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.
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.
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 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.
- 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
- - 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.
- 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
- 0.25% 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.