Register company in Bahamas: Introduction
To register company in Bahamas is hassle-free with Tetra Consultants’ assistance. With us at the wheel, you will be able to dedicate your time and resources to other more important channels. The Bahamas is a Caribbean country best known to most as a vacation destination. However, it is also home to an attractive zero tax regime. Under the International Business Companies Act 2000 and the Amended 2004 Act, many corporations have set up their IBCs in The Bahamas. There are many other qualities that will entice you to set up your corporate home here too. With our lean-and-mean mentality, you can rely on our team of experts to provide you a seamless experience throughout the whole process to register company in Bahamas. Regardless of whether you are setting up an onshore or offshore company, our ultimate goal is for your Bahamas company to be operationally ready within the stipulated time frame. Our service package includes everything you will require to set up business in The Bahamas:
- Company registration with the Registrar General’s Department
- Local company secretary and registered address
- Corporate bank account opening
- Financial license applications
- Annual accounting and tax services
What is a Tax Haven and is The Bahamas a Tax Haven?
- As the name suggests, tax havens usually have low or even zero tax rates and are thus used for illicit activities such as tax evasion. The definition of tax haven sometimes also includes financial secrecy and confidentiality, political and economic stability as well as ease of doing business for foreigners.
- Whilst The Bahamas possesses all three qualities of a tax haven, it is not one since the country’s regulators continue to uphold high financial reporting standards in conformance with the Financial Transactions Reporting Act 2018. Even though this has increased the legitimacy of a Bahamas offshore company, the negative connotation of it being a tax haven still remains as it is unfairly or wrongly classified as one.
- By the Financial Action Task Force and the Organization for Economic Co-operation and Development’s (OECD) standards, The Bahamas is deemed to have been compliant with all relevant measures in the fight against money laundering and terrorist funding, displaying strict and transparent financial reporting standards. Hence, as of December 2020, it was removed from the OECD’s grey list.
What are the new economic substance requirements and how do they affect businesses looking to register company in Bahamas?
- As part of its commitment to tax reform, The Bahamas passed the Commercial Entities (Substance Requirements) Act In December 2018. It provides for standards to determine whether a tax measure imposed on an organisation is harmful or fair. Concurrently, it also helps to ensure that The Bahamas does not facilitate or encourage the use of corporate structures which attract profits but are not necessarily legitimate in reflecting the real economic activity that are actually operated in The Bahamas. This has helped to create a more legitimate business environment in the country.
Who is subject to the new requirements to register company in Bahamas?
- Under this act, all legal entities conducting “relevant activities” are to observe the economic substance requirements. These relevant activities include companies in the banking, insurance, fund management, finance and leasing, headquarters, shipping, distribution and service centre as well as an intellectual property business. This law also applies to holding companies engaged in such activities or have subsidiaries that do so.
- To demonstrate substantial economic presence, your company must be conducting core income-generating activities within the country. These core income-generating activities are not allowed to be outsourced to an entity or person outside of The Bahamas. Management of the business also has to be done from within The Bahamas.
- To demonstrate the level of core income generating activities, your company must have:
- an adequate amount of annual operating expenditure
- an adequate level of qualified full-time employees
- an adequate number of physical offices
- To demonstrate the required level of management and control in The Bahamas, your company must have:
- an adequate number of meetings of the board of director conducted in The Bahamas
- there is a quorum of the board of directors physically present within The Bahamas during the meetings
- strategic decisions made at the meetings of the board of directors are to be recorded
- all records and minutes are to be kept in The Bahamas
- the board of directors must have the necessary knowledge and expertise to discharge its duties
Penalties for failure to comply with regulations to register company in Bahamas
- All included entities are to report on its compliance within nine months of its fiscal year end. Failure to comply with the requirements might warrant an administrative penalty of $150,000. In cases of persistent non-compliance, the entity may also be struck off of the Bahamas registrar of companies.
- Nonetheless, even if you are not required to observe this new law, you will still be subjected to annual reporting obligations.
- Before the start of the engagement, Tetra Consultants will advise you on the appropriate economic substance regulations based on your intended business activity. If required, our team will assist with the local office and recruitment of local employees. We will also continue to assist with annual reminders to ensure that you report timely to the relevant authorities.
How long to register company in Bahamas and open a corporate bank account?
- Tetra Consultants will assist you to register company in Bahamas with a seamless procedure.
- Upon receiving the required due diligence documents of the directors and shareholders, Tetra Consultants will conduct a name search with the Registrar General’s Department to reserve your preferred name.
- Companies must file their application through an established financial or corporate service provider. Tetra Consultants will provide you one to help you file your application.
