Advantages of the Bahamian Offshore Company Formation

The Bahamas is a favourite jurisdiction for many IBC’s acting as holding companies for trading and investment fund management or as instruments for asset protection. Possessing the advantage of no incorporation, capital gains, inheritance, VAT or sales taxes a Bahamian IBC will also receive full tax exemption from any local taxes including Stamp Duty.

The incorporation process is efficient and usually can be completed in one day. The fees of incorporation are based on the IBC’s authorized share capital.

There are other advantages: the professional, insurance and banking services have good reputations and there have been huge strides in the development of e-commence. The Government takes a laissez-faire approach to offshore business and its involvement is minimal. There are no restrictions on the importation of foreign capital for offshore companies who are able to import and export funds in all currencies without incurring any tax liabilities. However, the rules dictating foreign investment are involved and somewhat impenetrable and it is recommended that specialist advice is sought. The business legislation is relatively versatile and there is good anonymity for investors although since 2001 all IBCS must now provide details of identities, addresses and names of Directors.

The Bahamas is internationally renowned for its premier Banking services, with over 30 countries establishing licensed Banks within the jurisdiction in compliance with the Banks and Trust Companies Regulation Act 1965. Many of the licensed banks also offer Trust management services.

The jurisdiction is very appealing to wealthy investors because of the rigorous confidentiality, expert financial advice and prestigious institutions.

Employment law

There is no formal requirement under Bahamian law for an employee to be provided with a written contract of employment but generally contracts are prepared in unionized industries. Additionally, there are no formal procedures under Bahamian law to terminate employment nor is there any legal entitlement to notice on termination. However by custom it is usual to agree one week’s pay period and if this become problematic specialist legal advice should be sought or guidance from the Labour Board which regulates employer and employee relations.

With regard to an employee’s entitlement to leave it is the custom to agree one to two weeks of paid holiday entitlement after one year’s service and two weeks sick pay. There is however, a statutory entitlement to eight weeks paid Maternity leave.

A work permit is required for all non-Bahamians wanting to work or carry out business in the Bahamas. A Work permit will usually last a year and cost between $250 and $7,500 per year. The permit will generally be granted to senior or specifically skilled individuals who will be undertaking a job/role that cannot be filled by a Bahamian.

Geography, People and Culture

The Bahamas area is approximately 13,939 sq.km (5,382 sq.mi). The terrain is low and flat and the weather semitropical. The Capital is Nassau and the second largest city is Freeport. The population was recorded in 2002 at 310,000. English is the official and everyday language, although Creole is also spoken. Bahamians are broken down into the following ethnic groups: African 85%, White 12%, Asian and Hispanic 3%. Many ancestors arrived in the islands in the early 1800s as slaves. Two thirds of the population live on New Providence Island.

School attendance is compulsory between the ages of 5 and 16 years. This is high at 95% attendence and a literacy rate of 93%.

In the principal cities of Nassau and Freeport there are international airports and relatively good paved roads. Electricity is generally reliable and most businesses have a backup generator.

In Nassau there are two daily newspapers, three weekly papers and international papers available for sale. Cable TV and Satellite are available locally providing most American programmes with some European and Canadian channels.

Immigration and Residency

If a non-Bahamian wishes to stay longer than the limitation imposed by a Tourist visa without working, an application must be made for a Residence Permit from the Immigration Department. Home-owners can secure a Home Owner's Residence Card which is renewable annually and allows entry and residence during its validity.

Legal and Political System

The political and legal traditions of the Bahamas closely follow those of the United Kingdom. The Queen is recognised as the formal head of state and an appointed Governor General serves as the Queen’s representative in The Bahamas. The legal system is composed of a Court of Appeal, Supreme Court and Magistrates’ Courts. The Privy Council of the United Kingdom is the highest appellant court. The Governor General appoints the Chief Justice of the Supreme Court on the recommendation of the Prime Minster and the Leader of the opposition. Other Justices are appointed on the advice of a Judicial Commission.

The Bahamian parliament consists of the Senate, a 16 member body appointed by the Governor General and the House of Assembly, which is comprised of 40 members elected from individual constituencies. The Assembly, which emulates the Westminster system performs all major legislative functions with the leader of the majority party serving as the Prime Minister and the head of government. As in the United Kingdom elections are every five years but the government can dissolve parliament and call an election at any time. Following elections held in May 2002 the current ruling party are the Progressive Liberal Party (PLP). The other political parties are the Free National Movement (FNM) and Coalition for Democratic Reform (CDR).

Economy

The official currency is the Bahamian Dollar: the Government maintains its value on par with the US Dollar.

The Bahamian economy is almost entirely dependent upon tourism, financial services and offshore banking. Tourism alone accounts for 60% of the gross domestic product (GDP) and employs half the workforce. Banking accounts for 15% of GDP, Agriculture and fisheries 3% and Manufacturing 3% of GDP. Most Bahamian food and manufactured goods are imported from the United States of America with which it has close economic and commercial relationship. The slowdown in the American economy following 11 September 2001 affected growth in the Bahamian tourism industry of the majority of tourists are American. In 2002 of the 4 million tourists visiting the country 83% were The GDP in 2002 was $5.2 billion with a growth rate of 0.1%.

Trade exports are salt, aragonite, chemicals, lobster, fruit and vegetables and the major markets are the UK, other EU countries and Canada.

Legislation relating to offshore and non-resident business

If you require more information on any particular statute please contact us.
Bahamas Free Trade Zone Act
Banks and Trust Companies Act 1965
Banks and Trust Companies Regulation (Amendment) Act 2000
Business Licenses Act 1980
Central Bank of the Bahamas (Amendment) Act 2000
Companies Act 1992
Criminal Justice (International Cooperation) Act 2000
Exchange Control Act 1952
Exchange Control Regulations 1956
Exempted Limited Partnership Act 1995
External Insurance Act 1983
Financial and Corporate Service Providers Act 2000
Financial Intelligence Unit Act 2000
Financial Transactions Reporting Act 2000
Fraudulent Dispositions Act 1991
Hotels Encouragement Act
Industries Encouragement Act
Insurance Act 1969
International Business Companies Act 1989
International Business Companies (Amendment) Act 1994
International Business Companies Act 2000
International Persons Landholding Act 1993
Investment Funds Act 2003
Merchant Shipping Act 1976
Mutual Funds Act 1995
Mutual Legal Assistance (Amendment) Act 2000
Registration of Business Names Act 1989
Securities Board Act 1995
Trust (Choice of Governing Law) Act 1989
Trustee Act 1893
Trustee Act 1998