 1965 and conform to various conditions.

Incorporation process usually takes about 7 to 14 working days in The Bahamas.

• Name of the Company
• Jurisdiction in which the company is incorporated
• Proof of Citizenship
• Registration Fee
• Approvals for the selected business
• Copy of a valid passport or original birth certificate
• National Insurance card
• National Insurance letter of Good Standing
• Certificate of Incorporation
• Real property tax (if the applicant owns property on which the business is located)
• Letter of Authorisation for Third Parties / Appointed Representatives, where a third party is used

• Personal tax is not levied in the Bahamas
• No residence tax
• No taxable income on personal tax
• No capital gains
• No tax on deductions and allowances
• No capital duty
• Stamp duty is imposed at variable rates
• Property tax is subject to several exemptions. Owners of land and building must pay an annual real property tax. The rate levied depends on whether the property is – Commercial property or owner occupied
• Taxes are not levied on Net Worth
• The employer pays 5.9% and employee pays 3.9% on Social security tax. Self-employed are levied at 8.8% of average insurable income depending on their class

• Taxable income is NIL
• Taxation of dividends is NIL
• Taxation on capital gains, NIL
• Corporate income tax, NIL
• Surtax, NIL
• Foreign tax credit, NIL
• Holding company regime, NIL
• Free zone incentives are offered, that exempts companies from stamp duty, import or export duties for qualifying transactions
• Withholding tax on dividends, interests, royalties, branch remittance - NIL
• Capital duty and payroll tax, NIL
• Property Tax:
  
  • For commercial property –
    • 1% levied on that part of the value that does not exceed BSD 500,000
    • 2% levied on that part of the value that exceeds BSD 500,000
  • For owner-occupied property,
    • Tax exemption for the first BSD 250,000 in value
    • 0.75% levied for value of property ranging between BSD 250,000 and BSD 500,000
    • 1% of the market value that exceeds BSD 500,000
  • For vacant land owned by non-Bahamians,
    • A fee of BSD 100 is due on the part of the market value that does not exceed BSD 7,000 of market value
    • 1.5% tax is levied on the value exceeding BSD 7,000
• Social Security tax is levied at 5.9% of wages on the employer and 3.9% for the employee, capped at BSD 26,000 annually
• Stamp duty is levied at variable rates. Non-residents may be charged up to twice the rate of residents. It may also apply to imports
• Transfer tax, NIL
• VAT rate will be set at 7.5% and implemented as of January 1^st, 2015

Non-Bahamians must meet a minimum capital investment of BS$ 500,000 and the proposed investment must not be in an area reserved for 100% Bahamian participation.

The legislation of an IBC contains asset protection clauses against actions emanating from without the Bahamas. Provisions are also available for protection of minority shareholders. IBCs are permitted to own shares in other Bahamian companies, maintain bank accounts in the jurisdiction and employ the services of local professionals.

Individuals and companies are given resident and non-resident status for exchange control purposes. Resident entities carry on business in the domestic market in Bahamian dollars, while non-resident entities can operate for the Bahamas but trade anywhere else in the world and in any currency except the Bahamian dollar.

The Bahamas have signed Tax Information Exchange Agreements (TIEAs) with about 30 countries. 

Licensing

All businesses must be licensed under the Business License bill 2010. This includes all businesses registered before the bill became law. Any individual who desires to incorporate a company in the Bahamas has to register the business.

Under the new Business License Amendment Act 2013, the following measures are taken, as of July 1^st 2013.

• Except for financial institutions and stand-alone retail gas stations, all special categories of rates for various businesses have been eliminated and business license fees will now be payable as follows:
  
  • Turnover of $50,000-$500,000: 0.5%
  • Turnover of $500,000 -$5M: 0.75%
  • Turnover of $5M-$50M: 1.25%
  • Turnover of $50M -$100M: 1.5%
  • Turnover greater than $100M: 1.75%
    

• The subsidiaries of a company will now be charged the same business licence fee as the parent company

• The stamp tax exemption granted to first-time homebuyers has been extended for an additional five years from 1st July 2013 to 30th June 2018 and the following amendments have been implemented:
  
  • The exemption is now only applicable to Bahamian citizens
  • The exemption no longer applies to the purchase of vacant land for the construction of a single-family residence
  • There the aggregate value of the conveyance and the mortgage exceeds $500,000; the exemption will not be applicable