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The Bahamas

The Bahamas

from 1.250 €

Offshore company incorporation in the Bahamas

The Bahamas has a long-standing reputation as a model destination for offshore company formation services.

The Caribbean archipelago attracts international capital due to its tax-free status and strict privacy policies. The Bahamas is one of the most trusted and stable jurisdictions for offshore business services.

Capital: Nassau
Official language: English
Currency: Bahamian dollar
Population: 397,000 (2021 estimate)
Tax system: Zero taxation
VAT: from 0 to 12%
Average salary: 1,420 €

Opening a company in the Bahamas

The Bahamas is a place where the offshore services industry has facilitated the opening of more than 100,000 companies in recent decades. Opening a company in this archipelago is a great way for entrepreneurs, individuals and businesses to take advantage of the opportunities offered by the vibrant financial markets.

The most direct route to these benefits is through the formation of an international business company, commonly referred to as an IBC of The Bahamas.

The International Business Companies Act 2000 remains the main piece of legislation controlling the regulation of the offshore company formation market in this tax haven with the following benefits:

20 years of tax exemption Tax exemption for both the company and its shareholders for twenty years after completion of the incorporation process
A shareholder and a director Bahamian companies need only a minimum of one shareholder and one director. No submission of annual reports
Annual General Meetings held anywhere There is no requirement for Bahamian companies to hold their annual general meetings in The Bahamas.
Easy Banking Once officially registered, it is easy for a new company to open a corporate bank account in the Bahamas.

Bahamian companies must include one of the following words at the end of the company name: “Incorporated“, “Corporation” or “Societe Anonyme” or the respective abbreviation “Inc.“, “Corp“. or “SA“.

Why the Bahamas?

The Bahamas is one of the world’s most popular offshore destinations because it offers attractive business conditions for entrepreneurs. With over 400 registered banks, the country is an ideal location for asset protection and tax exemption. The offshore destination is convenient for entrepreneurs and investors wishing to keep personal information confidential.

The Caribbean islands benefit from a stable political environment, a progressive economy and a diverse cultural landscape along with a high standard of living. With almost 30% of The Bahamas’ economy coming from its offshore market, the government has continually taken steps to ensure the stability and longevity of its offshore financial markets.

Advantages

The Bahamas is an ideal financial location for investors seeking to obtain tax advantages with confidentiality. An offshore Bahamian company can be used for asset protection, estate planning and tax limitation.

Not only do citizens not have to pay income and gift taxes, but companies are also granted many concessions that make them an attractive investment. More than 250 foreign banks, according to the World Bank, are licensed to operate in the Caribbean state, facilitating operations and transactions.

Investors choose this country in particular to transfer assets characterised by steady, long-term returns. Establishing an international trading company, commonly referred to as an IBC of The Bahamas has the following benefits:

  • No financial reporting obligations
  • Amendments to the Memorandum and Articles of Association can be easily made
  • Zero corporate taxes
  • Political and economic stability
  • Absence of exchange, currency and capital controls
  • Absence of double taxation treaties
  • Modern and simple incorporation laws and procedures
  • Names and information of shareholders remain private
  • The cost of maintaining the company each year is low
  • Once a company is formed, it is easy to obtain a bank account in The Bahamas

Company formation

With low start-up costs, high levels of confidentiality in a safe and low-risk environment, company incorporation in The Bahamas involves filing the articles of incorporation with the Registrar of Companies.

The deed requires a unique company name (which is not similar to any other), a single shareholder and must be signed by at least two subscribers in the presence of a witness.
A non-resident subscriber must first obtain permission from the foreign exchange control body. The articles of association, signed in the presence of a witness, must be submitted together with the memorandum of association or within six months.

The legal requirements are:

  • Certified copy of passport
  • Bank reference
  • Certified proof of residence less than 3 months old
  • Copy of individual ID
  • Proof of relevant address (bank statement/extract, energy bills, etc.)
  • Well-delineated business plan
  • Company profile of interested parties

A register of members, a register of directors and officers, a copy of the company’s name, copies of all minutes and documents of the company, including the memorandum and articles of association, shall be kept at the registered address of the company.

Privacy protection

The Bahamas has an established reputation for financial privacy laws that offer clients a safe jurisdiction with nominal fees and minimal regulation. The 1990 International Business Companies (IBC) Act of The Bahamas protects its companies and the integrity of its shareholders.

This law prohibits the exchange of information about its companies between The Bahamas and any other state. Offshore companies can be assured that sensitive corporate information such as business and banking details will remain confidential and safeguarded.

No tax on foreign-source income

The attractive service that The Bahamas offers to foreigners is a tax exemption on foreign-source income for both the company and its shareholders. The Bahamas offers lower tax rates and deductions, which are possible for jurisdictional companies.

Investment opportunities

Without a doubt, The Bahamas is a place with investment opportunities for global entrepreneurs due to the emergence of small and large businesses. Investors have several favourable conditions in various significant sectors that offer higher returns and earnings.

The government itself also offers numerous opportunities to encourage global business on the island in the tourism (hotels, resorts, restaurants), manufacturing industries, and non-oil energy-focused infrastructure planning, including liquid natural gas plants and various solar projects.

Opening a bank account

The efficient functioning of the financial system has made it easier to open an offshore bank account. Banks in The Bahamas are known for their privacy and security and verify the identity of the customer on the basis of an official document (e.g. passport). The time required is from a few working days up to 3 weeks and all accounts have 24-hour online services, always available 7/7 days.

