The
term 'offshore' is not used in Bahamian
legislation or in describing company forms.
Abstaining from local trading activity is
the key factor which allows use of the various
'offshore' corporate forms, and ensures
long term exemption from taxation and some
or all of stamp duty, exchange controls
and business licensing requirements. Since
there are no general corporate taxes other
than stamp duty, there is no separate 'offshore'
sector as such in taxation terms.
Bahamas Forms of Offshore Operation
Offshore (external) operations take place
mostly within the following forms:
Bahamas Tax Treatment of Offshore Operations
In the Bahamas there is no income or corporation
tax, no capital gains tax, no VAT or sales
tax, and no withholding tax. Companies and
partnerships pay annual fees to the Government
depending on their nature and capitalisation.
There is stamp duty and there are some property
taxes. Exempted Limited Partnerships are exempt
from both, as are Trusts provided that their
beneficiaries are non-resident. Banks and
Trust Companies (ie administrators of trusts)
are also exempt provided that they have non-resident
licenses (this is a matter of practice - a
license is issued as resident or non-resident
depending on circumstances). All of the offshore
entities, and non-resident domestic companies,
are exempt from exchange controls. Mutual
Funds are exempt from taxes and exchange controls
if they have an appropriate corporate form;
in practice therefore they are exempt. For
further details of stamp duty and property
taxes see Domestic
Corporate Taxes.
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Bahamas
Fees Payable by Financial Institutions
Financial institutions licensed under the
Banks and Trust Companies Law 1965 pay fees
on registration and annual fees (2006) as
follows:
| Authorised
Agents and Authorised Dealers |
$310,000 |
| Authorised
Dealers |
$250,000 |
| Authorised
Agents |
$60,000 |
| Other
Public Institutions |
$25,000 |
| Restricted
Bank and Trust |
$5,000 |
| Restricted
Bank |
$5,000 |
| Restricted
Trust |
$2,500 |
| Non-Active
Bank and Trust |
$1,000 |
'Other
Public Institutions' includes banks and trust
administration companies; 'Restricted' banks
and trusts are those that deal only with a
list of customers included in their license
and which cannot be altered without permission.
Captives are licensed under the External Insurance
Act 1983, and pay a fee of $2,500 on registration
and annually thereafter. In addition, $650
is paid annually for each underwriting manager
employed by a captive insurer.
On
registration, a captive insurer gains exemption
from taxes for 15 years.
Resident
insurance companies pay a registration fee
of $1,000 and the same annually thereafter,
plus 2% of gross premiums collected each quarter.
Insurance
companies are not permitted to use the International
Business Company or LDC corporate forms, but
must establish a Bahamian domestic limited
company or must register as foreign companies.
Captives registered under the External Insurance
Act are exempt from exchange controls.
New
insurance legislation is in the pipeline which
will update the somewhat outdated Bahamian
insurance acts.
The
Investment Funds Act 2003 established the
following fee structure for investment funds
and fund administration companies:
| Application
Fee for a Investment Fund Licence (Standard
Professional or SMART Fund - non refundable) |
$750.00 |
| Initial
Registration Fee (Recognized Foreign
Fund -non refundable) |
$100.00 |
| Initial
Filing Fee (Investment Funds licensed
by an
Unrestricted Investment Fund Administrator) |
$750.00 |
| Annual
Investment Fund Licence Fee (Standard,
Professional Fee payable in or SMART
Investment Fund) |
$950.00 |
| Annual
Investment Fund Licence Fee (Self Administered
Standard, payable in the first Professional
or SMART Investment Fund) |
$1,000.00 |
| Annual
Registration Fee (Recognized Foreign
Fund) |
$100.00 |
|
Initial principal office fee payable
by an Investment Fund in the first year
to Administrator (non-refundable) |
$500.00
|
| Application
Fee for an Unrestricted Investment Fund
Administrator’s Licence (non-refundable) |
$5,000.00 |
| Application
Fee for a Restricted Investment Fund
Administrator’s Licence (non-refundable)
|
$2,000.00 |
| Application
Fee for an exemption from the obligation
of having to obtain an Investment Fund
Administrator’s Licence (non-refundable)
|
$1,500.00
|
| Annual
Unrestricted Investment Fund Administrator’s
Licence Fee |
$10,000.00 |
|
Annual Restricted Investment Fund Administrator’s
Licence Fee. |
$5,000.00 |
| Annual
Exemption Fee from the obligation of
having to obtain an Investment Fund
Administrator’s Licence |
$1,500.00 |
NB:
Fees charged by administration or registration
agents are a separate matter; the above fees
are simply set annual dues.
