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 307,000. 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. In May 2007, voters brought back former Prime Minister Hubert Ingraham's Free National Movement Party, with 24 of the 41 House of Assembly seats. Prior to the election, which attracted a 90% turnout, the PLP, led by Perry Christie, had been in power since 3rd May, 2002.

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 USD8.3bn in 2007, and GDP per head was about USD25,000 in 2007 at PPP, good for the region but not wonderful. According to the IMF, the future for the economy looks bright, with GDP set for 4% growth in 2008 in real terms. 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.

BAHAMAS: EXECUTIVE SUMMARY

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Bahamas Executive Summary