The Bahamas’ Department for Inland Revenue has introduced a tax levy on the overseas earnings of Bahamas-domiciled international business companies (IBCs) for the first time.
The new tax/levy is applicable from 1 January 2024. It has been introduced as part of the jurisdiction’s drive towards eliminating the preferential treatment of foreign entities and therefore meet its commitments to the European Union and Organisation for Economic Co-operation and Development. Legislation has been in place to remove the so-called ‘ring-fencing’ of IBCs since 2019, so the intentions of the government have been clear for some time.
The levy will apply to revenues generated by an IBC carrying on a business in or from within the Bahamas.
A “business” is defined as ‘…trade, profession, vocation, venture or undertaking, provision of personal services, technical and managerial skills, and the exploitation of tangible or intangible property for the purpose of obtaining income on a continuing basis from such property…’
IBC revenue is deemed to be from operations within the Bahamas if it is generated from the sale of or commercial benefit from property registered or located in the Bahamas, the export of goods, the sale or provision of services to persons within or resident in the Bahamas or professional services from the Bahamas.
Regulated investment funds and pure-equity-holding companies will be exempt.
For IBC revenues attributable to operations outside of the Bahamas:
A fee of BS$2,500 will be payable on revenues of up to BS$1 million. For revenues exceeding BS$1 million a 0,25 levy will be payable, rising to a maximum of BS$100,000.
For revenues attributable to operations from within the Bahamas for all entities the following rates will apply:
- For revenues exceeding BS$1 million, a 0.25% rate will be levied
- Banks and trust companies will be charged at the higher rate of 1% of turnover, up to a maximum of BS$100,000
- Other financial services companies will pay 1.25%, again up to a maximum of BS$100,000
- Family offices will pay BS$10,000 or 0.25% of turnover, whichever is greater
- All payments will be capped at BS$100,000.
Full details of the fee scales are set out in the Business Licence Bill which can be accessed here. The Bill supersedes the Business Licence Act 2010, which has been repealed.
The JTC team is available to discuss these developments or to answer any other questions you might have.
JTC established its Bahamas office in 2022. Our comprehensive suite of services provided from the Bahamas includes local private trust company formation and administration, international business company formation and administration, assistance in establishing foundations and executive entities, as well as directorship, nominee shareholder and secretarial services, along with a variety of other professional services to global corporate and private clients.