The Bahamas has delivered attractive global financial services since the 1930s. Between their iron-clad confidentiality policies and tax-exempt business models the wealthy of the world continue to incorporate their new business is in the Bahamas. A few other countries offer similar business and tax-exempt trusts and banking, but the Bahamas remains one of the top choices.
Recent Changes To Incorporating Businesses In The Bahamas
Bahamian International Business Companies (IBC) are commonly used as holding companies, to hold bank accounts, financial and commercial titles, international trading, own movable and immovable properties, asset protection and estate and inheritance security, and more.
In 2018 the Bahamas made a few significant legislative changes to ensure they are in full compliance with the regulations set up by the EU and the OECD. These changes are a balance as they improve ethics while maintaining confidentiality and tax-exemptions. Here is a breakdown of each new act.
The Removal of Preferential Exemptions Act—there were several non-tax exemptions that allowed for ring-fencing, and this new act voids them all. This includes the removal of the Business Companies Act; the Exempted Limited Partnership Act; the Investment Condominium Act, 2014; and the Executive Entities Act, 2011.
What this means for your IBC is that you must obtain a business license, pay an annual fee, and stamp duty on designated instruments. It also abolishes limited duration companies. Companies incorporated on or before December 31, 2018, are grandfathered for three years, until December 31, 2021. You will still enjoy full tax-exemption.
This Act also opens the door for international banking, insurance, and securities sectors to offer their services to Bahamas residence. These transactions will be completed in local currency and are subject to pending regulatory approval. It will also open the door for local commercial banks to provide their services to international clients.
Commercial Entities (Substance Requirements) Act—this act requires minimum economic substance requirements for companies providing services to, trading with affiliates of, or operating as financial and insurance services companies, shipping businesses, IP businesses, headquarters businesses, and holdings. The goal of this Act is to prevent the formation of shell companies.
The Register of Beneficial Ownership Act—beneficial owners of companies in the Bahamas was once completely confidential. As of this new Act registered agents must verify the identity of the beneficial owners of all companies incorporated in the Bahamas. Once verified, all beneficial owners are added to a secure database that can only be accessed and searched by “registered agents” employed by the database. Unlike most countries, to maintain confidentiality the beneficial owner database in the Bahamas is not open to the public.
The Multinational Entities Financial Reporting Act—ultimate parent entities (UPEs) of multinational entities groups (MNEs) are now required to report their annual profits and loss statements (PNL) in a country-by-country report (CbCR).
Any group of two or more entities incorporated in different jurisdictions that have a conciliated revenue of over USD 850 million are considered an MNE.
The CbCR must include the key elements of PNLs including revenue, tax paid and accrued, employment, capital, retained earnings, tangible assets, business activities, and more.
Terms You Need To Know Before You Incorporate A Business In The Bahamas
Country code – BS
Legal basis – Common law
Legal framework – International Business Companies Act updated as of 2018.
Company form – International Business Company (Company limited by shares)
Liability – The liability of the shareholders is limited up to the amount of the shares they hold.
Economic Substance – Financial and insurance services companies, shipping businesses, IP businesses, headquarters businesses, holdings and companies providing services to or trading with affiliates are required to meet economic substance requirements. They must be controlled and managed from the Bahamas and have adequate premises, amount of expenditures and number of employees in the Bahamas, according to its business activity and size. Companies deemed to be conducting a high-risk intellectual property business will be subject to enhanced substance requirements.
Share capital – The authorized share capital is usually USD $50,000. There is no statutory requirement for capital to be fully or partly paid on incorporation. Shares may be denominated in any currency and may be with or without nominal or par value. Bearer shares are not allowed.
Shareholders – International Business Companies may be formed by one or more shareholders, who can be either natural or legal persons, residents or non-residents, without limitations. Details of shareholders are not publicly disclosed. Nominee shareholders are allowed.
Directors – At least one director is required, who may be a natural person or a legal entity. Directors’ details are available to the public. Nominee directors are permitted.
Secretary – The appointment of officers such as a secretary is optional, and may be an individual or a corporation, resident or non-resident.
Registered Address – An IBC must have a registered office in the Bahamas, provided by a licensed service provider.
General Meeting – Annual general meetings are not mandatory. However, if meetings are held, they can be anywhere in the world and may be by proxy or by telephone.
Electronic Signature – Permitted.
Re-domiciliation – A foreign entity can easily be re-domiciled as a Bahamas IBC, and vice versa.
Compliance – Bahamas’ IBCs must keep accounting records, which may be kept anywhere. There is no requirement to file financial statements and annual return to the Registrar, neither tax return to the Tax authorities. Bahamas IBCs are subject to an annual government fee.
- Shareholders Not Disclosed
- Directors Not Disclosed
- Corporate Shareholders Permitted
- Corporate Directors Permitted
- Local Secretary Highly Suggested
- Annual General Meetings Required
- Redomiciliation Permitted
- Electronic Signature
- Financial Statements required
- Audited Accounts Exemption
Tax Terms You Need To Know Before Incorporating Your Business In The Bahamas
Corporate income tax – Bahamas does not levy corporate income tax.
There are no withholding taxes on dividends, interests, and royalties paid to non-residents.
IBCs in the Bahamas may trade with residents and they may own real estate within the territory, but exchange controls and stamp duties on authorized capital will apply in these cases.
Other taxes – There are no personal direct taxes such as personal income tax or net worth tax.
The Bahamas levy a real property tax up to 2% for land and building owners, although several exemptions may apply. There is also a stamp duty on the transfer of certain assets and financial instruments.
Companies conducting business in the Bahamas may be subject to several indirect taxes such as import duties, hotel guest tax, passenger tax, casino tax, among others.
Need Help Incorporating Your Business In The Bahamas?
As you can see there is a lot to take into consideration. Not to worry as SCGIBC is here to assist. We work with you remotely to register and incorporate your startup in the Bahamas—no need to hop on a plane. This is just two of our ongoing corporate services. Reach out today to learn more!