Corporate tax in Bahamas

Summary

 

Corporate Income Tax Rate (%) 0
Capital Gains Tax Rate (%) 0
Branch Tax Rate (%) 0
Withholding Tax (%) 0

Taxes on corporate income and gains

No taxes are levied on corporate income or capital gains.

License fees and other duties

Business license fees. For corporations designated as residents for exchange-control purposes, their business revenue in the Bahamas is subject to an annual license fee, which varies according to an­nual revenue or turnover. Businesses that have annual turnover not exceeding BSD50,000 are required to pay a business license fee of BSD100. If the turnover exceeds BSD50,000 per year, the fee varies from 0.5% to 1.5%, based on the business annual revenue or turnover. However, for most professional businesses, the busi­ness license fee equals 1% of revenue.

As an anti-tax avoidance measure, a subsidiary in the Bahamas is subject to the same business license tax rate as is its parent in the Bahamas.

Business license fees must be paid by 31 March each year, and proof of payment of real property tax must be produced before the license is issued.

Corporations regulated by specific legislation may not be subject to this fee.

Bank and trust company license fees. Offshore banks and trust companies licensed under the Bank and Trust Companies Regula­tion Act are subject to business license fees, which vary depending on the value of the assets under management. The annual busi­ness license fees range from BSD450,000 to BSD3,750,000 per license. Domestic banks and other domestic financial institutions licensed under the Bank and Trust Companies Regulation Act are subject to a business license fee, which equals 3% of annual rev­enue or turnover.

International business companies. International business compa­nies (IBCs) pay an annual license fee based on authorized capital. Government fees related to the creation of an IBC equal BSD330. The annual license fee is BSD350 if turnover is less than BSD50,000, and the fee is BSD1,000 if turnover is BSD50,000 or more. IBCs are exempt from all other taxes (except potentially value-added tax (VAT), effective from 1 January 2015; see Sec­tion G) and stamp duties for a period of 20 years from the date of incorporation, except for transactions involving real estate in the Bahamas. IBCs are normally created through service pro viders that charge separate fees for their services.

Limited duration companies. Limited duration companies (LDCs) pay an application fee of BSD850 and an annual license fee based on authorized capital. LDCs may be classified as partnerships for US tax purposes. By complying with certain formalities, an exist­ing IBC may change its status to an LDC.

Insurance companies. Insurance companies that are incorporated in the Bahamas pay stamp tax on authorized capital (for details, see Section D). They also pay the fees described below.

Resident insurance companies that write local business pay an initial registration fee of BSD1,000 and a premium tax of 3% of gross premiums collected each quarter. The minimum tax is BSD25.

Restricted offshore insurance companies pay an initial registra­tion fee of BSD2,500 and an annual fee of BSD2,500 in subse­quent years. Unrestricted companies pay an initial registration fee of BSD3,500 and an annual fee of BSD3,500 in subsequent years. Offshore insurance companies also pay an annual fee of BSD1,000 for each licensed resident insurance manager who provides underwriting as a service. Offshore insurance compa­nies are exempt from all other taxes for a period of 20 years from the date of registration.

Other significant taxes

The following table summarizes other significant taxes.

 

 

Nature of tax Rate
Value-added tax (VAT); charged on any
taxable supply of goods and services, as
well as importations; applied at the standard
rate, unless an exception applies such as a
zero-rating or a VAT exemption; standard
and zero-rated supplies allow input VAT
recovery on purchases made, but VAT
exemption results in input VAT being a cost;
the legislation provides limited exceptions;
VAT registration is mandatory for a person or
business making taxable supplies or taxable importations and having turnover exceeding BSD100,000 in any period of 12 months or
less; the legislation also provides for voluntary registration; standard rate
7.50%
Customs duties, on imported items;
exemptions may be granted to businesses
licensed under certain legislation; rate varies by type of item
Various
Hotel guest tax, on room rate (expected to
Be repealed on the introduction of VAT)
10% plus BSD10 per additional adult per day
Stamp tax
On property conveyances; rate depends on selling price 4% to 10%
On imported items (average rate) 10.00%
On authorized capital of a domestic limited
company (payable at time of incorporation)
First BSD5,000 2.00%
Each additional BSD1,000 0.50%
Repatriation out of the Bahamas of
substantial profits by trading concerns;
tax is imposed on each transfer of funds
exceeding BSD500,000 per year if the
transfer represents dividends, profits or
payments for services rendered by a
related party
Repatriated foreign currency 5.00%
Repatriated Bahamian dollars 1.50%
Leasing, subleasing or licensing of marina slips; tax rate applied to value
BSD0 to BSD20,000 4.00%
BSD20,001 to BSD50,000 6.00%
BSD50,001 to BSD100,000 8.00%
BSD100,001 and above 10.00%
Real property tax; application of tax varies
depending on appraised value, location,
nationality of owner and development of property
0.75% to 2%
National insurance contributions on weekly
wages up to BSD620 or on monthly wages
up to BSD2,687; for employees earning BSD60 or more a week; paid by
Employer 5.90%
Employee 3.90%

Foreign-exchange controls

Corporations doing business in the Bahamas fall into the catego­ries of resident or nonresident.

A resident company is a company that deals in or holds assets in the Bahamas. Business is carried out in Bahamian dollars. All trans ac tions requiring foreign currency need prior approval of the Central Bank of the Bahamas to convert Bahamian dollars into another currency.

A nonresident company is one whose shareholders are not des­ignated residents of the Bahamas and whose principal business activity takes place outside the Bahamas. Bank accounts in all currencies other than the Bahamian dollar can be operated free of any exchange controls. Shares of nonresident companies incorpo­rated under the Companies Act cannot be transferred without the prior permission of the Central Bank of the Bahamas. Exchange-control regulations generally do not apply to companies incor­porated under the International Business Companies Act.

Nonresident companies are subject to an annual fee of BSD300.

Tax treaties

The Bahamas does not have any existing tax treaties. The Bahamas has entered into tax information exchange agreements with vari­ous countries.

On 3 November 2014, the Bahamas and the United States signed and released a Model 1 Intergovernmental Agreement (IGA) for the implementation of the US Foreign Account Tax Compliance Act.