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Location and infrastructure

The Bahamas, officially the Commonwealth of the Bahamas, is a country consisting of more than 700 islands, cays, and islets in the Atlantic Ocean; north of Cuba and Hispaniola (the Dominican Republic and Haiti); northwest of the Turks and Caicos Islands; southeast of the U.S. state of Florida and east of the Florida Keys.

Its capital is Nassau on the island of New Providence.

Population

The Bahamas has a total population of 347,176, of which 25.9% are under 14, 67.2% 15 through 64, and 6.9% over 65.

Language

The official language of the Bahamas is English; many residents speak the Bahamian Dialect.

Currency

The Bahamian dollar (BSD) has been the currency of The Bahamas since 1966. It is normally abbreviated with the dollar sign $, or alternatively B$ to distinguish it from other dollar-denominated currencies.

Tax system

Corporate Tax:

Residence – Companies are not subject to direct taxes.

Taxable income – No

Taxation of dividends – No

Capital gains – No

Losses – No

Rate – The Bahamas does not levy corporate income tax.

Surtax – No

Alternative minimum tax – No

Foreign tax credit – No

Participation exemption – No

Holding company regime – No

Incentives – While there are no company taxes, the Bahamas offers free zone incentives, including exemptions from stamp duty and import/export duties for qualifying transactions.

There is no withholding tax for interest, dividends, royalties, technical services or any other.

Other Taxes on Corporation:

Capital duty – No

Payroll tax – No

Real property tax – Subject to several exemptions, owners (to include life tenants) of land and buildings must pay an annual real property tax. The applicable rate levied on the assessed value depends on whether the property is commercial or owner-occupied. The first BSD 50,000 of assessed value is taxed at . 5% for commercial property (exempt for owner-occupied property); the next BSD 50,000 is taxed at 1% for commercial and .75% for owner-occupied property; and the remaining assessed value is subject to tax at 1.5% for commercial and 1% for owner-occupied property.

Social security – The employer must pay 5.9% of wages and the employee 3.9% (capped at BSD 26,000 annually).

Stamp duty – Stamp duty is imposed at various rates (either flat dollar or as a percentage of value) on certain instruments and filings, to include bonds, money orders, letters of credit, transfers of real or tangible property, affidavits, powers of attorney, etc. In some instances, nonresidents may be charged stamp duty at up to twice the rate of residents. Stamp duty also may apply to imports.

Transfer tax – No

Other – While companies are not subject to direct taxes, they are subject to a host of other indirect taxes and fees, including a business license fee, registration duties and import duties. Other indirect taxes include hotel guest tax, passenger tax, casino tax and business and hotel licensing fees. Customs duties for dutiable goods apply upon import or upon the withdrawal from bond of bonded goods. A general additional surcharge of 2.5% may apply on imports and warehoused goods are subject to a 1% additional duty.

Personal taxation:

The Bahamas does not levy personal income tax.

Stamp duty – Stamp duty is imposed at various rates (either flat dollar or as a percentage of value) on certain instruments and filings, to include bonds, money orders, letters of credit, the sale of a business, transfers of real or personal property,

affidavits, powers of attorney, etc. In some instances, nonresidents may be charged stamp duty at up to twice the rate of residents. Stamp duty also may apply to imports.

Real property tax – Subject to several exemptions, owners (to include life tenants) of land and buildings must pay an annual real property tax. The applicable rate, levied on the market value, depends on whether the property is commercial property or owner- occupied (see under “Other taxes on corporations”).

Inheritance/estate tax – No

Net wealth/net worth tax – No

Social security – The employer must pay 5.9% of wages, with the employee contributing 3.9% (capped at BSD 26,000 annually). The self-employed are subject to a rate of 8.8% of average insurable income, depending on their class (with an annual cap of BSD 26,000).

Double tax treaties

Bahamas has not signed any double tax agreements since it does not levy direct taxes, there are no double tax treaties between the Bahamas and other countries. 

Even though Bahamas has no double tax agreements, it did sign various Tax Information Exchange Agreements (TIEAs) in the last years. It currently has TIEA’s with: Argentina, Aruba, Australia, Belgium, Canada, China, Denmark, Faroe Islands, Finland, France, Germany, Great Britain and Northern Ireland, Greenland, Guernsey, Iceland, India, Japan, Korea, Malta, Mexico, Monaco, New Zealand, Norway, Poland, San Marino, South Africa, Spain, Sweden, The Netherlands, U.S.

Legal system

The Bahamian legal system is based on English common law, which, since 1964, has been complemented by an American type of constitutionalism which declares the existence of certain fundamental principles that are to be observed and enforced.

Article 15 of the Constitution concisely states these principles:

"Whereas every person in the Bahamas is entitled to the fundamental rights and freedom of the individual, that is to say, has the right, whatever his race, place of origin, political opinions, colour, creed or sex, but subject to respect for the rights and freedoms of others and for the protection of the public interest, to each and all of the following namely:

(1) life, liberty, security of the person and the protection of the law; 

(2) freedom of conscience, of expression and of assembly and association; and

(3) protection for the privacy of his home and other property and from deprivation of property without compensation.”   

Banking

Apart from the Central Bank of The Bahamas, and the Financial Intelligence Unit (FIU, December 2000), the sector consists of commercial banks, savings banks, trust companies, offshore banks, insurance companies, a development bank, a publicly controlled pension fund, a housing corporation, a public savings bank, private pension funds, cooperative societies and credit unions. 

The Bahamian financial system faces no obvious near-term threats to financial stability. The onshore banking system is well capitalised, liquid, and profitable.

Types of companies

  • Bahamas Domestic Limited Company
  • Bahamas Company Limited by Guarantee
  • Bahamas Public Company
  • Bahamas International Business Company
  • Bahamas Limited Duration Company
  • Bahamas Foreign Company
  • Bahamas Limited Partnership
  • Bahamas Exempt Limited Partnership
  • Bahamas Trusts
  • Bahamas Foundations
  • Bahamas Segregated Account Company

Changes to the tax laws and other applicable rules in various countries covered by this publication may be proposed. Therefore, readers should contact local specialized firms to obtain further information.