The Bahamas is a luscious archipelago that spans over 100,000 square miles, home to some of the earth’s clearest oceans and beautiful beaches. It is no surprise that the country has become a popular vacation spot for many but it is also considered a tax haven for many foreign investors. The country has managed to develop mature financial services, together with an established infrastructure and tax neutral environment, attracting foreign investors from around the world. Before you decide to register company in Bahamas, here are 4 things to know before you start your Bahamas LLC registration.
1. Pseudo-Tax Haven:
The Bahamas is seen by many to be a Tax Haven for foreign incorporations and firms. Whilst the country inhabits the necessary qualities, it has been wrongly classified widely due to the stricter financial reporting rules. Structurally, the tax system of The Bahamas is considered narrow, given that it is mainly anchored upon import duties fees on international trade as well as various other tax fees. In the Bahamas, there are no personal or corporate income tax obligations (unless revenue is derived from within The Bahamas), and taxes are also exempted on inheritances and capital gains. Instead, the government derives inland revenue through implementation of other forms of taxes which includes: value-added tax (VAT), property tax, stamp duties, import fees and licensing fees. As such, it is important to know the tax structure when you start your Bahamas LLC registration.
2.Business Areas Reservation:
Before starting your Bahamas LLC registration, it is crucial to understand the investment opportunities and type of business foreign investors are allowed to partake in. In the Bahamas, there are areas of businesses made completely reserved to nationals of Bahamian only. The reserved business areas range from wholesale and retails operations to landscaping and even real estate businesses, limiting your options when starting a business in the Bahamas. On the flipside, the local government of The Bahamas has also identified areas for international investors. The reserved international investment business areas include tourism and up-scale development of condominiums to light manufacturing and exporting services. If you are unfamiliar whether your Bahamas LLC registration will infringe upon the incorrect business areas, contact Tetra Consultants for more information as we develop the best plan together going forward with your company.
Apart from being a popular location for foreign investors due to its tax haven status, the Bahamas actually provide a suite of investment incentives and free trade zones to encourage an even more open market and economy. Attached are the following investment incentives that are open to any qualifying firms:
The Hotels Encouragement Act:
Firms are provided duty free entry of approved construction materials, furnishings and fixtures for hotel development. Additionally, the management are given concessions from real property tax for the initial 20 years of their operation of the hotel.
The Industries Encouragement Act:
Firms starting a business in the Bahamas in the industrial and manufacturing industry can expect duty free imports on machineries, raw materials and building supplies, on top of an addition to exemption from property tax for a 15 year period. The duty free concessions on all imports is valid for the initial 5 years of operation. The concessions will face a lowered rate of 10% tax for the subsequent 10 years.
The Tariff Act:
For Bahamas LLC registration that will involve dealing with raw materials and agrarian markets, you can expect customs duty exemption on specified raw materials, supplies and equipment for Agriculture, Floriculture, Horticulture, Fisheries, Forestry, Cottage and Light Industries, and Commercial Printing.
The Free Trade Zones Act:
The Free Trade Zones (FTZ) Act designated areas in the Bahamas to be classified as free industrial and commercial zones. In essence, there is currently only one FTZ known as The Freeport, and is operated by the Grand Bahama Port Authority. In conjunction with The Hawksbill Creek Agreement Act, the port area is considered a FTZ and enjoys freedom from all taxes until 2015 and from excise taxes, stamp duties and most customs duties until 2054.
4. Economic Substance Requirements:
Similar to most tax haven countries that offer tax neutral or tax exemptions on corporate taxes, The Bahamas is subjected to economic substance requirements. The economic substance requirements act as a standard to determine if imposition of tax on an organisation is harmful or fair. This helps to facilitate and encourage legitimate usage of corporate structures and prevent the incorrect reflection of economic activity that does not measure up to what is actually operated in The Bahamas. Under the Commercial Entities (Substance Requirements) Act that was passed in December 2018, firms classified under “relevant activities” have to observe the requirements and prove that their core-generating income activities are derived from The Bahamas as well.
Engage Tetra Consultants as we arrange your LLC registration in The Bahamas in a smooth and hassle-free process. The team provides a comprehensive service package that includes planning and strategizing with our clients to select a suitable business entity, completing the registration and documentation processes, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations.
Contact us to find out more about company registration in The Bahamas and our dedicated and experienced team will revert within the next 24 hours.