Bahamas: Domestic Corporate Taxation
Under the National Insurance Act 1972 as amended, Bahamian employers, employees and the self-employed pay social security contributions.
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.
The National Insurance Board has begun to implement the recommendations and from June 1, 2010, raised employee contributions to 3.9% of earnings (3.4% prior to June 1, 2010). Employer contributions increased to 5.9% from 5.4% at the same time. The maximum earnings level was raised from BSD400 to BSD500 per week from January 1, 2011 and to BSD600 from July 2012; self-employed persons pay 8.8% of earnings to the same maximum.
Furthermore, the contribution requirement for retirement pension was raised from 150 weeks to 500 weeks with the concession that a claimant aged 65 or over, having paid less than 500 contributions but more than 150, will qualify for a one-time grant.
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.