Company and Jurisdictions
International Business Company (IBC)
|Companies Act, 1992 and International Business Companies (IBC) Act, 2000||USD 50,000, being the maximum capital for the minimum duty payable annually.|
|Annual government fees:||Corporate Taxation:|
|Time to incorporate:||Ready-made companies:|
|Minimum members:||Registered office required:|
|One, individual or corporate.||Yes, at address of a licensed management company or law firm in Bahamas|
|Local registered agent:||Minimum number directors:|
|Yes.||One, individual or corporate.|
|Officer to be locally resident:||AGM required:|
|Annual return required:||Financial statements to be prepared and/or audited:|
|No.||Company is required to keep financial records reflecting financial position of the company but there is no need to record or file these with the authorities|
|Balance sheets to be filed:||Share register required:|
|No.||Yes, at registered office|
|To be filed with Registrar:||Open to public inspection:|
|No.||No, but open to other members|
|Exchange controls:||Redomiciliation permitted:|
|No.||Yes, in and out.|
|Language of incorporation:||Confidentiality:|
|English.||No specific statutory provisions in relation to companies, but a common law duty on professionals to keep affairs of clients confidential.|
|Bearer shares permitted:|
Very quick formation procedure
Good name availability
Not affected by EU savings directive
Guarantee against tax, which runs for 20 year from incorporation
Excellent banking services - over 350 banks
Frequent changes in legislation
Poor legal services as no foreign lawyers allocated to practice in jurisdiction.
OECD Harmful Tax Practices
The Bahamas was among 35 jurisdictions identified by the OECD in June 2000 as meeting the technical criteria for being a tax haven. On 15 March 2002, the Bahamas' government signed a commitment to improve the transparency of its tax and regulatory systems and establish effective exchange of information for tax matters with OECD countries by 31 December 2005.
Tax Information Exchange Agreement (TIEA)
The Bahamas signed a bilateral TIEA with the USA in 2002, which came into force on 1 January 2004 for criminal matters. The agreement is to be extended to cover civil tax matters from 1 January 2006.
EU Savings Tax Directive
Financial Action Task Force (FATF)
The Bahamas was one of 15 countries or territories identified by the FATF as Non-Cooperative (NCCT) in June 2000, after it found serious deficiencies in its anti-money laundering legislation. The Bahamas was removed from the NCCT list in June 2001 after it had enacted 11 new laws, as well as significant amendments to existing legislation, including a prohibition on anonymous accounts and bearer shares.
The Bahamas is a member of the Caribbean Financial Action Task Force and was Chair in 2003.
The Bahamas is a member of the Offshore Group of Banking Supervisors (OGBS) and the Financial Intelligence Unit (FIU) is a member of the Egmont Group. The Bahamas FIU has signed several memoranda of understanding with other FIUs for the exchange of information. As a result of the Financial Intelligence Unit (Amendment) Act 2001, the FIU is now able to cooperate and render assistance to any foreign FIU that performs functions similar to those of the Bahamian FIU.
Mutual Legal Assistance Treaties (MLATs)
The Bahamas has a Mutual Legal Assistance Treaty with the United States, which entered into force in 1990, and agreements with the United Kingdom and Canada.
The Bahamas has no tax treaties
|Full Country Name:||The Commonwealth of The Bahamas|
|Area:||13,939 sq. km. (5,382 sq. mi.)|
|Population:||320,665 (2004 est.)|
|Capital City:||Nassau, New Providence. Second Largest City - Freeport, Grand Bahama|
|People:||Afro-Caribbean 85% European 12% Asian and Hispanic 3%|
|Languages:||English; some Creole amongst Haitian groups.|
|Currency:||Bahamian Dollar (BSD)|
|Government:||Constitutional parliamentary democracy.|
|Legal system:||based on English common law|
|Head of State:||HM Queen Elizabeth II|
The Bahamas is an archipelago of approximately 700 flat, low lying islands in the western Atlantic Ocean, only 30 of which are inhabited. It extends from 80 kms east of Florida to 80 kms northeast of Cuba. Neighbours of the Bahamas include Haiti and the Turks & Caicos Islands; both are located to the southeast of the Bahamas. The Tropic of Cancer runs through the middle of the archipelago, passing across the lower part of Great Exuma Island and the upper part of Long Island. Although the total land area of the archipelago is 13,939 sq. kms, the islands are spread over an area of approximately 259,000 sq. kms.
