Tax Haven Bahamas

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Tax haven Bahamas stands out as a mature offshore jurisdiction for financial services. Contributing to the prominence of the Bahamas as a tax haven are the large number of legal incentives implemented along with economic growth policies that “cut red tape and lay out the red carpet for investors. Tax haven Bahamas has a 40 year old financial services sector which has made great strides in the fields of offshore banking, trust, insurance and offshore company formation, making the sector the second largest contributor to tax haven Bahamas’ economic and infrastructural growth and employment. Offshore financial services provide at least 12% of GDP.

As a tax haven the Bahamas is ranked in the top ten countries worldwide with a developed banking sector. As a banking centre, tax haven Bahamas has accumulated an asset base which exceeds US $200 billion thanks to a wealth of financial services such as private banking, mutual fund administration and portfolio management. These growing sectors have helped boost infrastructure, convenient transportation into, out of and throughout the islands, as well as create a modernized telecommunications system.

Brief Country Overview

Upon the arrival of Christopher Columbus in 1492, about 30,000 Lucayans were found in the Bahamas. This group of indigenous people was identified as Tainos before migrating farther north from the Spanish islands of Cuba and Hispaniola to the Bahama Islands.

The Bahamas tax havens are formerly called the Commonwealth of the Bahamas and consist of 700 masses of dry land which include cays, rocks and islands, some of which are habitable while very small cays are ideal locations for scuba diving and day visits. The capital of the Bahamas tax havens is Nassau, which is located on the island of New Providence and together, these tax havens have a total population of roughly 330,000.

Eleuthera, Exuma, Inagua, Acklins, Abaco, Grand Bahama and Andros represent only a few of the islands found in the chain of Bahamas tax havens. They are managed through a district system and administered by a local government which reports to the Central Government under which New Providence, the main island is directly controlled.

Tax haven Bahamas is an independent, self-governing nation with legal and political practices which find their origins in the Westminster system and the United Kingdom. There are three main political parties in tax haven Bahamas, the Bahamas Democratic Movement, Bahamian Nationalist Party and the Coalition for Democratic Reform. Elections in the Bahamas tax havens are held every five years when the Prime Minister is elected as head of government, while the power as head of state is vested in the Governor-General, who represents Queen Elizabeth 11.

Bahamas Fiscal Advantages and Incentives

As tax havens, the Bahamas put in place several incentives and business friendly policies that are favorable to investors both foreign and local. Here are some of those advantages and fiscal incentives that tax haven Bahamas offer:

  • No tax on income
  • No tax on capital gains
  • No tax on profits, dividends and inheritance
  • No sales tax
  • No exchange controls
  • Highly trained professional accountants, bankers and trustees
  • Friendly business climate
  • Monetary and economic stability
  • International financing from organisations such as the Overseas Private Investment Corporation funded by the US Government
  • Exemption from customs duties on raw materials for hotel developers under the Hotels Encouragement Act
  • Exemption from import duties on license fees, equipment and raw materials for exporters under the Industries Encouragement Act

Bahamas Offshore Business Entities

  • Bahamas External Insurance
  • Bahamas Exempted Limited Partnership
  • Bahamas International Business Companies
  • Bahamas Banks and Trusts
  • Bahamas Foundations

Offshore Legislative Framework

As a tax haven the Bahamas continues to make the necessary legislative decisions that not only enable advancement of the wealth of financial services available but also demonstrate its commitment to upkeep and strengthen due diligence standards and compliance issues. Laws for offshore activities in tax haven Bahamas include but are not limited to the following:

  • The Trusts (Choice of Governing Law) Act, 1989
  • The Perpetuities Act, 1995
  • The International Business Companies Act, 2000
  • The Companies Act, 1992
  • The Exempted Limited Partnership Act, 1995
  • The Foundations Act, 2004
  • Electronic Communications and Transactions 2003
  • The Anti-Terrorism Act, 2004
  • The Financial Intelligence Unit Act,2000

The Bahamas Financial Services Board (BFSB)

The Bahamas Financial Services Board (BFSB) was created in 1998 to promote the Bahamas as a tax haven and international financial centre. Tax haven Bahamas’ Financial Services Board comprises of professionals who would have gained valuable experience working with government institutions, law firms, banks, insurance, accounting and trust companies. Financial and professional sectors promoted by the BFSB include trust, insurance legal and insurance services, investment management and advisory, private and corporate banking, and the shipping and companies’ registry, which proves the well roundedness of the Bahamas as tax havens.

Bahamas Recent Development

In June 2009, the Minister of Finance disclosed the government’s intention to create a Financial Services Authority for the purpose of fostering improved regulation and supervision of tax haven Bahamas’ financial services sector. Under the new institution, tax haven Bahamas hopes to secure the right movement forward for offshore services by employing a team of skilled market surveillance and inspection supervisors, financial services regulators and consultants, including the implementation of staff training and recruitment programs. Tax haven Bahamas is looking forward to consolidating regulators by creating a dual system whereby the new regulatory authority and the Central Bank of the Bahamas can work alongside each other.

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