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- BAHAMAS EXECUTIVE
SUMMARY
Bahamas
Executive Summary
The Bahamas Are An Independent Nation State
The
Bahamas became independent from the UK in 1973,
although the Queen remains Head of State. Beginning
50 miles off Florida, in the Caribbean, the
Bahamas has 700 islands and a population of
302,000. The official language is English. The
capital is Nassau, there are a number of international
airports with good connections, and there are
excellent port facilities. The climate is sub-tropical.
The Westminster-style government is business-friendly.
Elections in 2002 saw
a major political upset when the Progressive
Liberal Party led by Perry Gladstone Christie
ousted the incumbent Free National Movement
after a 10-year reign, winning 28 seats out
of 40 in the House of Assembly.
Economy Based on Financial Services and Tourism
The
Bahamas was a trust and tourist jurisdiction
very early in the 20th century, but was relatively
late in developing as a financial centre. The
economy is heavily dependent on tourism (4m
visitors a year), but financial services are
growing in importance. GDP was $5.9bn in 2005,
and GDP per head was about $18,800 in 2005 at
PPP, good for the region but not wonderful.
According
to the IMF, the future for the economy looks
bright, with GDP growth set to continue in the
fiscal years 2006/7 and 2007/8 at rates of 6.5%
and 6.7% respectively.Unemployment
is a problem, but has eased recently. The Bahamas
are very dependent on imports and have a structural
trade deficit; recent years have seen budget
deficits, which the government will have to
address in the context of regional trade liberalisation.
The
Bahamas' Stock Exchange
In
May 2000, the Bahamas' new stock exchange (BISX)
went live, originally with 2 established brokers;
by
the end of 2005 there were 19 companies listed
on the exchange with a capitalisation of around
$2.6 billion.
The BISX has an upgraded infrastructure from
which remote trading across a secure private
WAN and the launch of an international segment
can take place. However, the exchange has struggled
to develop a secure financial base in the absence
of promised privatisations.
The Bahamas' Lowtax Specialisations
Leading
sectors are banking (about 300 banks with assets
near $1 trillion) and mutual funds ($100bn under
management). Trust management is also prominent.
The insurance sector has assets of $700m. Professional
services are excellent. The shipping registry
has been very successful for larger vessels.
No Income Tax in the Bahamas!
There
is no income tax, capital gains tax, VAT, sales
or use tax or wealth tax. Annual government
fees are imposed on businesses and there are
national insurance, stamp duties and property
taxes. Local businesses are controlled by licensing
and somewhat protected, although there are good
investment incentives in some sectors. Offshore
operations take place through International
Business Companies or other tax-exempt forms.
International
Standing
After
the Bahamas was placed on both the FATF and
OECD 'blacklists' in 2000, the government extensively
revised its legislative structure to bring the
country into conformity with tougher international
standards, and the Bahamas was removed from
both lists as a result.
A
Tax Information Exchange Agreement was signed
with the US in 2002, and the new Bahamian government
in 2002 emphasized its determination to maintain
the Bahamas as a fully compliant international
financial centre. Some dissatisfaction with
the new legislation on the part of the financial
sector is being dealt with through adjustment
of the regulatory regime.
Immigration
Controlled by Residence and Work Permits
With
an unemployment problem, the Government controls
access to Bahamian jobs with a system of work
permits. Access to housing has been recently
relaxed for foreigners, who are now encouraged
to buy or build 'second homes'. Also,
the finance industry is working with the government
to develop a more flexible work permit framework,
to allow the Bahamas to attract the best industry
talent.
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