THE BAHAMAS: An Introduction to General Business Law

The Bahamas: A Modern and Progressive Business Environment

The Bahamas continues to strengthen its position as a globally competitive jurisdiction by refining its regulatory framework to meet international standards while fostering a dynamic business environment. Through significant legislative updates, The Bahamas enhances transparency, ensures fiscal responsibility, and positions itself as a forward-thinking nation committed to compliance with global norms. Below is an overview of some of the key reforms, including an amendment to the Immigration Act, reforms of the Business Licence Act and the Commercial Entities Substance Requirements Act (CESRA), and the introduction of corporate tax considerations in line with international tax standards.

Economic Permanent Residence

The Bahamas has long been a sought-after destination for foreign nationals seeking to invest in real estate or purchase a second home in a beautiful and stable environment. In order to further attract investment and foster economic growth, the government introduced the Economic Permanent Residence program. This initiative allows financially independent individuals who own property or make qualifying investments in The Bahamas to apply for long-term residency, providing both the opportunity to reside in the country and benefit from its thriving investment landscape.

Economic Permanent Residents can enjoy permanent residence in The Bahamas as long as they maintain an eligible property or investment that meets the required threshold set by the Minister of Immigration. Although this policy has been in place for some time, the government has recently introduced the Immigration (Amendment) (No. 2) Act, 2024 (the “2025 Amendment”), which came into effect on 1 January 2025. The amendment aims to provide clearer guidelines and enhance the framework surrounding Economic Permanent Residency, ensuring a more transparent and streamlined process for applicants.

The 2025 Amendment provides that individuals who make an investment of one million dollars in real estate in The Bahamas, or in Zero Coupon Bonds issued by the Central Bank of The Bahamas for a period of ten years, now qualify for Economic Permanent Residency. This change codifies the requirements and clarifies the eligibility criteria for foreign nationals seeking to apply for this status.

By introducing these changes, The Bahamas continues to strengthen its position as an attractive destination for investment, offering long-term residency options while maintaining a clear and transparent framework for qualifying individuals.

Business Licence Act 2023

The Business Licence Act 2023 (“BL Act 2023”) came into force in The Bahamas in September 2023, marking a progressive step forward in modernising the country’s business regulations. This updated legislation replaced the Business Licence Act of 2010 and consolidates various laws that govern business activities in the nation. One of the key objectives of the BL Act 2023 is to ensure that businesses operating within The Bahamas comply with appropriate licensing and tax obligations, while maintaining the country’s reputation as a globally attractive business destination.

The BL Act 2023 applies to all entities incorporated under the International Business Companies Act, 2000, that are conducting business in or from The Bahamas. These entities are required to hold a business licence and pay an annual business licence tax based on their turnover, unless exempted by specific provisions in the legislation. This ensures that all businesses contributing to the Bahamian economy are doing so in accordance with national laws.

The Department of Inland Revenue has issued a helpful Guidance Document for Financial Services Entities (the “BL Guidance”), which provides additional clarity on what constitutes doing business in or from within The Bahamas. According to the BL Guidance, businesses may be considered as conducting operations in The Bahamas if they meet any of the following criteria:

• Revenue Derived from The Bahamas: business activities recorded within the company’s books as originating in or from The Bahamas;
• Relevant Activities under CESRA: entities involved in activities covered by the Commercial Entities (Substance Requirements) Act (CESRA), which require a substantial economic presence in The Bahamas;
• Operational Management: entities that make significant business decisions or have substantial operations managed from within The Bahamas;
• Permanent Establishment: a fixed place of business or permanent establishment within The Bahamas;
• Personal Services: performance of personal services within the jurisdiction; and
• Financial Services: businesses regulated by The Central Bank of The Bahamas or the Securities Commission of The Bahamas, including insurers and credit unions.

Commercial Entities (Substance Requirements) Act 2023 (CESRA)

The Commercial Entities (Substance Requirements) Act 2023 (“CESRA 2023”), which came into effect on 1 September 2023, builds upon the original CESRA 2018. The law was designed to ensure that entities operating in The Bahamas maintain a genuine economic presence, thereby preventing entities from artificially shifting profits to low-tax jurisdictions. CESRA 2023 now provides clearer guidance on the substance requirements of entities, emphasising that businesses must conduct core income-generating activities within The Bahamas and have their management and direction based in the country.

Entities are now also required to submit economic substance reports either to their Registered Agent or the Compliance Commission, providing transparency and reinforcing The Bahamas’ commitment to international best practices in corporate governance.

Corporate Income Tax Considerations

In a bid to align with global tax standards, the Government of The Bahamas issued a green paper titled “Corporate Income Tax Strategies for The Bahamas” on 17 May 2023. This document outlines The Bahamas’ plan to implement a corporate income tax in line with the Organization for Economic Cooperation and Development’s (OECD) Pillar Two rules. These rules, which are designed for multinational companies with group revenues exceeding EUR750 million, aim to introduce a global minimum tax of 15%.

By adopting this framework, The Bahamas is proactively modernising its tax system to ensure a fair and transparent fiscal environment for businesses operating within its borders. The introduction of a corporate income tax would provide a level playing field for all entities, fostering growth and economic development while maintaining the country’s reputation as a trusted global financial hub.

The introduction of the Domestic Minimum Top-up Tax Act 2024 marks a significant step towards fiscal fairness in the country, reinforcing The Bahamas’ commitment to combating tax avoidance and promoting sustainable tax practices. This development underscores the nation’s adaptability to evolving global tax regulations and its ongoing efforts to ensure compliance with international standards.

In conclusion, The Bahamas is poised to continue its strong economic growth with a robust, transparent, and fair regulatory framework that attracts businesses and investors from around the world. With its careful consideration of international tax standards and commitment to maintaining a competitive business environment, The Bahamas remains a top choice for businesses seeking stability, transparency, and global connectivity.