10 things you should know about doing business in The Bahamas
Graham Thompson looks at the business environment in The Bahamas
1. Location
The Bahamas archipelago includes 700 islands strategically situated 100km from Florida, easily accessible by air from major financial and population centres in the United States, Canada, Europe, South America and Central America. The ease of doing business in The Bahamas is enhanced by its Eastern Time Zone location, the availability of modern office facilities, and an established communication and transportation infrastructure.
2. Workforce
There are approximately 325,000 people living throughout the islands of The Bahamas, with the two main population centres situated in Nassau and Freeport. The country, consistently listed as the richest country in the Caribbean Community ranked by GDP per capital, offers investors a skilled English-speaking work force.
3. Fiscal matters
The Bahamas offers a stable macroeconomic environment. The Bahamian Dollar is pegged one-to-one to the US Dollar, and the two currencies can be used interchangeably in The Bahamas for day-to-day transactions.
4. Government and judiciary
The Bahamas has celebrated over 280 years of parliamentary democracy and enjoys exemplary political, economic and social stability. The Bahamas is a sovereign nation, having obtained its independence from Britain in 1973. The Bahamas is a member of The United Nations, the Commonwealth of Nations, the Organisation of American States and the Caribbean Community.
The Bahamas' legal system is based on British common law, supplemented by statutes enacted by Bahamian Parliament. Constitutional safeguards include freedom of speech, press, worship, movement and association.
The Bahamas has an independent judiciary with the Supreme Court as the court of first instance, and appeals to the Court of Appeal. Final appeals lie to Her Majesty’s Privy Council based in London.
5. Investment climate
The National Investment Policy is designed to support an investment-friendly climate. The Government’s growth policies are guided by the Bahamas Investment Authority, which was established as a “one-stop shop” to reduce bureaucratic delays.
There are commercial ventures specifically targeted for international investment, including financial services, banking, captive insurance, touristic resorts, upscale housing, time share development, the energy sector, information & data processing services, high-tech services, ship repair, light manufacturing for export, pharmaceutical manufacturing and off-shore medical centres. The Bahamian Government offers a series of investment incentives that provide relief from customs duties and real property taxes for up to 20 years, for specified ventures.
6. Tax neutral regime
The Bahamas, as a leading international financial centre, has a tax-neutral regime. There is no income tax, no capital gains tax and no inheritance tax for all who reside in The Bahamas. Companies in certain sectors can seek permission to operate tax-free within the Port Area on Grand Bahama Island, under the terms of The Hawksbill Creek Act.
7. The financial services sector
The Bahamas is recognised as a mature, well-regulated and sophisticated international financial centre. International financial institutions deliver myriad services including banking, private banking and trust services, investment advisory services, insurance, and shipping registries. The industry is supported by an experienced and skilled cadre of advisers including lawyers, accountants, trust officers and insurance specialists.
The Bahamas has a long history of providing asset management and administration services. More than 100 broker dealers and investment advisory firms provide investment management services, custodial services and corporate services.
The Bahamas is at the forefront of the modern investment funds industry, with more than 700 funds presently licensed. The Investment Funds Act (IFA) recognizes four classes of funds: The Standard Fund, The Professional Fund, The SMART Fund and The Recognised Foreign Fund. The IFA retains the ability of authorised local fund administrators to license Professional and SMART investment funds independently of the regulator.
The jurisdiction appeals to high net worth and ultra-high net worth persons as a base from which to efficiently manage their wealth. Often, these persons establish a family office, which helps them achieve their long term financial goals while dealing with increased regulations, and complex issues of taxation, distribution planning and charitable giving.
8. Second home market and permanent residence
The Bahamas has an excellent reputation as a desirable second home destination. The public and private sectors have worked hand in hand to create the most advantageous conditions for wealthy individuals and their families to live and work in a tropical paradise where their assets and confidentiality are protected.
9. Recent legislation
The Bahamas is committed to modernising its legislative framework by updating existing laws and introducing innovative legislation. The International Business Companies Act has been updated, and a modern Trustee Act has been enacted. The company insolvency regime was revamped in 2011 to make provisions for international co-operation in cross-border insolvencies. In addition, modern legislation has been enacted with respect to foundations, investment condominiums (ICON), segregated accounts companies, private trusts companies, purpose trusts and external insurance.
10. Legal advice
Most investors find it prudent to engage local legal counsel to assist in the process of establishing the corporate structure of an intended business, as well as making applications to relevant government departments for necessary permits and approvals.
(Includes content from the Bahamas Financial Services Board, the Bahamas Investment Authority, the CIA World Factbook and the Nassau Tribune)