The bank may also ask for specific documentation to prove the origin of your funds, such as a contract of sale of a house, an account statement from a foreign bank, a receipt from the sale of securities, etc.

Banks reserve the right to refuse services to a “politically exposed person” who, in the opinion of the bank, would pose a “reputational” risk if he or she becomes a customer or has doubts about the origin of the prospective customer’s funds. Banks in The Bahamas are prohibited by law from accepting money that may be derived from crimes or illegal activities.

Flexibility

The government has recently started to make some necessary changes to local rules and regulations to promote business flexibility on the island. IBC accounts can be traded in currencies other than the world’s official commercial currencies: dollars, euros and pounds sterling.

This allows them to maintain the integrity of their assets without losing value to stronger currencies or being subject to the fluctuations of hard currencies in the international market. Companies have considerable versatility in terms of both business and investment activities. Company owners can choose the type of business entity available and start the registration process.

Taxes in the Bahamas

The Bahamas’ tax system is characterised by the absence of taxes on non-resident companies whose profits are derived from abroad (only local income is subject to taxation) and its high degree of secrecy.

An offshore company set up in the Bahamas pays no tax or duty on profits or dividends or capital gains obtained

  • An offshore company pays a fixed annual fee of a few hundred euros
  • Offshore companies are not obliged to maintain or file their own accounts
  • There is no right of succession to the transfer of shares in the event of the death of one of the shareholders of a non-resident company
  • Discretion: shareholders setting up an offshore company are anonymous and their identity is not recorded in the local register

Commercial property taxes are levied at 1% per year for the first $500,000 in value and 2% above $500,000.

Types of companies

IBC International Business Company (Private Limited Company)

An International Business Company (IBC) is a legal entity that does not have to have a principal business activity in the country where it has its registered office. It will deal primarily with “international business” rather than domestic business and is not required to file annual accounts and returns.

An IBC therefore operates in other jurisdictions rather than where the IBC itself is domiciled in order to benefit from tax exemption. It essentially conducts a variety of business and investment activities throughout the world while adhering to the following guidelines:

  • There is no limit to the number of shareholders, their residence or nationality. Only one shareholder may be sufficient and he/she may also be a manager/director
  • There is no minimum capital requirement, nor is it compulsory to ‘lock up’ in a bank account
  • Shares have to be registered and a specific register has to be kept
  • Companies can be managed from another country. For example, all official meetings of shareholders and directors may be held abroad
  • Companies cannot do business with companies or individuals resident in The Bahamas
  • Corporations cannot own real estate in The Bahamas
  • Corporations are not permitted to carry on the following activities: banking, insurance, reinsurance and real estate

The normal authorised share capital is US $50,000, which is the maximum capital for the minimum tax and licence fee payable (US $350) at the time of incorporation and annually.

A Bahamian IBC is exempt from all taxes and stamp duties, including:

  • corporate income tax
  • capital gains tax
  • VAT
  • wealth tax
  • sales tax
  • property tax
  • gift tax
  • inheritance tax

LLC (International Limited Liability Company)

A Bahamian limited liability company (LLC) can be incorporated under the Companies Act 1992 or as an international business company under the International Business Companies Act 2001 with limited liability protection.

LLCs must appoint a locally registered agent and maintain a registered office in The Bahamas. If you set up a limited liability company in The Bahamas, you can also take advantage of these additional benefits:

  • No tax: each company enjoys totally tax-free profits
  • Asset protection: the law contains asset protection clauses against shares originating outside The Bahamas
  • Privacy: Shareholders’ names are not on any public register
  • Limited liability: liabilities of shareholders are limited to their shares in the capital of the company
  • LLC can be 100% foreign owned
  • Minimum two shareholders to form an LLC
  • Minimum of one director to manage an LLC
  • Fast registration process in one working day
  • Registration costs only $330 USD and $350 USD for annual renewals
  • No minimum capital requirement

VAT in the Bahamas

Value Added Tax (VAT) is charged on almost all goods and services imported, purchased and sold for the use of Bahamians. Two rates are applied, the standard rate of 12% and the 0% rate.

Goods exported to customers abroad are classified as VAT-exempt or zero-rated. By contrast, almost all domestic supplies of goods and services are taxable at the standard rate of 12%. Exports, most services to non-residents and some international services are generally zero-rated.

VAT number

Individuals, legal persons, permanent establishments carrying on taxable activities within The Bahamas with an annual turnover in excess of BSD 100,000 must register for VAT.
Similarly, persons providing telecommunications or e-commerce services for the use, enjoyment, benefit or advantage of persons within The Bahamas must also be VAT registered.

To be a VAT registered person you must be “in business” meaning that you are engaged in any continuing activity of supplying goods or services to a third party in return for consideration.

If you make an isolated or “one-off” sale, you are not considered to be “in business” for VAT purposes, so you can enjoy the exemption. VAT registration is not possible without a fixed place of abode in The Bahamas.

Why rely on Ukincorporation.co.uk?

Ukincorporation.co.uk is a GR Morgan Formations company for the entrepreneur who wishes to take his business abroad or develop a new business.

For over 10 years in the market, the GR Morgan Formations team offers its expertise in terms of international taxation. In addition to setting up companies in the UK and other jurisdictions, it offers a range of services, from a virtual office in London to administration and accounting services, to opening a bank account.

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