BAHAMAS

Name of country

• BAHAMAS

Region

• chain of islands in the North Atlantic Ocean, southeast of Florida, northeast of Cuba

Population

• 352,655 (July 2021 est.)

General Introduction

• When someone mentions “paradise,” they are referring to a state of mind. The Bahamas is often the first spot that springs to mind for many people. The Atlantic Ocean is home to this coral-based archipelago. This country is made up of about 700 islands. Many travelers go to Grand Bahama and Paradise, which are home to some of the world’s most luxurious hotels. Bahamas is one of the wealthiest countries in the Americas in terms of GDP per capita. A considerable number of offshore corporations have set up shop in this jurisdiction. Tourism is without a doubt the country’s most important economic industry. Tourism is responsible for more than 60% of the country’s GDP and employs more than half of the workforce.

Wifi Speed

• From May 2018 to May 2019, broadband internet in the Bahamas averaged a download speed of 11.13 Megabits per second (Mbps), higher than the previous two years studied.

Electrical outlet

• For the Bahamas there are two associated plug types, types A and B. Plug type A is the plug that has two flat parallel pins and plug type B is the plug that has two flat parallel pins and a grounding pin. The Bahamas operates on a 120V supply voltage and 60Hz.

Per Capita GDP 

Real GDP growth rate

• 1.4% (2017 est.)
• 1.7% (2016 est.)
• 1% (2015 est.)

Climate

• tropical marine; moderated by warm waters of Gulf Stream

Residence-by-Investment

• Approved applicants and their families are granted permanent residency in the Bahamas through the Bahamas Residency By Investment (aka Bahamas Golden Visa) program. After ten years of residency in the Bahamas, foreigners are eligible to petition for citizenship. In the Bahamas, dual citizenship is not recognized, therefore applicants must give up their previous citizenship.

Investment

The Bahamas Investor Visa Applicants are offered the following investment options:

• Buy a real estate property of at least $500,000, properties above 1,500,000USD will get speedy consideration
• Invest at least $500,000 in a business, not in an area reserved for 100% Bahamian participation. Specific forms of businesses are eligible for benefits. You’ll need to include NIB sales, infrastructure, and possible entrepreneurial spin-offs as potential benefits to the national economy. You must also state the number of Bahamians working in the first year of the project’s construction and operation.

Approved applicants will need to hold the investment for the rest of their stay in the Bahamas.

Key Benefits

• Right to reside in the Bahamas without further renewal of permits.
• Right to enjoy all privileges enjoyed by citizens of Bahamas except for the right to vote.
• Right to purchase property in Bahamas
• Liberal tax regime.
• Easy travel to Commonwealth nations, members of the Caribbean Community and the members of the Organization of American States
• Eligible to apply for Citizenship of Bahamas after fulfilling residence requirements.

Requirements

• Purchase of Residence in Bahamas. Applications by investors purchasing the property of value in excess of BS $1.5 million will be given speedy consideration.

Procedures and Time Frame

• This permit entitles the immigrant to reside in Bahamas permanently. The application for Permanent Residence should be made to the Department of Immigration. After obtaining the permit, the applicant will be required to obtain a Home Owners Resident Card to become eligible to purchase property in the country.

Processing time

• 2 months

Natural Resources

• salt, aragonite, timber, arable land

Ethnic Groups

• African descent 90.6%, White 4.7%, mixed 2.1%, other 1.9%, unspecified 0.7% (2010 est.)

 Languages

• English (official), Creole (among Haitian immigrants)

 Religion

• Protestant 69.9% (includes Baptist 34.9%, Anglican 13.7%, Pentecostal 8.9% Seventh Day Adventist 4.4%, Methodist 3.6%, Church of God 1.9%, Brethren 1.6%, other Protestant .9%), Roman Catholic 12%, other Christian 13% (includes Jehovah’s Witness 1.1%), other 0.6%, none 1.9%, unspecified 2.6% (2010 est.)

Median Age

• total: 32.8 years
• male: 31.7 years
• Female: 34 years (2020 est.)

Urbanization

• urban population: 83.4% of total population (2021)
• rate of urbanization: 1.02% annual rate of change (2020-25 est.)

 Physician density

• 2.01 physicians/1,000 population (2017)

Government type

• parliamentary democracy under a constitutional monarchy; a Commonwealth realm

Unemployment Rate

• 10.1% (2017 est.)
• 12.2% (2016 est.)

Taxes

Headline Personal Income Tax Rate (highest marginal tax rate) – 0% + 8.8% social security tax

Headline Corporate Income Tax Rate (excluding dividend taxes) – 0%

Summary: The legal framework for economic substance requirements in Bahamas

Legal Framework

Legislation

What legislation sets out the economic substance requirements in your jurisdiction?

