The Bahamas has introduced a bill that introduces taxation for international business companies (IBC) and their income received abroad. Previously, such enterprises enjoyed a number of tax benefits and paid only for a license to conduct business activities in the Bahamas, therefore they were popular with many businessmen.
The bill provides that IBCs registered in the Bahamas will be required to pay tax on income received abroad from January 1, 2024. The updating of the legislation is caused by the country’s obligations to the EU and the OECD.
In 2022, the Bahamas were included in the list of non-EU countries. The Bahamas has agreed to end the practice of preferential treatment for international business in order to meet the demands of the international community for increased business transparency, deoffshorization and combating tax evasion.
The bill repeals and replaces the Bahamas Business Licensing Act of 2010. It provides:
- new rules for applying the business license fee;
- new tax rates depending on the amount of income;
- a list of activities from which income would be classified as “derived from operations in the Bahamas”.
What taxes will an IBC have to pay?
International business companies will be required to pay $2,500 on the first million of “income attributable to operations outside the Bahamas.” If income exceeds $1 million, a 0.25% fee will apply.
Financial institutions will be subject to different tax rates. Banks and trust companies will be subject to a higher tax rate of 1% on turnover. Other financial services companies will be subject to a rate of 1.25%. At the same time, the amount of the fee for all enterprises will not exceed the threshold of $100,000.
The income of international business companies will be considered derived from operations in the Bahamas if the firm carries out the following activities:
- sale or exploitation of tangible or intangible property registered in the Bahamas;
- export of goods outside the country;
- providing goods or services to persons who are classified as residents of The Bahamas for currency control purposes or who are in the country at the time of the transaction;
- professional services, including legal, accounting, consulting services, etc.