Doing business in Bahamas

How quickly can I set up a business?

The department of Inland Revenue provides a for step process for applying for Business Licences. https://inlandrevenue.finance.gov.bs

What is the minimum investment needed?

All non-Bahamians or Permanent Residents seeking to do business in The Bahamas must obtain prior approval from the Bahamas Investment Authority (BIA). The BIA is the gatekeeper of foreign direct investment in The Bahamas.

A minimum capital investment of BS$500,000 is required and the proposed investment must not be in an area reserved for 100% Bahamian participation.

How can I raise finance?

Own funds, private banking and or capital markets.

What are the legal requirements for setting up my business?

The Bahamas’ legal system is based on English Common Law. Appeals are heard by The Bahamas Court of Appeal, which sits year-round in Nassau, New Providence. The final appeal court is The Privy Council in the United Kingdom.

When you start a trading business in The Bahamas you must operate through a trading structure. The following types of structure are commonly used:

• Sole trader
• Partnership
• Company

Business vehicles can also combine to operate together as joint ventures, partnerships, companies and groups of different combinations of these.

What structure should I consider?

A wide range of options is available when selecting a structure for doing business in The Bahamas. Certain types of investment may require the use of a particular vehicle as in the case of bank formation or insurance business, which require a corporate structure. In the case of corporate structures company names must be approved by the Registrar of Companies. Other business names must be registered with the Registrar General’s Department under the Business Names Act. There are no restrictions on capitalization and there are no investor tax consequences.

Structures for doing business include Sole Proprietorships Limited Liability Companies, Companies Under The Companies Act 1992, Companies Under The International Business Companies Act, Unlimited Liability Companies Unlimited liability, Segregated Account Companies, Joint Ventures, General Partnership, Limited Liability Partnership, Undisclosed Partnerships, and Subsidiaries/Branches /Representative Offices.

What advice can you give me in regards to payroll and taxation requirements?

There are many considerations, employment rights and protections that a business needs to have in focus when doing business in The Bahamas. There are also financial penalties where legal obligations are not adhered to, so careful attention should be paid to the payroll, taxes and employment status rules when employing people.

Setting up as a new employer

All employers must register with the National Insurance Board (www.nib-bahamas.com), even if there is only one employee.

As an employer, you will be responsible for National Insurance Contributions (NICs).

Paying your employees

In The Bahamas, the Employment Act and Minimum Wages Act explain how and when employers must pay employees their wages for hours worked. Bahamian law establishes a minimum wage and overtime wages for workers.

New employees

When a new employee starts, NIB needs to be advised. There are wide ranging legal implications for individuals working in The Bahamas, so seeking professional advice early on can ensure compliance with the rules.

Other employment considerations

There is a whole host of other legal and employment issues to consider, including employment contracts, statutory rights to paid leave, maternity and paternity pay.

As there is the danger of financial penalties for non-compliance with the various rules, seeking professional advice early on when employing people in The Bahamas is always recommended.

International matters

• Extensive double tax treaty network
• The Bahamas generally follows the OECD Guidelines on transfer pricing – although SME’s exempt from some of the more onerous requirements.

Value added tax (VAT)

1. The Bahamas operates VAT and businesses (resident companies and overseas companies who have businesses established in The Bahamas), who make supplies (sales) over the VAT threshold (currently $100k) must register.
2. A Bahamas VAT registered business must charge and account for VAT, currently at the rate of 12%, on its taxable supplies. It is usually possible, however, to offset any VAT incurred on expenses that relate to business purchases.
3. VAT returns must be completed electronically at agreed intervals, usually every three months – although sometimes monthly. Payments must also be made electronically.
4. The Bahamas social security tax is known as national insurance (“NI”). NI contributions have to be paid by the workforce as a deduction from their gross salary (“employees NI”), and by employers (“employers NI”).

Customs duties

• Some goods imported into The Bahamas are subject to Custom Duties.

Employee taxes

• The Bahamas social security tax is known as national insurance (“NI”). NI contributions have to be paid by the workforce as a deduction from their gross salary (“employees NI”), and by employers (“employers NI”).
• Employers have an obligation to collect NI

Is there anything else that I should know?

Bahamas Investment Authority

The government’s proactive economic growth and development policies are guided by the Bahamas Investment Authority (BIA), which was established to reduce bureaucratic delays for domestic and international investors.

Operating from the Office of the Prime Minister, the BIA has been designated a “one-stop shop” designed to simplify investing in The Bahamas. The BIA serves as the administrative arm of the National Economic Council (NEC) and the Investments Board.

Foreign Investors seeking to establish a business in The Bahamas must submit to the BIA a project proposal with supporting documents. The proposal ultimately will be considered by NEC, an agency headed by The Prime Minister and that is responsible for the executive management of the National Investment Policy. The NEC effectively is the decision making body in respect of all commercial projects undertaken by foreign direct investors.

After approval by the NEC of a proposed investment project, and following on the establishment of the desired structure for conduct of the intended business, the investor must make application to the Ministry of Finance [Business Licence Unit] for a business licence.

Location and Climate

The Commonwealth of The Bahamas is an archipelago spanning 100,000 square-miles extending southeast from Florida in the United States of America to northern Hispaniola. The Bahamas has an estimated land area of 5,400 square miles made up of some 700 islands and 2,400 cays.

The Bahamian climate, mild throughout the year, is one of the great attractions of the area. The average temperature varies from the low 70s F (about 21 °C) during the winter to the low 80s F (about 27 °C) during the summer, and extremes seldom fall below the low 60s F (about 16 °C) or rise above the low 90s F (about 32 °C). The average annual rainfall is about 44 inches (1,120 mm), occurring mostly during the summer months. Prevailing winds, coming from the northeast in winter and from the southeast in summer, lend a cooling influence to a generally humid atmosphere.