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In the Bahamas there are no taxes on profits, dividends
or income; there is no capital gains tax, no withholding
tax and no sales tax. The taxes impinging on companies
are business license fees, stamp duty, property taxes
and import duty. Most offshore or non-resident entities
are exempt from business license fees and many are exempt
from stamp duty. Corporate entities pay incorporation
or registration fees to the Government:see Types
of Company and Offshore
Legal and Tax Regimes for details of annual fees
payable depending on status.
Business
License Fees
Under the Business Licenses Act 1980 (as amended) enterprises
operating in the Bahamas are liable to pay annual license
fees. Non-resident entities, International Business
Companies, Limited Duration Companies and Exempted Limited
Partnerships are not liable for these fees; nor are
banks, trust companies, insurance companies, mutual
funds or ship holding companies, all of which have their
own separate fee regimes (see Offshore
Legal and Tax Regimes).
Business
License Fees depend on annual turnover and gross profit
percentage; the rules are complicated and professional
advice is necessary. Some illustrative situations are
as follows:
- Businesses
with turnover below $50,000 are exempt;
- Businesses
with turnover between $50,000 and $100,000 pay between
$250 and $800 depending on the level of gross profit;
- Larger
businesses pay gradually increasing amounts; a business
with turnover of $30m and a high gross profit percentage
might pay as much as $500,000 or 1% of turnover.
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Payroll Taxes
Under the
National Insurance Act 1972 as amended, Bahamian employers,
employees and the self-employed pay social security
contributions.
Employees
pay 3.4% of earnings (up to maximum earnings of $13,000
pa); employers pay 5.4% of earnings to the same maximum;
self-employed persons pay 8.8% of earnings to the same
maximum.
Although
all employers and employees pay these contributions,
whether or not they are resident, benefits can generally
be claimed only by resident Bahamians. Even in Paradise,
it seems, there are thorns on the roses. Expatriates
returning home to die at 60 after a lifetime of service
in the Bahamas may be able to get a refund of contributions,
or can elect to receive a pension.
In
a 2005 report, the Social Security Reform Commission,
after a 10-month review, recommended sweeping changes
to the 30-year-old benefits programme to ensure its
sustainability.
The
Commission, which was appointed in October 2003, made
13 key recommendations, including increasing the contribution
rate from 8.8 percent to 11.8 percent. The first increase
would come into effect in January 2011, and there would
be an increase by one percent every year until 2014.
Commission
Chairman Alfred Stewart has explained that since the
Fund started in 1975, there has not been an increase
in the contribution rate.
It
was also recommended that the retirement age be increased
from 65 to 67 and that the contribution requirement
for retirement pension be increased from 150 weeks (three
years) to 500 weeks (10 years).
In
addition, the Commission recommended that the ceiling
on insurable wages be increased to $500 per week and
thereafter adjusted annually in line with the average
change in the national wage index over the previous
three calendar years. The Commission had recommended
that this come into effect in January 2006.
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Stamp Duties
Stamp duties
are payable in a number of situations in the Bahamas.
The most important of these are company incorporation,
real estate transactions and overseas remittances of
Bahamian currency.
Stamp
duty on the capital (initially and on subsequent increases)
of a domestic limited company runs at $64 on the first
$5,000 and $3 on each additional $1,000.
Stamp
duty on real estate transactions ranges from 2% on small
amounts to 10% on sales over $250,000. It is normally
shared between the parties. There is a 1% stamp duty
on mortgages paid by the borrower.
Bahamian
currency exported from the jurisdiction is stamped at
0.25%.
Real Estate Tax
Real estate tax is levied on the following types of
land and real property:
- Developed
real estate on the island of New Providence;
- Developed
real estate on other islands if owned by non-Bahamian
persons;
- Undeveloped
real estate on New Providence owned by (you guessed
it) non-Bahamian persons.
Real
estate holdings must be declared annually to the Chief
Valuation Officer.
The
rates of tax are as follows:
- Owner-occupied
property:
| Value,
$ |
Rate
of tax, % |
| Up
to 250,000 |
Nil |
| 250,001
- 500,000 |
0.75 |
| Over
500,000 |
1.0
(max $35,000) |
- Other
property:
| Value,
$ |
Rate
of tax, % |
| Up
to 500,000 |
1.0 |
| Over
500,000 |
2.0 |
| Unimproved
property in New Providence |
3.0 |
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