In 1492, Christopher Columbus made his first landfall in the Western Hemisphere in The Bahamas. Spanish slave traders later captured native Lucayan Indians to work in the gold mines in Hispaniola, and within 25 years, all Lucayans perished. In 1647, a group of English and Bermudan religious refugees, the Eleutheran Adventurers, founded the first permanent European settlement in the Bahamas and gave Eleuthera Island its name. Similar groups of settlers formed governments in the Bahamas until the islands became a British Crown Colony in 1717. The first Royal Governor, a former pirate named Woodes Rogers, brought law and order to the Bahamas in 1718, when he expelled the buccaneers who had used the islands as hideouts. During the American Civil War, the Bahamas prospered as a centre of Confederate blockade running. After World War I, the islands served as a base for American rumrunners. During World War II, the Allies centred their flight training and anti-submarine operations for the Caribbean in the Bahamas. Since then, the Bahamas has developed into a major tourist and financial services centre. The Bahamas achieved self-government through a series of constitutional and political steps, attaining internal self-government in 1964 and full independence within the Commonwealth on July 10, 1973.
Eighty-five percent of the Bahamian population is of African heritage. About two-thirds of the population reside on New Providence Island (the location of Nassau). Many ancestors arrived in the Bahama Islands when they served a staging area for the slave trade in the early 1800s. Others accompanied thousands of British loyalists who fled the American colonies during the Revolutionary War.
Government and Politics
|Head of State:||Queen Elizabeth II (since 1952), represented by Governor General Dame Ivy Dumont (since 2002)|
|Head of Government:||Prime Minister Perry Christie (since 3 May 2002) and Deputy Prime Minister Cynthia PRATT (since 7 May 2002)|
|Cabinet:||Cabinet appointed by the Governor General on the Prime Minister's recommendation|
|Elections:||none; the monarch is hereditary; Governor General appointed by the monarch; following legislative elections, the leader of the majority party or the leader of the majority coalition is usually appointed Prime Minister by the Governor General; the Prime Minister recommends the Deputy Prime Minister|
Bicameral Parliament consists of the Senate (16-member body appointed by the governor general upon the advice of the prime minister and the opposition leader for five-year terms) and the House of Assembly (40 seats; members elected by direct popular vote to serve five-year terms); the government may dissolve the parliament and call elections at any time Elections: last held 1 May 2002 (next to be held by May 2007) Election results: percent of vote by party - PLP 50.8%, FNM 41.1%, independents 5.2%; seats by party - PLP 29, FNM 7, independents 4
Supreme Court; Court of Appeal; magistrates' courts
Political parties and leaders
Free National Movement or FNM (Tommy Turnquest); Progressive Liberal Party or PLP (Perry Christie)
Basic economic facts
GDP (2002): $5.2 billion.
Growth rate (2002): 0.1%.
Per capita GDP (2002): $17,000.
Main industries: Tourism, financial services, manufacturing, agriculture and fisheries
The Bahamas is a developing country, with a GDP per capita of US$16,443. The main economic activity is tourism, which generates approximately 60% of the country's GDP. Second comes Offshore Financial Services, contributing approximately 15% of GDP, followed by the Agriculture and Fisheries industries, which together account for 8% of GDP.
Financial services constitute the second-most important sector of the Bahamian economy, accounting for up to 15% of GDP, due to the country's status as a tax haven and offshore banking centre. As of 2002, the government had licensed 301 banks and trust companies in The Bahamas. The Bahamas promulgated the International Business Companies (IBC) Act in January 1990 to enhance the country's status as a leading financial centre. The act served to simplify and reduce the cost of incorporating offshore companies in The Bahamas. Within nine years, more than 84,000 IBC-type companies had been established.
