The Bahamas


ESSENTIAL FACTS

LOCATION: 24 15 N, 76 00 W
The Bahamas are an island chain in the North Atlantic Ocean off the coast of Florida and northeast of Cuba.

POPULATION: 305,655

CURRENCY: Bahamian dollar (BSD)

LANGUAGE: English (official), Creole (among Haitian immigrants)

CLIMATE: The Bamahas enjoy a tropical marine climate and warm Gulf Stream waters.

EDUCATION: Over 95 percent of Bahamians 15 and over can read and write.

PUBLIC HOLIDAYS: Independence Day, 10 July (1973)

HISTORY AND GOVERNMENT

HISTORY
Lucayan Indians are the original inhabitants of the Bahamas. The British settled in 1647and made the Bahamas a colony in 1783. The Bahamas gained independence from the UK in 1973.

POLITICAL SYSTEM
The Bahamas have a constitutional parliamentary democracy. The Queen of England appoints and is represented by Bahamas Governor General. The Prime Minister is elected, then nominates his or her Deputy Prime Minister and government ministers.

The legislative branch of the Bahamas government consists of a bicameral Federal Parliament, with a Senate and a House of Representatives.

JUDICIAL SYSTEM
The Bahamas’ legal system is based on English common law. In the judicial branch there is the Privy Council; Courts of Appeal; Supreme (lower) Court; and magistrates courts.

COMMERCE AND TRADE

COMMERCIAL ACTIVITY
Agriculture: Citrus, vegetables, poultry
Industry: Tourism, banking, cement, oil transshipment, salt, rum, aragonite, pharmaceuticals, spiral-welded steel pipe

TRADE PRACTICES
Exports: Mineral products and salt, animal products, rum, chemicals, fruit and vegetables to Spain, US, Poland, Germany, UK, Guatemala
Imports: Machinery and transport equipment, manufactures, chemicals, mineral fuels; food and live animals from US, Brazil, Japan, South Korea, Spain

BANKING, FINANCE AND INVESTMENT

FINANCIAL FACTS
The economy of the Bahamas, while arguably the strongest in the Caribbean, relies heavily on tourism and offshore banking; tourism and its related industries (construction, hospitality services, etc.) account for 60 percent of its GDP as well as the source for over half of those employed in the Bahamas.

Fiscal year: 1 July - 30 June

BANKING
Bahamians do not use the word “offshore” to describe any of its financial services. There is no need to separate these types of businesses from Bahamian businesses for tax purposes, as stamp duties are the only taxes that corporations pay in the Bahamas.

The Central Bank of the Bahamas has the ultimate authority in Bahamian banking. This includes the issuing of banking licenses, which can be categorized as restricted or unrestricted. The procedure for obtaining a banking license includes a business plan, a personal interview and financial statements.

The Financial Intelligence Unit Act of 2000 has allowed for the divulging, analysis and sharing of banking information connected to illegal activity. The Financial and Corporate Service Providers Act of 2000 requires mandatory training of bank officials and employees in an increased effort for banks to know their customers, in order to better spot “red-flag” transactions.

STOCK MARKET
The Bahamas' stock exchange (BISX) is new, having been established only in 2000. After just five years, the BISX shows a capitalisation of $2.6 billion.

MEMBERSHIPS
ACP, C, Caricom, CDB, FAO, G-77, IADB, IBRD, ICAO, ICCt (signatory), ICFTU, ICRM, IDA, IFC, IFRCS, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, ITSO, ITU, LAES, MIGA, NAM, OAS, OPANAL, OPCW (signatory), UN, UNCTAD, UNESCO, UNIDO, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO (observer)

FOREIGN INVESTMENT
Investment by foreigners in Bahamian opportunities is greatly restricted. Bahamians who desire to invest outside of the Bahamas must purchase the foreign currency with which to do so at a high exchange rate.

However, the Central Bank has recently become more relaxed in the regulations regarding real estate investments and debt and equity instruments.

REAL ESTATE
The Bahamas welcomes foreigners to invest in real estate. The rules have recently been relaxed regarding inherited property as well as advance permit regulations for undeveloped land purchases up to five acres. The Chief Valuation Officer oversees the registration and annual filings of all real estate holdings.

LABOR

BENEFITS/PENSION
Bahamian employers, employees and the self-employed pay social security contributions on earnings as follows, although benefits are only distributed to Bahamian residents:

Employees - 3.4%
Employers - 5.4%
Self-employed - 8.8%

IMMIGRATION

EMPLOYMENT
Work permits are issued to top-level employees and those with special skills more readily in an effort by the finance industry to welcome better business. Foreign nationals are automatically granted residency status if they live in the Bahamas and have a work permit.

RESIDENCE
All companies that are based in the Bahamas, whether Bahamian or foreign owned, have residency as long as business is done in the Bahamas. Companies that do no business at all in the Bahamas - again, whether Bahamian or foreign owned - do not have resident status.

The Immigration Department oversees all applications for Bahamian residency. Special fast-track application treatment is granted to foreign homeowners whose combined Bahamian real estate holdings total over $500,000. In addition, homeowners receive a special card that doubles as a visa and a residency card, and is renewable each year.

BUSINESS

BUSINESS ENTITIES
A Limited Duration Company, which is quite similar to an IBC with the exception that it may last only 30 years, must conduct all business outside of the Bahamas, and has the following rights:

  • Bahamian bank account
  • Office space in the Bahamas
  • Deal with Bahamian businesses and services for their own purposes
  • Shareholder or board meetings within the Bahamas
  • Other activities within the Bahamas applied for at the Ministry of Finance

An International Business Company (IBC) must divulge identities, addresses and names of directors and owners to the Registrar General at the time of incorporation.

TRUSTS
Bahamian trust law is based on English trust law. Bahamian trusts with settlors, beneficiaries and trustees that are not residents of the Bahamas are under no obligation to register the trust with the Central Bank. These types of trusts are exempt from taxation.

However, if the assets of the trust include Bahamian real estate holdings, the trust must be registered and taxes must be paid.

TAXATION

PERSONAL TAXATION
The tax structure of the Bahamas is based on fees paid to the government for activities (applications, etc.), events (i.e., annual fees) and duties (stamp duty, etc.).

CORPORATE TAXATION
There is no income tax, capital gains tax, VAT or sales tax.

OTHER TAXATION/DUTIES
Stamp duties are paid on real estate transactions (generally from 2 to 8 percent, split between buyer and seller) and on Bahamian currency paid overseas (at a rate of .25 percent).