- Within 1 week, you can expect to receive the documents of your new company including your Company Registration Certificate as well as the Memorandum and Articles of Incorporation.
- After successful company formation, Tetra Consultants will assist to open a corporate bank account with a bank of your choice. A bank account opening will usually take around 4 weeks to be completed.
- You can expect to start operations with your Bahamian company within 5 weeks upon engaging Tetra Consultants.
- Tetra Consultants’ team of Chartered Accountants is able to provide a full suite of services that will ensure that your newly incorporated company will continue to abide by all regulations. These services include monthly bookkeeping, preparation of financial statements and annual tax return filings.
Can you register company in Bahamas as a foreigner?
- Foreigners can start a business in The Bahamas since 100% foreign ownership is not only allowed but encouraged through the creation of the International Business Companies Act.
- This form of company has minimal requirements, including no residency requirement for the director, making it easy for foreigners to register company in Bahamas.
- However, foreigners looking to do business in the Bahamas must be approved by the Ministry of Finance’s Bahamas Investment Authority (BIA). This is the authority that governs foreign direct investment in the jurisdiction.
- To obtain approval from the Bahamas Investment Authority, you must submit a detailed Project Proposal following the official guidelines laid out by the BIA. This Proposal will then be forwarded to the National Economic Council and any relevant Ministries if applicable.
- In addition, at least $500,000 must be invested as the initial investment capital, in a field or industry that is not restricted for local business activities only. Restricted industries include ones such as real estate, local media, essential services, local food and beverage industries, retail, security services, construction, seafood and local transport industries.
- For foreign investors who wish to set up company and conduct business in the Bahamas, and do so using local currency, they will need to first need to be granted “Resident” status from the Exchange Control Department of the Central Bank of The Bahamas. To do so, they have to submit to the Exchange Control an application letter with details of their company and intended activities for review. This can be done after the Investment Authority approves your Project Proposal. Tetra Consultants will assist you throughout the entire process.
How to register company in Bahamas?
Tetra Consultants has assisted numerous clients to complete Bahamas company registration. Our Bahamas company formation package will get you on your way to setting up your new corporate home. Tetra Consultants advises you to read through this guide to fully understand the steps for a successful company formation process.
Step 1: Choosing a suitable corporate entity
- After understanding your business goals and activities, our team of dedicated consultants will recommend the most suitable corporate entity for you to carry out your business. Prior to incorporating a Bahamian company, you will be advised on the optimum paid-up share capital, corporate structure, legislations and whether there is a need to apply for any licenses to operate.
Step 2: Reservation of company name
- Tetra Consultants will reserve your preferred company name with the Registrar General’s Department
Step 3: Preparation of supporting documents to register company in Bahamas
- Before Tetra Consultants can incorporate your company in The Bahamas, you are required to provide us with the required KYC documents. Some of these documents include the names of directors and identification proof.
- Upon receiving all the necessary documents, Tetra Consultants will proceed to draft and notarize the company’s Memorandum and Articles of Association.
- According to the business activity and corporate structure, Tetra Consultants will also draft articles of incorporation, business plan and other incorporation documents.
Step 4: Filing to register company in Bahamas
- All companies incorporated under the International Business Companies Act must have a registered office and a registered agent in The Bahamas. As such, we will provide you with a registered office and a registered agent to ensure that you stay compliant.
- After receiving approval from the Registry, Tetra Consultants will courier the Certificate of Incorporation, Memorandum and Articles of Association and other corporate documents to your preferred address.
Step 5: Corporate bank account opening
- After registration, Tetra Consultants will assist you in opening a corporate bank account. Our team has established partnerships with multiple reputable banks in The Bahamas. If you prefer to open an account with an offshore bank, we can also arrange that with reputable banks in jurisdictions such as Hong Kong, the United States or New Zealand. We will present your business to each relationship manager and compliance team.
- Typically, a corporate bank account opening will take roughly four weeks. In most cases, the directors and shareholders are not required to travel. However, if travel is required, we will have a representative accompany you to the bank meeting. Alternatively, our team will negotiate with the banks to conduct a conference call instead or to request for a waiver.
- Once your account has been successfully opened, Tetra Consultants will courier the internet banking token and access codes to your preferred address.
Step 6: Business licenses
- As companies conducting business within the Bahamas must have a license from the Ministry of Finance’s Business License Unit according to the Business License Act, Tetra Consultants will continue to process the relevant application with the Department of Inland Revenue to ensure that your business operations can be conducted smoothly.
- The license application costs $100 and the nature of your company’s intended business activities must be disclosed to and approved by the Business License Unit, and the BLU will also need to see relevant documents such as the certificate of incorporation and the registration for national insurance.
