The Commonwealth of the Bahamas is the richest state in the Caribbean region, and its location has also contributed to this. Its proximity to North America provides the opportunity to develop tourism, trade, and international business. Tourism generates the bulk of revenue, more than 60% of GDP, and financial services account for 15%. The Bahamas signed tax information exchange agreements with 34 countries, including the United States in 2002.
The tax system is designed with foreign investors in mind and offers several advantages: there are no exchange controls, zero income and capital gains taxes, and zero inheritance taxes. The Bahamas Investment Authority (BIA) encourages investment and helps companies obtain permits based on the Commercial Enterprise Act (CEA), and the International Business Companies Act of 2000.
More than a third of the world’s financial institutions operate in this jurisdiction, with one in five global corporations opening accounts here. Since 2022, the Bahamas has also begun to position itself as a hub for the development of financial technology, introducing the use of digital currency under the Digital Assets and Registered Exchanges Act (DARE)
Many years of the stable political system and, a favorable tax environment provide businesses with favorable conditions for registering a company in the Bahamas.
Advantages of registering a company in the Bahamas
Zero taxes for offshore companies.
To attract more investors, the government has provided zero taxes on capital gains, profits, VAT, and stamp duty, and there is no currency control.
Minimum requirements for company registration.
One director and one shareholder are enough to run the business.
There is no financial reporting.
According to the legislation, companies are not required to submit an annual financial report.
High confidentiality.
Data on managers and owners of the company are recorded in the registers but are not publicly disclosed.
There are no requirements for authorized capital.
The amount of capital affects the further payment of license fees. Company registration in the Bahamas costs are minimal.
Geographical location.
The islands are located between North and South America, a kind of economic bridge that promotes cooperation between countries.
Disadvantages of setting up a company in the Bahamas
Presence of an office.
It is mandatory to have a company office on the island, as well as a licensed agent. The seal and company documents must be kept in the office. It is prohibited to transfer the address of registration from one company to another company.
Prohibitions.
For offshore: prohibited from doing business with residents offshore, buying real estate, banking, or insurance activities.
Issuance of registered shares only.
Only registered shares may be issued offshore.
Failure to pay the state duty leads to deregistration.
If the company has not paid all state fees, it is struck off the register. Only after five years the company can again submit documents for restoration in the register.
Competition.
Tax system and registration conditions attract many companies.
High costs of doing business.
It is worth taking into account the cost of maintaining the office, utilities, and payment for the work of employees.
Requirements for opening a company in the Bahamas
The mandatory company formation in the Bahamas requirements include:
- The organizational structure must include one managing director (no residency requirement, can be either a legal entity or an individual), one shareholder, and a secretary (optional).
- Have an office in the jurisdiction where the documents will be kept and hire an agent, according to the Beneficial Ownership Registry Law of December 20, 2018.
- Obtain a license for financial services, investment funds from the Financial Commission, pharmaceutical services – permit from the Ministry of Health, tourism – Ministry of Tourism. For IBC registration of banking, and insurance activities is possible, but the activity itself must be carried out outside the state.
- Keep registers of shareholders and minutes of meetings
- Authorized capital depends on the chosen legal form of the company. State duties depend on the size of the capital: if up to $50,000 – $350 fee, over $50,000 – $1000.
The process of opening a company in the Bahamas
Company registration in the Bahamas consists of several steps and can take about 5 weeks.
Select the type of business
Before registering a form of legal entity, it is important to familiarize yourself with the local legal requirements. Some activities require permits from local government agencies.
Decide on a name
It is forbidden to: use the words Royal or Imperial, associated with the government, or repeat the names of already registered companies.
You can use abbreviations: Ltd, Corp, Inc., S.A., AG.
Company Registration
Gather documents on the company (Memorandum, Articles of Association, contracts, registers, certificates), on the manager and shareholders to provide data for KYC procedure, and prepare documents confirming the presence of a local office. Apply to the Registrar.
