In
the Bahamas there is no income tax, capital
gains tax, purchase or sales tax, VAT
or capital transfer tax. Employees pay
national insurance contributions, and
there is stamp duty on property and mortgage
transactions, and a tax on real property;
customs duties are quite high on most
imported goods.
Bahamas Residence and Liability for Taxation
Bahamian national insurance contributions
are payable by all employees and the self-employed,
whether resident or not, although only
Bahamian residents receive benefits. Other
Bahamian taxes or duties are related to
events, rather than residence status.
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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 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 by individuals
in a number of situations in the Bahamas.
The most important of these are real estate
transactions and overseas remittances of
Bahamian currency.
At
the time of writingm stamp duty on real
estate transactions ranges from 2% on small
amounts to 8% on sales over $100,000. 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 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 |
An amendment
to the Stamp Act which provides for exemption
from payment of stamp duty on certain financial
transactions involving licensed lending
institutions went into effect in 2008.
As of
July 1, 2008, application may be made for
exemption from stamp duty for any of the
following: purchase of a dwelling home;
purchase and financing of a dwelling home
and mortgage; purchase and financing of
a dwelling home combined with other domestic
loans and mortgages; purchase of vacant
land for the construction of a dwelling
home; transfer of a home mortgage; and,
transfer of a home mortgage combined with
other domestic loans.
The
government stated that applications for
stamp duty exemption in respect of these
transactions must be accompanied by a completed
affidavit, a copy of a National Insurance
card, the first page, signature page, and
back sheet of conveyance, and/or first page,
signature page, and back sheet of mortgage.
In New
Providence, applications must be made to
the Financial Secretary at the Ministry
of Finance, or to a Family Island Administrator.
The
Ministry reminded applicants that purchase
or construction of the home must be in respect
of a first time home ownership, and the
home must be intended for owner occupancy.
“A
dwelling house includes a condominium unit
or a duplex, exclusive of any part that
is not owner-occupied,” stated the
Ministry.
“The
property must not be used for commercial
purpose," it added.
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