International Business Company (Company limited by shares)
The Bahamas has long been regarded as a cornerstone of the global offshore financial services sector. Dating back to the 1930s and 1940s, the country attracted international investors seeking a stable, tax-neutral environment combined with strong privacy protections. Although its prominence shifted somewhat following its independence from the United Kingdom in 1973—with jurisdictions like the Cayman Islands, the British Virgin Islands, and Bermuda rising in popularity—the Bahamas remains a key destination for offshore company formation, trusts, and private banking services.
Offshore companies in the Bahamas are established under the International Business Companies Act. These entities, known as International Business Companies (IBCs), are limited liability companies where shareholders’ risk is confined to the unpaid portion of their shareholding. IBCs are structured to be versatile vehicles for international business and investment, enjoying minimal reporting requirements and high confidentiality protections.
Ownership in a Bahamian IBC is represented by shares, which may include different classes offering varying rights. Shareholders typically have voting rights, such as electing directors and approving financial statements, and are entitled to dividends and any residual assets upon dissolution, subject to share class provisions. The board of directors, appointed by the shareholders, is responsible for steering the company’s operations and making key strategic and financial decisions.
To avoid increased government fees, the authorized share capital of an IBC is typically capped at an aggregate nominal value of USD 50,000 and 50,000 shares. This amount refers to the maximum share issuance authority granted to the company, not the actual number of shares issued, and the nominal value refers to the minimum price for what the share can be issued and alloted for. Shares may be issued at a nominal (par) value or at a premium, and share premiums above the nominal value do not attract additional incorporation fees.
There is considerable flexibility in terms of company structure. Both directors and shareholders may be either individuals or corporate entities, and there is no requirement for them to be residents of the Bahamas. Only one director and one shareholder are required to form an IBC, making the jurisdiction particularly appealing for solo entrepreneurs, family offices, and private investors.
In alignment with international tax and regulatory standards, the Bahamas has enacted the Commercial Entities (Substance Requirements) Act. This legislation imposes economic substance requirements on entities engaged in specific activities such as financial services, insurance, intellectual property management, shipping, headquarters functions, and group service operations. Affected companies must demonstrate operational presence in the Bahamas, including local management, adequate staff, and physical office space.
From a tax perspective, The Bahamas introduced a new Business Licence regime through the Business Licence Act, 2023 and accompanying Regulations, replacing the previous 2010 framework. Under the new law, all International Business Companies (IBCs) operating in or from within The Bahamas are required to obtain a business licence and pay an annual tax based on their turnover, unless they are regulated investment funds or pure equity holding entities. “Carrying on business” includes activities such as generating revenue within The Bahamas, having local operations or management, offering services locally, or being a regulated financial entity. Turnover must be apportioned between domestic and international sources when applicable.
IBCs with domestic turnover under BS$100,000 are exempt from tax; those with BS$100,000–BS$500,000 pay 0.5%, and BS$500,000–BS$5 million pay 1.25%. For international activities, IBCs earning under BS$1 million pay a flat BS$2,500, while those over pay 0.25% up to BS$100,000. Entities solely holding assets (except real estate in The Bahamas) or conducting exempt activities like regulated investment fund operations or holding equity passively are not subject to licensing or tax under the Act.
For the avoidance of doubt, IBCs that do not conduct activities in or from within the Bahamas, or IBCs that are only holding assets (of any kind) and are not operating a business within The Bahamas are not required to have a business licence or to pay business licence taxes, with the exception of IBCs that hold real estate property in the Bahamas.
Setting up an IBC in the Bahamas is efficient and streamlined. Incorporation can typically be completed within three to five business days generally. Once the necessary documentation—such as the memorandum and articles of association—is prepared and submitted to the Registrar General, the certificate of incorporation is issued promptly. Bahamian IBCs are commonly used for a wide array of purposes, including holding investments and intellectual property, owning international bank accounts, facilitating cross-border trade, and providing estate planning and asset protection solutions for high-net-worth individuals.
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 unpaid amount of the shares they hold.
Business License – A business licence is required for all IBCs that are conducting business in or from within The Bahamas. The following activities are not required to obtain a Business License: an investment fund regulated under the Investment Funds Act, 2019 and a pure equity holding entity.
Economic Substance – IBCs carrying on the following activities only are required to be directed and managed from within the Bahamas, have adequate physical premises and adequate number of employees in the Bahamas, and conduct its core-income generating activities from within the Bahamas.
- banking i.e. banking business
- insurance i.e. insurer
- finance and leasing i.e. business of providing financing or leasing of assets
- fund management i.e. management of collective investment schemes
- distribution and service center business i.e. reselling goods to affiliated companies or providing services to affiliated companies. Affiliated company is defined as a company which is part of the same group (e.g. parent-subsidiary, sister entity with common parent company, etc).
- headquartering i.e. providing management services to affiliated companies
- intellectual-property business i.e. holding and exploiting IP assets, generating identifiable revenue from such assets. Please note that the provision of services for developing IP assets or holding or using IP assets for ordinary commercial or service business is not considered an intellectual property business. IP businesses are those that generate separate and identifiable revenue from IP assets (e.g. patent licensing).
