Introduction
The Bahamas, officially the Commonwealth of The Bahamas, is an independent, sovereign, English-speaking country consisting of two thousand cays and seven hundred islands that form an archipelago. It is located in the Atlantic Ocean southeast of the United States; northeast to east of Cuba, Hispaniola (Dominican Republic & Haiti) and north to east of the Caribbean Sea; and west to northwest of the Turks and Caicos Islands. Its size is almost 14,000 km² with an estimated population of 330,000. Ethnic groups include Black (esp. West African), European, and Other. Its capital is Nassau. It remains a Commonwealth realm.
Business Environment
In terms of business and communications infrastructure, the Bahamas are very well-developed. The business environment is particularly well-attuned to the finance sector as a result of the Bahamas’ long-term policy of promoting itself as an international finance centre, accompanied by a well-developed regulatory structure; as the economy depends heavily on the offshore financial sector, the government tries hard to avoid use of the island for money laundering. An Economic Impact Assessment of the financial services industry commissioned by the Bahamas Financial Services Board (BFSB) found that the industry contributes about 20% to the Bahamian economy.
There is a wide range of professional services in the Bahamas, particularly for the insurance, trust management and mutual fund sectors. The Government has understood the importance of e-commerce for the future of international business and is making a determined attempt to become a centre of e-commerce development.
There is relatively little Government involvement in business in the Bahamas, particularly for offshore businesses. Onshore business activity requires a license under the Business Licenses Act 1980 and firms must register their business names under the Registration of Business Names Act 1989 ($50 to register).
Economic Environment
Once heavily reliant on agriculture and fishing, the Bahamas has diversified its economy into tourism, financial services, and international shipping. While the nation enjoys a per capita income that is among the top 30 in the world, there is a big gap between the urban middle class and poor farmers. In addition, the nation is vulnerable to hurricanes, which regularly inflict serious damage.
Taxation
The Bahamas is a true tax haven: There are no income taxes, estate or inheritance taxes, gift taxes, or any other taxes of any type. There are also no withholding taxes on dividends, royalty or payroll. The government is financed largely by customs duties and import taxes, and licensing fees.
The Bahamas is not a party to any double taxation agreements.
The Bahamas have an information-sharing treaty with the United States relating to information involving tax crimes.
Banking
The unit of currency is the Bahamian dollar which has parity against the US dollar; the US dollar is also accepted.
The Bahamas is one of the financial centers of the Caribbean, with approximately 400 banks registered in the country. Financial services produce some 15 percent of GDP and are the second-largest industry after tourism. The government seeks to attract foreign banks, and the financial sector is extremely open to foreigners. The government is under extreme pressure from the Organization for Economic Co-Operation and Development (OECD) and others to tighten regulation of the offshore financial sector.
The banking community of the Bahamas is supervised by the Central Bank of the Bahamas, which attempts to maintain a regulatory environment conducive to investment opportunities, while ensuring the high standards of conduct, as developed by the Basil Committee on Banking Supervision.
The self-regulatory code of conduct of the Association of International Banks and Trust Companies (AIBT) also deters the use of financial operations for criminal activities and upholds the principles of bank secrecy.
The government remains involved in the financial sector through ownership of the Bahamas Mortgage Corporation and the Bahamas Development Bank, which primarily provides financing for commercial, industrial, and agricultural development projects.
Offshore Banking
Growing from a tiny off shore tax haven comprised of a few branches of foreign banks in the mid-sixties to world banking powerhouse. The country’s legislation and regulatory structure, comparatively highly-skilled workforce, and its stable government have attracted the some of the most prestigious financial institutions from around the globe.
The Bahamas is one of the “Big Three” offshore financial centers for the United States, along with Bermuda and the Cayman Islands. Virtually all major banks have a branch in the Bahamas, and several have their worldwide headquarters there.