The legislation that sets out the economic substance requirements in The Bahamas is the Commercial Entities (Substance Requirements) Act 2018 (CESRA). CESRA came into force on 31 December 2018.

Relevant entities

What types of entity are subject to the economic substance requirements in your jurisdiction?

All entities incorporated, registered or continued under the Companies Act, International Business Companies Act, Partnership Act, Partnership Limited Liability Act or Exempted Limited Partnership Act are subject to CESRA.

However, only an ‘included entity’ is required to have substantial economic presence in The Bahamas. An included entity is a ‘commercial entity’ that is engaged in ‘relevant activities’.

A commercial entity is an entity incorporated, registered or continued under the Companies Act, International Business Companies Act, Partnership Act, Partnership Limited Liability Act or Exempted Limited Partnership Act but does not include an entity that is either ‘resident owned in The Bahamas’ and conducts its core income-generating activities in The Bahamas, or centrally managed and controlled outside The Bahamas and is tax resident in a jurisdiction other than The Bahamas.

Relevant activities are defined in CESRA as banking business, insurance business, fund management business, financing, and leasing business, headquartering business, distribution, and service centres business, shipping business and commercial use of the intellectual property.

Holding companies are subject to reduced substance requirements. However, where a subsidiary of a holding company is engaged in a relevant activity, the holding company is deemed to be engaged in a relevant activity and is required to have substantial economic presence in The Bahamas if it is a commercial entity.

Relevant activities

What activities trigger the economic substance requirements in your jurisdiction?

A commercial entity engaged in any of the following activities will be required to have substantial economic presence in The Bahamas:

• banking business;
• insurance business;
• fund management business;
• financing and leasing business;
• headquartering business;
• distribution and service centres business;
• shipping business;
• commercial use of intellectual property; or
• a holding company that has a subsidiary engaged in any of the activities listed above.

Tax residence requirements

Must entities be tax resident (or deemed tax resident) in your jurisdiction to be subject to the economic substance requirements? If yes, what are the tax residence rules and requirements? If not, do the economic substance requirements in your jurisdiction differ with respect to non-resident entities ?

Entities do not have to be tax resident in The Bahamas to be subject to economic substance requirements.

If an entity is tax resident in a jurisdiction other than The Bahamas and is centrally managed and controlled outside of The Bahamas, then it will not be required to have substantial economic presence in The Bahamas.

Where an entity claims to be tax resident in a jurisdiction other than The Bahamas, it is required to substantiate this claim by providing the following information:

• a tax identification number issued by a foreign jurisdiction;
• a tax residence certificate issued by a foreign jurisdiction;
• official receipt or statement issued by a foreign tax authority;
• certification by the entity that the majority of meetings of the board of directors, or controlling persons in the case of a non-corporate entity, in any financial year took place in the foreign jurisdiction; and
• the ordinary residency of the majority of the board of directors, or controlling persons in the case of a non-corporate entity.

Guidance

Has the government published guidance on the economic substance requirements?

CESRA allows for the Minister of Finance to issue guidelines for complying with CESRA and any person or entity subject to CESRA is required to comply with such guidelines. On 25 February 2019, the Minister of Finance issued guidelines pursuant to CESRA.

The Minister of Finance has also issued various public notices that do not have the force of law but provide further guidance on certain issues regarding CESRA.

Bahamas aims to become “near-shore Delaware for corporate structuring”

• As part of his contribution to the 2022/2023 national Budget Debate, Pinder told the Senate: “Due to the rapidly evolving domestic and international economic and financial services environments, there is a clear need to improve the current law pertaining to the registration of companies, insolvency and bankruptcy in The Bahamas.
• “In this vein, the Government of the Commonwealth of The Bahamas, led by the Office of the Attorney General, has set a goal to revise the relevant law inclusive of the Companies Act 1992; the International Business Companies Act 2000 and related legislation; and the Companies (Winding Up) (Amendment) Act; the International Business Companies (Winding Up) (Amendment) Act; the Companies Liquidation Rules 2012, 2013 and the Bankruptcy Act 1870. Yes, I said 1870.”
• The Attorney General continued: “Terms of Reference have been finalised and we are prepared to appoint a project team made up of public and private sector individuals formed to overhaul the Bahamas’ registered companies, insolvency and bankruptcy legislative regimes.

• “The goal now is to ensure that these relevant new proposed laws remain current, modern, competitive and reflect international best practices generally. These reforms have the ability to materially change The Bahamas’ commercial offering internationally and provide another boost to our financial services and commercial structuring markets. We look to become the near-shore Delaware for corporate structuring and reorganisation.”