Opening a corporate bank account
The wide range of banks in the territory offers several opportunities:
- Work with multi-currency accounts, more than 20 currencies
- The account balance should be around $1000
- No currency control
- Low fees for payments in the US (as this is the main partner)
- Account registration takes about 3 weeks
Obtaining a business license
For some types of activities (tourism, finance, pharmaceuticals) it is necessary to obtain an official license from the Ministry of Finance, Department of Revenue, it is possible to apply online. It is also necessary to pay a state fee every year for license renewal. Annual tax from 0.5% to 1.25% for turnover over $5 million.
Compliance with local legislation
Each employee must be registered with the National Insurance Board and pay monthly fees. There are no audit requirements. Under the new changes, companies must file Country-by-Country Reporting (CBCR) where they do business with the Ministry of Finance.
Documents required to register a company in The Bahamas
Company registration and requirements are based on the rules of the International Business Companies Act 2000 as amended in 2004.
For an offshore company, it is necessary to provide:
- Certificate of incorporation of a legal entity, founding documents (contract, Articles of Association, Memorandum)
- Documents of directors, shareholders, founders (can be physical persons and legal entities, residents and non-residents)
- Register of directors and shareholders
- Minutes of the first meeting of shareholders
- Share certificate
IBC Director Appointment Resolution with Apostille
Types of companies in The Bahamas
In this jurisdiction, it is possible to open many types of companies. Most often IBCs, foundations, and LLCs are chosen.
Each option has its advantages and requirements:
International Business Company (IBC):
- The size of the authorized capital is $50000
- The name can be used abbreviation: Ltd, Limited, Corp.
- There should be at least one director and one shareholder in the organizational structure
- Have a local office and a licensed agent
- Pay state duty, depending on the amount of authorized capital
- Tax benefits
- If income exceeds $850 million, a financial report must be filed with the Ministry of Finance.
Limited Liability Company (LLC):
- No capital requirements
- No corporate tax
- No need to hold a meeting of directors
- Mostly chosen by international firms and investors because of the taxation system
Aggregate Account Company (SAC):
- No capital requirements
- No corporate tax
- International business opens if it is necessary to segregate assets, build a complex financial structure, and protect investments from cross-liability.
Exempted limited partnership (ELP):
- No capital requirements
- No corporate tax
- There is an equity tax
- Requires a general partner and one limited partner
- For international business, it is interesting as an instrument where general partners have unlimited liability and limited partners have personal assets protected.
Private Foundations:
- $10000 authorized capital
- No taxes
- Used by wealthy families to protect assets, later to be passed on to heirs, until then retaining control over the activities of the foundations.
Taxation in The Bahamas
For non-resident companies in the Bahamas, there are only:
- An annual fee (depending on the amount of authorized capital): up to $50,000- $350 fee, over $50,000- $1,000.
- No income tax
- No capital gains tax
- No stamp duty
- No VAT
FAQ about setting up a company in the Bahamas
How do I incorporate a company in the Bahamas?
The process includes gathering documents, paying fees, opening a bank account, and filing an application with the Registrar of Companies.
How much does it cost to register a company in the Bahamas?
The cost depends on several factors such as the type of business, additional permits, or licenses. According to official data – the registration fee is $330.
How long does it take to register a company in the Bahamas?
Registration with the government takes up to 7 days, but opening a bank account can take up to 4 weeks.
Can foreigners register a company in the Bahamas?
Yes, foreigners can incorporate and operate a business in this jurisdiction. The government of the island attracts foreign investment by offering favorable tax conditions.
Are there restrictions on foreign ownership of Bahamian companies?
There are no restrictions for non-resident companies, but if the business is a banking or insurance business, it can only be conducted outside of the state.
What is the corporate tax rate in The Bahamas?
The Bahamas does not have a corporate tax rate, which makes this jurisdiction attractive for business.
Is a local address required to register a company in The Bahamas?
Yes, it is a mandatory requirement when registering a business, and it is also possible to use the services of a licensed agent.
What annual reporting requirements apply to Bahamian companies?
There are no filing requirements for international companies, but they are required to keep books and records at the office.
How to open a bank account for a Bahamian company?
The general package of documents to open an account includes company documents, documents of authorized persons, licenses, and certificates may also be required.
Do I need a Bahamian director to incorporate a company?
A company may appoint a resident of any country as a director, there are no restrictions.