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The Bahamas

Tax Haven Jurisdictions

Synopsis:

Independent sovereign state having gained independence from the United Kingdom in 1973. Excellent efficiency. English speaking. Excellent air and sea communications with the United States. Has not suffered to the same extent as the Cayman Islands from financial scandals. No corporate or individual taxation for residents. Significant ship and yacht registrations. Growing banking and insurance sector. No direct tax treaty network.

Star Ratings

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Location

The Commonwealth of the Bahamas is a 100,000 square mile archipelago of approximately 700 sub tropical islands and 2,000 cays situated just 62 miles south east of Florida

Relationship with the UK

The Bahamas are now fully independent from the United Kingdom but are still members of the 'British! Commonwealth. Today, the relationship with the United States, both politically and financially, is far more important. The Bahamian dollar is at parity with the U.S. Dollar.

Advantages of Bahamian International Business Company ("IBC")

Under Act 2/1990, the Bahamas introduced IBC legislation very similar to that of the BVI (See below). The legislation effectively sought to codify and guarantee the rights, principally that of being tax free, of those wishing to establish an IBC company

Incorporation under the Act provides the following benefits and features: IBC companies need only pay registration and annual license/franchise fees. It is important to note that the Bahamas since 1717, has never imposed either individual or corporate taxes. IBC companies operating from the Bahamas, i.e. using local directors and/or serviced office facilities, are totally tax exempt. Bahamian law guarantees this exempt status for a period of 20 years from the date of registration. Where the Bahamas is used as a 'Command Centre' and/or a non IBC company has business activities in the Bahamas, an annual business license fee will be charged varying between US$1.00 and US$180,000.00. The latter only applying where there is a turnover of US$5,000,000.00, or more. The above does not apply to banks and insurance companies which are covered by separate legislation.

Taxation

The Bahamas does not impose, income, capital gains, gift or inheritance tax on individuals. Locally based companies not covered by the IBC legislation are liable to pay , with the exception of banking and insurance companies, an annual license fee based on the undertakings annual turnover. In real terms, such taxes, are unlikely even for high turnover firms to exceed 3-4% of gross profits. Banking and insurance firms will normally pay even less than the above.

There are no minimum issued share capital requirements, however, the maximum share capital is automatically stated as US$5,000.00. Issued share capital over this amount will result in a non standard annual franchise fee. Annual franchise fees operate on a sliding scale

  • An IBC is required to have a registered agent and office in the Bahamas. In most cases, nominee directors will also be employed to allow anonymity to be maintained when dealing with third parties. Otherwise, it may be necessary for an ultimate beneficial owner to reveal his or her identity.
  • Both registered and bearer shares can be issued.
  • A company will normally have two, or more, shareholders.
  • Only one director is required. A company may serve as director.
  • There are no nationality requirements for either directors or shareholders.
  • Annual general meetings must be held but can take place in any jurisdiction and may even be concluded by means of a conference telephone call.
  • Directors have the power to protect the assets of the company by transferring them to trustees, another company or other legal entities for the benefit of the 1BC, it's beneficial owner(s) and/or creditor(s).
  • The register of members must be maintained at the registered office of the company in the Bahamas
  • No accounts or annual summaries have to be filed with the Government, with the exception of the annual franchise tax to be completed and filed by the registered agent
  • A company incorporated outside of the Bahamas may be re-domiciled in the Bahamas under the "Continuation" Principal

How to Incorporate an IBC

The formation procedure in the Bahamas, even for an IBC, adheres to standard common law practice. In most cases, a company will be formed on the instructions of a client through the use of the registered agent as the initial incorporator. The governing statutes are known as the memorandum and articles of association. In most cases 'nominee' directors will be maintained to ensure confidentiality. Remember, a register of members must be maintained at the company's registered office in the Bahamas. 'Directors', (nominee or not) arrange for the issuance of shares and take all other normal board decisions

Corporate Requirements

Name: The name of the corporation may be in any language. It must contain the word(s): Limited, Corporation, Incorporated, Sociedad Annima, Societe Anonyme, an equivalent, or an abbreviation thereto.

Capital: The authorised share capital may be expressed in any currency, and the IBC legislation allows for a company to have it's capital expressed in more than one currency. Shares may be issued in bearer or nominative form. The minimum annual franchise tax will apply to companies with an authorised capital of US$5,000.00, or it equivalent.

Registered office/agent: All companies incorporated in the Bahamas must maintain both a registered office and agent in the jurisdiction.

Amendments: Amendments are made in accordance with the terms and conditions outlined in the memorandum and articles of association. In most cases, either the board of directors or shareholders must take important decisions.