- shipping i.e. transportation by sea of persons, animals, goods or mail, the renting or chartering of ships for such transportation, management of ship crew, sale of travel tickets, the use, maintenance or rental of containers, including trailers and other vehicles or equipment for the transport of containers, used for the transport of anything by sea
- and pure equity holding company, companies that only own equity interests in other companies, and only earn dividends and capital gains (subject to a limited economic substance test, where the company does not need to be directed and managed from within the Bahamas, or conduct its core income-generating activities in the Bahamas)
Share capital – The maximum authorized share capital to avoid higher government fees is US$50,000. There is no minimum issued share capital other than issuing at least 1 share at the time of incorporation. There is no statutory requirement for capital to be fully or partly paid. Shares may be of different classes, and 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 – IBCs must keep accounting records, which may be kept in the Bahamas or outside of the Bahamas. An annual government fee payable to the Registrar General is due every January.
For IBCs whose turnover is lower than BS$250,000, there are no relevant filings.
For IBCs whose turnover is between BS$250,000 and BS$5,000,000, a Business Licence Return must be filed together with an independent practitioner’s report on turnover issued by a licensee of The Bahamas Institute of Chartered Accountants.
IBCs with turnover greater than BS$5,000,000 must submit an audited Business License Return and audited financial statements for the previous fiscal year prepared under a recognised accounting framework (i.e. IFRS or US GAAP) audited by an independent accountant licensed by The Bahamas Institute of Chartered Accountants.
IBCs and financial services entities that do not have domestic operations and which are paying the maximum business license tax of BS$100,000 may submit audited financial statements prepared by an independent auditor from another jurisdiction and do not have to provide an audited Business License Return.
The Business License Return and Financial Statements must be submitted no later than 31 March.
- Members not disclosed
- Members not disclosed
- Corporate members permitted
- Corporate manager permitted
- Local manager required
- Registered office or agent required
- Annual meeting required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Common law Legal basis
- 1 Minimum shareholders
- 1 Minimum directors
- - Minimum issued capital
- - Minimum paid up capital
- USDAny Capital currency
- Anywhere Location of annual general meeting
- 2018 AEOI
Taxes
Business License Tax - The Bahamas repealed the Business Licence Act, 2010 and its related amendments and regulations, and replaced it with the enactment of the Business Licence Act, 2023 and the Business Licence Regulations, 2023.
Under the new Act and Regulations, with the exception of IBCs carrying out certain business activities (see "Exempted Activities" below), all IBCs that carry on an active business in or from within the Bahamas, are required to have a business licence and pay a business licence tax annually based on turnover for the preceding calendar year.
"Carrying on an active business in or from within the Bahamas", includes the following:
- Business revenue recorded in the books and records of an international business company as having been earned from activity in or from within The Bahamas;
- Included entities conducting relevant activities under the Commercial Entities (Substance Requirements) Act 2023 (other than those that are pure equity holding entities);
- Significant operational mind and management decisions of a business being conducted in The Bahamas on an ongoing basis;
- The existence of operations at a permanent establishment/fixed place of business;
- Performance of personal services within The Bahamas;
- A financial services entity regulated by the Central Bank of The Bahamas or the Securities Commission
Turnover is defined as “all revenues recorded by the international business company in its books and records in The Bahamas, whether or not any portion of such revenues is attributable to activities conducted outside The Bahamas".
IBCs whose revenues are earned from activities performed partly within and partly outside of The Bahamas shall allocate and apportion such revenues between revenues earned from activities within the Bahamas, and revenues earned from activities outside of the Bahamas.
Activities within the Bahamas
Turnover from activities carried on within the Bahamas is subject to Business License Taxes as follows:
- Turnover of less than BS$100,000 - exempt
- Turnover between BS$100,000 and BS$500,000 - 0.5%
- Turnover between BS$500,000 and BS$5,000,000 - 1.25%
The following activities are considered to be from operations within the Bahamas:
- the sale or exploitation of tangible or intangible property that is located or registered in The Bahamas;
- the export of goods;
- the sale or other provision of goods or services to persons -
- deemed resident for exchange control purposes; or
- who are within The Bahamas at the time that the goods or services are sold or otherwise provided;
- professional services, including legal services, architectural services, consultancy services, engineering services, accountancy services and advisory services.
Activities outside of the Bahamas
Turnover from activities carried on outside of the Bahamas is subject to Business License Taxes as follows:
- Turnover of less than BS$1,000,000 - Flat tax of $2,500
- Turnover greater than BS$1,000,000 - 0.25% up to a maximum tax of BS$100,000
Exempted Activities
IBCs that are only holding assets (of any kind) and are not operating a business within The Bahamas are not required to have a business licence or to pay business licence taxes, with the exception of IBCs that hold real estate property in the Bahamas.
Specifically, the following activities are exempt from obtaining a Business License, and therefore, exempt from any Business License Tax:
- Investment Funds regulated by the Securities Commission of The Bahamas
- Pure Equity Holding Companies
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.
- Tax transparent entity
- 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
- 1.25% 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.