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If you are planning to start an offshore company in the Bahamas, here are some thing you should know about:
The taxation system is the most appealing factor for starting an offshore company in the Bahamas. This country offers zero taxation for corporate tax, income tax, capital gains tax, royalty tax, dividend and interest tax. Furthermore, these terms apply to both resident and non-resident businesses on the islands.
The cost of forming an offshore company in the Bahamas is low, as are the expenditures of maintaining the company. It takes around 7 to 14 working days for your application to be processed.
Offshore companies in the Bahamas can enjoy a high level of privacy, which is optimal for asset protection and retaining confidentiality of personal information. Remarkably, The 1990 International Business Companies Act of the Bahamas prohibits the exchange of knowledge on companies in the Bahamas with any other country.
Apart from being an exceptional tourist country with stunning beaches, The Commonwealth of The Bahamas, commonly known as The Bahamas, is also famous for its attractive conditions to international investors who wish to start a business in the Bahamas. Here are all the steps and their associated costs to start a business in the Bahamas:
In comparison, the cost to start a business in the Bahamas is among the cheapest in the world. It is even lower considering all the benefits the country offers to international businesses here. If you are looking for a trusted corporate service provider to help you start a business in the Bahamas, check out One IBC®’s Bahamas company formation service.
A bearer share is an equity security that is entirely owned by the person or company who carries the physical stock certificate. Since the share is not registered with any authority, the easiest way to transfer ownership is to present the physical paperwork.
When register a company in Bahamas, many businesses do not know if bearer shares are permitted in the Bahamas or not. To answer this question, the country used to allow bearer shares, but had eliminated them in 2000. All bearer shares prior to that have been recalled on June 30 2001. These changes were made in the International Business Company (IBC) Act 2000 as a repeal of the IBC Act 1989, with a view to improve the business law as well as gain trust from international investors. The Act also stated that there must be at least one shareholder in the company, and the beneficial owners of a corporation must be revealed to the registered agent, but they are not on public record.
The elimination of the Bahamas bearer shares has addressed issues of transparency raised by the FSF, FATF, and OECD in relation to the identification, recording, and dissemination of pertinent information about legal and business entities.
The Bahamas earned its tax haven reputation due to its foreign investor-friendly tax and business legislation. This is due to the fact that personal income, inheritance, gifts, and capital gains are not taxed in the Bahamas. Other taxes, including value-added tax (VAT), property taxes, stamp taxes, import tariffs, and license fees are the source of income for the government.
Because of its reputation for stability, the Bahamas is an international hub for banking operations that attracts global financial organizations. Consequently, this attracts many companies and wealthy foreigners . With a per-capita GDP of $34,863.70 in 2019, the Bahamas are the third wealthiest country in the continent, after the United States and Canada.
No tax or only nominal taxes - Although the tax system differs by nation, all tax havens promote themselves as a place where non-residents may avoid paying high taxes by placing their assets or companies there. As a matter of fact, even well-regulated nations, although not classed as tax havens, still offer tax advantages to encourage foreign investment.
High information privacy - Financial information is fiercely protected in the Bahamas tax havens. The Bahamas have explicit legislation or administrative processes in place to protect information from international influence and spying.
No local residency - Foreign entities are usually not required to have a significant local presence in the Bahamas. Within its borders, there is no need to produce products or services, or to conduct trade or commerce as well as any local representative or office.
To get a business license in the Bahamas, non-Bahamians must first submit a Project Proposal to the Bahamas Investment Authority (BIA). Non-Bahamians must have a minimum capital investment of BS$500,000 outside of “Bahamians only” areas.
The BIA will examine the application and forward it to the National Economic Council for review as well as these Government Ministry or Agency depending on the nature of the proposed commercial activity:
The BIA will notify the applicant in writing once a decision has been reached. They also collaborate with other government departments and support the project after permission is granted.
A Business Licence Unit office (BLU) can provide the application form. Complete and submit the application form to the BLU, a Treasury Office, or a Family Island Administrator. This form also includes the registration of a business name. If the name is rejected, the applicant will be informed and directed to choose from the remaining options on the form.
The application is completed within 7 working days if there is no problem. The applicants will be contacted by the BLU to notify them that they may pick up their Bahamas business license.
The Registrar General Office is where public trading firms, limited liability partnerships, and limited liability companies register and obtain their certificate of incorporation. Then this is delivered to the BLU office.
The Bahamas has a relatively low tax rate. In summary:
The Bahamas may appear to be a tax-free haven on the surface, but to actually benefit from this jurisdiction’s tax system, the help of a professional like One IBC® is strongly advised.
Businesses in the Bahamas are not subject to corporation or withholding taxes. Business license fees, stamp duty, property tax, and import tariff are all taxes that influence businesses. The majority of offshore or non-resident entities are free from business license fees and stamp duty. The government charges corporate entities fees for incorporation or registration.
On June 4th 2021, the G7 leaders decided to support proposals to overhaul the global tax system by introducing a worldwide minimum corporate tax rate of 15% for multinational corporations. However, the Bahamas maintains its sovereign right to select the appropriate tax system for the country's long-term growth.
Sales tax is a government-imposed consumption tax on the selling of goods and services. A traditional sales tax is imposed at the time of sale, collected by the shop, and then forwarded to the government. A company is liable for sales taxes in a particular jurisdiction if it has a nexus there, which can be a physical location, an employee, an associate, or some other kind of presence, depending on the rules in that country.
There is no sales tax in the Bahamas. Rather, the government imposes a value-added tax (VAT) on nearly all products and services.
Almost all products and services imported, bought, and sold in The Bahamas are subject to Value Added Tax (VAT). VAT rate is charged at 12%. However, goods shipped to clients in other countries are not charged with VAT.
A company is allowed to charge VAT only when it is VAT-registered. If it is obliged to be registered for VAT (mandated) and does not register, the company will still be responsible for any VAT (plus interest and penalties) even though it did not charge any. Therefore, it's critical to register as soon as possible (when the threshold is reached). Charging VAT without registering is a severe offense that can result in fines or imprisonment.
There are no income, capital gains, wealth, inheritance, succession, gift, or unemployment taxes in the Bahamas. In The Bahamas, foreign businesses are not taxed on their earnings, although they may be compelled to make national insurance contributions. Employees and employers must pay tax rates with 3.9% and 5.9% of their earnings, respectively, up to a maximum annual earnings of 670 Bahamian dollars (BSD) each week or 2,903 per month. This maximum level was set in 2018, and will be subject to a two-year rise based on the projected growth in average salaries. Although, due to the Covid pandemic, there was not a new level in 2020.
All non-residents in The Bahamas must be taxed with real estate interests. The Department of Inland Revenue has the authority to evaluate and reassess the value of any property that has grown. The maximum amount of property tax that may be assessed each year is $50,000.
Bahamas property taxes are usually issued in mid-October and must be paid by the end of December in the following year. The property owner is responsible for making sure that the taxes are paid on time (can be in either Bahamian or US dollars). Failure to pay taxes on time will result in a 5% annual penalty until payment is made. Below are the rates for commercial properties:
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