In
the Bahamas there are no taxes on profits,
dividends or income; there is no capital gains
tax, no withholding tax and no sales tax.
The taxes impinging on companies are business
license fees, stamp duty, property taxes and
import duty. Most offshore or non-resident
entities are exempt from business license
fees and many are exempt from stamp duty.
Corporate entities pay incorporation or registration
fees to the Government: see Types
of Company and Offshore
Legal and Tax Regimes for details of annual
fees payable depending on status.
Bahamas
Business License Fees
Under the Business Licenses Act 1980 (as amended)
enterprises operating in the Bahamas are liable
to pay annual license fees. Non-resident entities,
International Business Companies, Limited
Duration Companies and Exempted Limited Partnerships
are not liable for these fees; nor are banks,
trust companies, insurance companies, mutual
funds or ship holding companies, all of which
have their own separate fee regimes (see Offshore
Legal and Tax Regimes).
Business
License Fees depend on annual turnover and
gross profit percentage; the rules are complicated
and professional advice is necessary. Some
illustrative situations are as follows:
- Businesses
with turnover below $50,000 are exempt;
- Businesses
with turnover between $50,000 and $100,000
pay between $250 and $800 depending on
the level of gross profit;
- Larger
businesses pay gradually increasing amounts;
a business with turnover of $30m and a
high gross profit percentage might pay
as much as $500,000 or 1% of turnover.
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Bahamas Payroll Taxes
Under the National Insurance Act 1972 as amended,
Bahamian employers, employees and the self-employed
pay social security contributions.
Employees
pay 3.4% of earnings (up to maximum earnings
of $13,000 pa); employers pay 5.4% of earnings
to the same maximum; self-employed persons
pay 8.8% of earnings to the same maximum.
Although
all employers and employees pay these contributions,
whether or not they are resident, benefits
can generally be claimed only by resident
Bahamians. Even in Paradise, it seems, there
are thorns on the roses. Expatriates returning
home to die at 60 after a lifetime of service
in the Bahamas may be able to get a refund
of contributions, or can elect to receive
a pension.
In
a 2005 report, the Social Security Reform
Commission, after a 10-month review, recommended
sweeping changes to the 30-year-old benefits
programme to ensure its sustainability.
The
Commission, which was appointed in October
2003, made 13 key recommendations, including
increasing the contribution rate from 8.8
percent to 11.8 percent. The first increase
would come into effect in January 2011, and
there would be an increase by one percent
every year until 2014.
Commission
Chairman Alfred Stewart has explained that
since the Fund started in 1975, there has
not been an increase in the contribution rate.
It
was also recommended that the retirement age
be increased from 65 to 67 and that the contribution
requirement for retirement pension be increased
from 150 weeks (three years) to 500 weeks
(10 years).
In
addition, the Commission recommended that
the ceiling on insurable wages be increased
to $500 per week and thereafter adjusted annually
in line with the average change in the national
wage index over the previous three calendar
years. The Commission had recommended that
this come into effect in January 2006.
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Bahamas Stamp Duties
Stamp duties are payable in a number of situations
in the Bahamas. The most important of these
are company incorporation, real estate transactions
and overseas remittances of Bahamian currency.
At
the time of writing, stamp duty on the capital
(initially and on subsequent increases) of
a domestic limited company runs at $64 on
the first $5,000 and $3 on each additional
$1,000.
Stamp
duty on real estate transactions ranges from
2% on small amounts to 10% on sales over $250,000.
It is normally shared between the parties.
There is a 1% stamp duty on mortgages paid
by the borrower.
Bahamian
currency exported from the jurisdiction is
stamped at 0.25%.
Bahamas Real Estate Tax
Real estate tax is levied on the following
types of land and real property:
- Developed
real estate on the island of New Providence;
- Developed
real estate on other islands if owned
by non-Bahamian persons;
- Undeveloped
real estate on New Providence owned by
(you guessed it) non-Bahamian persons.
Real
estate holdings must be declared annually
to the Chief Valuation Officer.
At
the time of writing, the rates of tax are
as follows:
- Owner-occupied
property:
| Value,
$ |
Rate
of tax, % |
| Up
to 250,000 |
Nil |
| 250,001
- 500,000 |
0.75 |
| Over
500,000 |
1.0
(max $35,000) |
- Other
property:
| Value,
$ |
Rate
of tax, % |
| Up
to 500,000 |
1.0 |
| Over
500,000 |
2.0 |
| Unimproved
property in New Providence |
3.0 |
