International Business Company (Company limited by shares)
The Bahamas is one of the industry veterans when it comes to offshore financial services. Since the 30s and 40s, the jurisdiction has been attracting foreign wealth due to its absence of taxation and its confidentiality policies. Although it lost popularity after its independence from Great Britain back in 1973, in favor of Cayman, BVI or Bermuda, it is still one of the go-to jurisdictions in terms of offshore corporate, trust and banking services.
Last December 2018, the Bahamas implemented several legislative changes to comply with requirements set by the EU and the OECD, by enacting the Removal of Preferential Exemptions Act; Commercial Entities (Substance Requirements) Act; the Register of Beneficial Ownership Act; and the Multinational Entities Financial Reporting Act
The Removal of Preferential Exemptions Act abolishes ring-fencing features provided by the International Business Companies Act; the Exempted Limited Partnership Act; the Investment Condominium Act, 2014; and the Executive Entities Act, 2011 - which provided companies incorporated by non-residents to enjoy certain exemptions if they were operated completely outside of the Bahamas.
Because the Bahamas doesn’t levy corporate taxes the main impact for IBCs or Limited Partnerships doing business outside of the Bahamas is that now they will be required to obtain a business license and pay a certain annual fee, as well as stamp duty on certain instruments. Limited duration companies under the International Business Act have been abolished.
Companies incorporated on or before December 31, 2018, are grandfathered for three years, until December 31, 2021.
Furthermore, international banking, insurance, and securities/capital markets sectors will be able to offer services to residents in the Bahamas and in local currency once certain regulatory approvals are in place. On the other hand, local commercial banks will be able to provide services to international clients.
With regard to the Commercial Entities (Substance Requirements) Act - financial and insurance services companies, shipping businesses, IP businesses, headquarters businesses, holdings and companies providing services to or trading with affiliates are required to meet economic substance requirements.
The Register of Beneficial Ownership Act establishes obligations for registered agents to identify and verify identities of beneficial owners of companies incorporated in the Bahamas and maintain databases to hold such beneficial ownership. Information maintained in databases must remain confidential and only accessible by a ‘designated person’ and the registered agent to whom the database belongs to.
The Multinational Entities Financial Reporting Act, 2018, subjects Bahamas companies that are an ultimate parent entity (UPE) of a multinational entities group (MNE) to file a yearly country-by-country report (CbCR).
MNEs are groups that have two or more entities incorporated in different jurisdictions and that have a consolidated group revenue of over USD 850 mil.
A CbCR is an annual return that includes the key elements of the financial statements of a given multinational group by jurisdictions. It provides information to tax authorities about revenue, tax paid and accrued, employment, capital, retained earnings, tangible assets, and business activities, among others.
Bahamian International Business Companies are commonly used as holding companies, to hold bank accounts, financial and commercial titles, international trading, own movable and immovable properties, asset protection and estate and inheritance security, among others.
Legal
Country code – BS
Legal basis – Common law
Legal framework – International Business Companies Act (As amended).
Company form – International Business Company (Company limited by shares)
Liability - The liability of the shareholders is limited up to the amount of the shares they hold.
Economic Substance – Financial and insurance services companies, shipping businesses, IP businesses, headquarters businesses, holdings and companies providing services to or trading with affiliates are required to meet economic substance requirements. They must be controlled and managed from the Bahamas and have adequate premises, amount of expenditures and number of employees in the Bahamas, according to its business activity and size. Companies deemed to be conducting a high-risk intellectual property business will be subject to enhanced substance requirements.
Share capital – The authorized share capital is usually US$50,000. There is no statutory requirement for capital to be fully or partly paid on incorporation. Shares may be denominated in any currency and may be with or without nominal or par value. Bearer shares are not allowed.
Shareholders – International Business Companies may be formed by one or more shareholders, who can be either natural or legal persons, residents or non-residents, without limitations. Details of shareholders are not publicly disclosed. Nominee shareholders are allowed.
Directors – At least one director is required, who may be a natural person or a legal entity. Directors’ details are available to the public. Nominee directors are permitted.
Secretary – The appointment of officers such as a secretary is optional, and may be an individual or a corporation, resident or non-resident.
Registered Address – An IBC must have a registered office in the Bahamas, provided by a licensed service provider.
General Meeting – Annual general meetings are not mandatory. However, if meetings are held, they can be anywhere in the world and may be by proxy or by telephone.
Electronic Signature – Permitted.
Re-domiciliation – A foreign entity can easily be re-domiciled as a Bahamas IBC, and vice versa.
Compliance – Bahamas’ IBCs must keep accounting records, which may be kept anywhere. There is no requirement to file financial statements and annual return to the Registrar, neither tax return to the Tax authorities. Bahamas IBCs are subject to an annual government fee.
- Shareholders not disclosed
- Directors not disclosed
- Corporate shareholders permitted
- Corporate directors permitted
- Local director required
- Secretary required
- Local secretary required
- Annual general meetings required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- USD 1 Minimum issued capital
- - Minimum paid up capital
- USDAny Capital currency
- Anywhere Location of annual general meeting
- 2018 AEOI
Taxes
Corporate income tax - Bahamas does not levy corporate income tax.
There are no withholding taxes on dividends, interests, and royalties paid to non-residents.
IBCs in the Bahamas may trade with residents and they may own real estate within the territory, but exchange controls and stamp duties on authorized capital will apply in these cases.
Other taxes - There are no personal direct taxes such as personal income tax or net worth tax.
The Bahamas levy a real property tax up to 2% for land and building owners, although several exemptions may apply. There is also a stamp duty on the transfer of certain assets and financial instruments.
Companies conducting business in the Bahamas may be subject to several indirect taxes such as import duties, hotel guest tax, passenger tax, casino tax, among others.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 0% Offshore Income Tax Rate
- 0% Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 0% Dividends Withholding Tax Rate
- 0% Interests Withholding Tax Rate
- 0% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 0 Losses carryforward (years)
- 3.9% Social Security Employee
- 5.9% Social Security Employer
- 0% Personal Income Tax Rate
- 7.5% VAT Rate
- 31 Tax Treaties
Country details
The Commonwealth of the Bahamas consists of more than seven hundred islands (of which 24 are inhabited and more than 700 uninhabited), cays and islets in the Atlantic Ocean, is located to the north of Cuba and Dominican Republic, northwest of Turks and Caicos Islands, to the southeast of the state Florida and east of the Florida Keys. Geographically the Bahamas form, along with the Turks and Caicos Islands, the Lucayan Archipelago, also denominated by extension Bahamas.
It has a population of almost 400,000 inhabitants. Its capital and the most populated city is Nassau, located on the island of New Providence. Its official language is English, although the Bahamian Creole is widely spoken. Its official currency is the Bahamian Dollar, pegged to the US Dollar at an exchange rate of 1:1.
The Bahamas is a hereditary constitutional monarchy belonging to the Commonwealth of Nations. The British monarch, as head of state, appoints his/her representative, the Governor General. Executive power is exercised by the Cabinet, headed by the prime minister, an institution that appears in 1955 with the first parliamentary elections in the archipelago.
Legislative power rests on a bicameral parliamentary system. It is composed of sixteen members of the Senate (appointed by the Governor General) and forty members of the House of Representatives, elected directly by the population.
The Bahamas has an economy based on imports, tourism, and banking. Tourism alone accounts for more than 60 percent of GDP and employs directly or indirectly half the workforce of the archipelago.
Financial services are the second most important sector of the economy: about 15% of GDP.
Industry and agriculture contribute about one-tenth of GDP. Its major industries apart tourism and banking services are ceme