- Companies are also required to renew their business license annually and pay annual fees according to your company’s turnover rate. As such, we will continue to remind and process your application and payment for a business license.
Step 7: Financial reporting and taxation obligations
- Following the setup of your new Bahamian corporate home, Tetra Consultants will continue to provide you with the necessary accounting and tax services to ensure that you can continue to legally conduct business while staying compliant to regulatory obligations.
- Our team of dedicated consultants will timely prepare your firm’s financial statements, corporate tax returns and manage bookkeeping on your behalf.
- IBCs doing business within The Bahamas are not subjected to any income, capital gains or estate tax. However, a value-added tax may apply for some goods and services.
- It is to note that under the newly imposed legislation, your company may have to file a country-by-country annual report with the Ministry of Finance.
- Our team of dedicated consultants will continue to clarify any doubts you may have with regards to your company’s obligations.
- In addition, after incorporation, you will also have to sign up all members of the company with the National Insurance Board (NIB), which is similar to the system of social security in other jurisdictions. This is compulsory under the National Insurance Act. Every month, the employer, whether a local or foreigner will have to pay national insurance contributions to the Board, taken out from a proportion of the employer’s own salary.
Types of business entities in The Bahamas
- The International Business Company (IBC) structure is the most popular among foreign investors. Aside from IBCs, The Bahamas is also home to many other business forms.
- Generally, for most companies in The Bahamas, you will only require a director and shareholder of any nationality, a local registered address and registered agent. No minimum paid up capital is necessary in company formation as well.
- Prior to the start of the engagement, Tetra Consultants will fully understand your business before recommending the optimal business entity in The Bahamas. Some considerations we take into account include the type of business activity, tax obligations and nationalities of shareholders and directors. Our consultants will also offer more information on the requirements imposed to set up these entities.
- The simplest form of a business enterprise, companies can be incorporated as a Domestic Company under the 1992 Companies Act.
- To register as a Domestic Company, you will need at least two people to sign a Memorandum of Association in the presence of a witness. This is to then be submitted to the Companies Registry. For Domestic Companies, it is mandated that there are at least two directors. Domestic Companies are also to host annual general meetings. Unlike IBCs, Domestic Companies are to publicly disclose the names and addresses of its directors and officers.
- In general, Domestic Companies are private companies limited by shares or by guarantee as well as public companies.
Private companies limited by shares
- Under this business entity, you can continue to issue shares. As per its name, members and managers are limited in their personal obligations to the company. When winding up, directors or managers will not be personally liable for the debts and obligations of the company. In essence, the company has a separate legal entity from its directors and members.
- To register a company limited by shares, you will need to declare the form of business entity, the maximum number of shares, the authorised capital of the company, the classes of shares and specific details of its rights, limitations and criteria on your company’s Memorandum of Association.
Private companies limited by guarantee
- This corporate structure similarly also provides some form of security for its members. The structure separates the personal liabilities of the members from the company. When winding up, directors or managers will not be personally liable for the debts and obligations of the company. It is, however, to note that members can still be liable for any unpaid amounts with the maximum being the total of their investment or an amount agreed upon previously. In this case, members’ liability is limited to the amount agreed upon in the company’s Memorandum.
- To register as a private company limited by guarantee, you will need to declare the form of business entity, the maximum number of shares, the amount each member intends to contribute in the case of a winding up, the classes of shares and specific details of its rights, limitation and criteria on your company’s Memorandum of Association.
Private company limited by shares and by guarantee
- A hybrid between the two business entities, registration is fairly simple. You will have to declare the form of business entity, the maximum number of shares, the authorised capital of the company, the amount each member intends to contribute, the classes of shares and specific details of its rights, limitations and criteria on your company’s Memorandum of Association.
- In general, the only distinctive difference between a private company and a public company is that shares of a public company can be traded freely on the stock exchange.
International Business Company (IBC)
- With minimal requirements, this business entity is the easiest and most commonly adopted choice among many foreign investors. A company with limited liability, this popular incorporation choice allows you to be fully exempted from paying any form of tax in The Bahamas. By adopting a Bahamas IBC, you can conduct business offshore.
- Dispensing requirements such as hosting an Annual General Meeting, IBCs are known for their low maintenance. Under this form, you are not required to file any annual returns or an Annual Statement. However, IBCs are still required to maintain a filing of their incumbent officers and directors.
Exempted Limited Partnership
- An exempted limited partnership consists of general partners as well as limited partners. In the case of a winding up, general partners may be held personally responsible for the business’ liabilities and debts accumulated by the business, whilst limited partners will not be held personally liable. However, a limited partner will not be able to involve himself in the business activities. All exempted limited partnership companies are to provide a registered office in The Bahamas so as to receive any notice and communication.