The International Business Companies Act 2000, drafted in response to multilateral organisations' concerns, eliminated anonymous ownership of IBCs by prohibiting bearer shares and imposing know your customer (KYC) requirements. As a result, the Bahamas has become less attractive to both potential and existing IBC owners. The Central Bank of the Bahamas Act 2000 gives the Bank's Governor the right to deny licences to banks or trust companies he deems unfit to transact business in the Bahamas. During 2001, the Governor revoked the licenses of 55 of these banks. Key features of the Act include: provisions upgrading banking supervision, establishment of a Financial Intelligence Unit (FIU); introduction of licensing of financial and corporate service providers, the removal of bearer shares from IBCs' shareholding structures, and the granting of permission for Bahamians to own IBCs.
The number of banks and trusts declined from 301 in 2003 to 270 as of September 2004. This was due to the Central Bank's requirement that "managed banks" (those without a physical presence but which are represented by an agent such as a lawyer or another bank) either establish a physical presence in the Bahamas (an office, separate communications links, and a resident director) or cease operations.
During 2004, the Government continued to implement legislative reforms that strengthen its anti-money laundering regime and make it less vulnerable to exploitation by money launderers and other financial criminals. Since being removed from the Financial Action Task Force (FATF) list of Non-Cooperative Countries and Territories (NCCT) in the fight against money laundering, the Bahamas has been working to implement legislative and regulatory reforms to fulfil international obligations. The FATF has expressed satisfaction with the progress achieved by the Bahamas in addressing mutual legal assistance requests from member countries but continues to express concerns over regulatory requests. The FATF continues to monitor the progress the Bahamas is making in implementing its anti-money laundering regime.
The Financial Transaction Reporting Act 2000 requires financial institutions (such as banks and trusts, insurance companies, real estate brokers, casino operators, and others which hold or administer accounts for clients) to verify the identity of account holders. The Act also requires financial institutions to report suspicious transactions to the FIU and the police. The Act furthermore establishes KYC requirements. By 31 December 2001, financial institutions were obliged to verify the identities of all their existing account holders and of customers without an account who conduct transactions over $10,000. All new accounts established in 2001 or later have to be in compliance with KYC rules before they are opened. As of October 2002, only 42% of holders of existing accounts had been verified.
Since enactment of new regulations, the number of IBCs declined to 45,000 in 2002. However, overall employment in the financial services industry increased from 4,181 persons in 1999 to 4,586 persons in 2001.
The Country's economic activity is forecast to increase in 2004 by 2.5% following the projected recovery of US-led demand in the tourist industry. However, because of the economy's high dependency on US tourist arrivals, near term growth prospects are vulnerable to a slower than expected US recovery and terrorism-related security concerns. Medium-term projections point to a gradual erosion in external competitiveness. Output growth is estimated at 3% per year, consistent with a progressive loss of market share in the tourism sector. Tourism receipts are, however, expected to pick up in the coming years as a string of investment projects come on stream.
In addition to tourism and banking, the government supports the development of a "third pillar," e-commerce.
The Bahamas is a member of the Caribbean Community (CARICOM), the African Caribbean and Pacific (ACP) Group of States, CARIFORUM (CARICOM plus the Dominican Republic and Cuba), The Association of Caribbean States (ACS), The Caribbean Export Development Agency (CEDA), and the Caribbean Tourism Organisation (CTO).
The Government of the Bahamas is involved in on-going discussions on economic co-operation and trade liberalisation involving the US and Canada, which includes the proposed hemisphere-wide Free Trade Area of the Americas (FTAA) negotiations. The Government is participating with 33 other countries to forge an FTAA. However, these talks have stalled and it is unlikely that agreement will be reached by an earlier agreed deadline of January 2005.
The Bahamas has applied for Membership of the Word Trade Organisation (WTO), where it currently enjoys Observer status, and has started negotiations on its accession. Currently, the Memorandum on the Foreign Trade Regime is being drawn up and is due to be submitted in the near future.