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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
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.
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