- Exempted limited partnership companies are not permitted by law to undertake any business with The Bahamas public unless necessary for the growth of its offshore businesses.
Accounting and tax obligations
- Accounting and tax considerations are important factors when incorporating your company. By outsourcing your Bahamian accounting and tax obligations to Tetra Consultants, you can be confident that you are in the best hands. Our team of consultants will ensure that your firm’s financial statements, corporate tax returns and audits will be completed in a timely manner without the need for you to travel.
- Additionally, outsourcing your accounting and tax needs to Tetra Consultants will allow you to reduce overhead costs whilst being ensured of timely reporting and filings. Before the start of the engagement, our accounting team will also keep you updated of all the required deadlines and audit requirements. Thereafter, we will prepare all required filings in advance to ensure that the stipulated deadlines are met.
Annual reporting requirements
- Under The Multinational Entities Financial Reporting Act, companies incorporated in The Bahamas with a revenue of $850 million and above will have to file an annual report with the Minister of Finance. Otherwise, companies who have to prove its economic substance are to file a report on its compliance within nine months of its fiscal year end.
- In general, Bahamas-incorporated companies are not required to pay any income tax, incorporation tax, capital gains tax or wealth tax. However, companies should note that value-added tax is still applicable.
Is The Bahamas a good place to start business?
- The Bahamian government mostly focuses on tourism, banking and e-commerce as their primary drivers of economic growth, with manufacturing and agriculture as their secondary driver of growth. With this in mind, the country has a high degree of openness to foreign investors and capital, making it a good place for you to start business.
- Tetra Consultants will address any queries you have at any point in time during your Bahamas company incorporation. Additionally, we adopt a PESTLE framework to help you comprehensively analyse the feasibility and practicality of doing business in the Bahamas.
- The Bahamian government is enacting changes in the political system by imposing new regulations to oversee the island’s corruption issues. In 2018, the Bahamian government allocated $1 million to bring about a Freedom of Information Law. A Fiscal Responsibility Law was also initiated to improve the transparency of public spending.
- The Bahamas is also plagued with government corruption issues. The anti-corruption mechanisms imposed in the country are weak with no specific agency capable of handling allegations of corruption. It has been argued that the island’s widespread government corruption contributed greatly to the economic downturn.
- However, despite this The Bahamas scores relatively well on Transparency International’s Corruption Perception Index 2020, being ranked 30th out of 180 total countries.
- With strong support from its tourism industry and agricultural exports, The Bahamas is among the wealthiest countries in the Caribbean region.
- The Bahamas ranked 70th among 180 countries on The Heritage Foundation’s 2021 Index of Economic Freedom. Consequently, being classified as moderately free. It was also stated that the country is continuously innovating and initiating new steps to foster the development of small and medium enterprises while also encouraging greater local investment.
- The aftermath of Hurricane Dorian caused a significant drop in the country’s GDP with an estimated damage of about US$3.4 billion, also causing the country’s budget deficit.
- There are also an abundance of economic laws in the Bahamas that encourage investment through various attractive incentives and can be applied for by businesses who qualify for them, increasing the benefits of investment in the jurisdiction. These investment laws include The Family Island Development Encouragement Act, The Export Manufacturing Industries Encouragement Act, The Agricultural Manufactories Act, The Spirits and Beer Manufacture Act, The Hotels Encouragement Act, The Tariff Act, The Industries Encouragement Act, The City Of Nassau Revitalization Act, The Hawksbill Creek Agreement Act and The Bahamas Vacation Plan and Time Sharing Act.
- The official and spoken language of The Bahamas is English. This will provide you great convenience when doing business in The Bahamas as you need not worry about any potential language barrier that could get in the way.
- The Bahamas is home to one of the most educated populations in the Western Hemisphere. With an adult literacy rate of over 95% and a population of over 300,000 who are fluent in English, the country has a strong talent pool.
- Haitians living in The Bahamas unfortunately face many migration issues. This concurrently leads to poverty and prejudice against the Haitians.
- In 2017, the Bahamian government rolled out plans to employ smart technology to build up a smart nation. By adopting smart technology, the government hopes to positively contribute to the nation’s growth.
- In 2019, Prime Minister Hubert Minnis shared that the country is looking to transform into a technology hub. This is to be done by attracting more Information and Communications Technology companies to set up on its shore.
- Introducing a new work visa, BH1B, this visa primarily targets individuals looking to set up technology companies in The Bahamas. This visa will help to spur greater technological innovations within the island.