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Bahamas Taxation of Foreign Employees of Offshore
Operations
This
section refers to the taxation of foreign
employees in the Bahamas. See Domestic
Personal Taxes for the general principles
of individual taxation in the Bahamas, which
also apply to the resident employees of non-resident
entities. There are in fact no personal taxes
as such in the Bahamas, and there is no distinction
between the employees of resident or non-resident
operations.
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Bahamas Exchange Control
The Bahamas have exchange controls, under
the Exchange Control Act and Regulations 1956,
applying to resident individuals and companies,
who need consent from the Central Bank to
conduct operations in foreign currencies.
Likewise, non-resident or offshore companies,
who are free to deal in foreign currencies,
require Central Bank consent to deal in Bahamian
dollars.
Residents
comprise: Bahamian nationals, companies beneficially
owned in the Bahamas, and companies whether
Bahamanian or foreign-owned operating within
the Bahamas. Foreign nationals with work permits
who live in the Bahamas are also normally
considered to be resident.
Non-residents
comprise: foreign nationals living abroad,
or, if living in the Bahamas, without the
right to work there; and foreign companies
and foreign-owned Bahamian companies trading
exclusively outside the Bahamas.
Residents
who want to make external investments in foreign
currencies will usually be allowed to do so,
but have to buy the foreign currency at a
premium; non-residents who want to invest
into the Bahamas may do so, but the opportunities
for portfolio investment are very limited.
Exchange
controls are gradually being dismantled, initially
in respect of CARICOM, and it is the intention
of the Central Bank to remove them entirely
in due course.
In
February 2006
the Central Bank announced the relaxation
of exchange controls relating to real estate
investments, foreign currency transfers, mortgages,
and debt and equity instruments.
Prior
to the changes, residents purchasing securities
or making real estate investments overseas
had to do so through the Investment Currency
Market (ICM), at a premium bid and offer rate
of 25% and 20%, respectively. With immediate
effect, these rates were reduced by half,
to 12.5% and 10.0%, respectively.
In
addition, equities of Bahamian Companies listed
on BISX can be
cross listed on principal CARICOM exchanges
(i.e. Barbados, Jamaica, ECU and Trinidad
& Tobago), within prescribed limits.
Foreign
companies listed on principal CARICOM exchanges
may list issued and outstanding equity securities
on BISX.
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Bahamas Offshore Activities
The International Business Company and its
cousin, the Limited Duration Company, are
not allowed to do business with Bahamian residents,
but are allowed the following activities in
the Bahamas:
-
To
maintain bank accounts;
-
To
make and maintain contact with professional
firms;
-
To
maintain books and records;
-
To
hold meetings of directors or members;
-
To
lease real estate for use as an office.
It
is possible to obtain a license from the Minister
of Finance to carry out other types of business
activity on the island, if he considers it
is in the interests of the Bahamas.
Other
offshore and non-resident entities operate
under broadly similar regimes to the International
Business Company.
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Bahamas
Employment and Residence
Work
permits are necessary for non-Bahamians to
be employed: key (senior or specially-skilled)
people are issued permits; in other cases
it is wise to discuss the possibility of a
permit with the Bahamas Investment Authority
in advance.
Anyone
wishing to reside in the Bahamas must obtain
a residence permit from the Immigration Department.
Home-owners can obtain an annually-renewable
Home Owner's Residence Card which acts as
a visa for entry and residence during its
validity. Major international investors and
existing owners of properties worth more than
$500,000 benefit from accelerated treatment
of residence applications
The
International Persons Landholding Act 1993
reversed a previously deterrent stance and
actively encourages the purchase of local
residential property by foreigners. Acquisition
of a single family dwelling or up to 5 acres
of vacant land for construction of a dwelling
no longer needs an advance permit, but can
be registered after purchase. Rule for inheritors
of Bahamian properties have been similarly
relaxed. Fees for the (compulsory) registration
of real estate and residence permits are as
follows:
-
Application
for registration: $25
-
Application
for permit: $25
-
On
issue of certificate of registration or
issue of permit:
| Value
of property, $ |
Fee,
$ |
| Up
to 50,000 |
50 |
| Under
101,000 |
75 |
| 101,000
and over |
100 |
-
Homeowner
resident card: $500
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