- The Bahamas boasts an independent judicial system headed by the Supreme Court. The judicial system is known for its unbiased and fair judgement rulings.
- The Bahamas has recently introduced several legislations such as the Removal of Preferential Exemptions Act, the Commercial Entities Act and the Multinational Entities Financial Reporting Act. These laws demonstrate the country’s jurisdiction towards cultivating a transparent business environment.
- According to the United Nations, the Bahamian government has been promoting sustainable agriculture and rural development. This is done by creating more buffer zones and limiting the use of pesticides. This development also highlights The Bahamas commitment towards building a sustainable environment.
- The Bahamas has been applauded for its progress on their Sustainable Development Goals. By introducing new mechanisms that involve reforming energy use, the Bahamian government’s drive towards sustainable development should be commended.
- With an economy highly driven by the tourism industry, the impact of tourism on the environment is significant.
Looking to register company in Bahamas?
Contact us to find out more about how to register company in the Bahamas. Our team of experts will revert within the next 24 hours.
What is the best business in The Bahamas?
- The Bahamian economy is largely reliant on tourism and banking and financial services. These two sectors also make up the areas of businesses which the government aims to attract more foreign investment in, alongside other industries such as high-tech services, pharmaceutical manufacture, real estate and offshore medical centres.
How much does it cost to start a business in The Bahamas?
- While there are no paid-up capital requirements when starting a business in The Bahamas, Tetra Consultants will recommend setting aside at least US$5,000 as your paid-up capital to fund your overhead expenditures as well as initial deposit for corporate bank account opening.
- As for Tetra Consultants’ engagement fees, this depends on the exact services required from Tetra Consultants. Our fees are inclusive of government fees and all fees will be clearly stated in our engagement letter prior to the start of the engagement. Tetra Consultants believes in transparency with our valued clients and there are no hidden fees.
Why do companies register in The Bahamas?
- Apart from having an attractive tax policy, it also offers high levels of privacy and ease of incorporation. This allows even foreigners to set up companies easily for trading, tax management and investment holding purposes.
What is the income tax rate in The Bahamas?
- The Bahamas does not have income tax.
What does it mean for The Bahamas to be a commonwealth nation?
- As an ex-British Colony, The Bahamas gained independence in 1973 as its own sovereign country. However, it still maintains close economic and political ties with both Britain as well as the other commonwealth nations.
What language is spoken in The Bahamas?
- The official language is English, with most of the population being fluent in it.
What is the currency of The Bahamas?
- The currency is the Bahamian dollar which is pegged at a 1 to 1 rate with the US$. However, US$ is also widely accepted.
What are alternative jurisdictions for offshore company formation besides Bahamas?
- If you are looking for jurisdictions with similar low or zero corporate income tax rates for offshore companies, you can consider setting up in the Cayman Islands, Marshall Islands, Cook Islands, Costa Rica and the Turks and Caicos Islands.
- However, as several of the above jurisdictions may have a negative reputation as a haven for offshore tax evasion, you may wish to consider more reputable jurisdictions with strong corporate regulations to set up your offshore company instead, such as Hong Kong, New Zealand, the United States and the Czech Republic. Tetra Consultants can assist you to complete the incorporation process expeditiously.
What is an IBC in the Bahamas?
- It is the most popular type of business entity chosen by foreigners. It has limited liability, allows foreigners to conduct business offshore, and has minimal requirements for both set up and maintenance, making it an easy and advantageous option.
How do I start an LLC in the Bahamas?
- You will first need to decide a name for your business, which must be unique and end with either the words “Limited Liability Company” or “LLC”. Tetra Consultants will assist you to reserve the name.
- You will then have to submit with the required KYC documents, including the names of directors and identification proof. Upon receiving all the necessary documents, Tetra Consultants will proceed to draft and notarize the company’s Memorandum and Articles of Association. Tetra Consultants will also assist you to draft articles of incorporation, a business plan and other incorporation documents.
- You will not have to fulfill any mandatory criteria for minimum paid up capital for an LLC. However, you will need a listed office and agent in the Bahamas. Tetra Consultants will provide you with the necessary services to ensure that you are able to meet these requirements.
- Tetra Consultants will then file for incorporation with the Bahamas Registrar General’s Department. After receiving approval from the Registry, Tetra Consultants will courier the Certificate of Incorporation, Memorandum and Articles of Association and other corporate documents to your preferred address.
- After incorporation, Tetra Consultants will then open a corporate account with a reputable bank of your choice, as well as assisting you to apply for relevant licenses and fulfill the mandatory accounting and tax obligations.
- Contact us to find out more about how to set up an LLC in the Bahamas and our team of experienced consultants will revert within the next 24 hours.