The Bahamas is an independent country made up of 700 islands and over 1,000 small cays located off the southeast coast of Florida and the southeast tip of Cuba. The capital city, Nassau, is the financial center of The Bahamas and is easily accessible with direct flights from most metropolitian areas.
One of the major attractions of The Bahamas as a financial center is the absence of corporate, personal income, capital gains, withholding, inheritance, and estate taxes. The Bahamas has a long history as an offshore financial center, dating back to the 1930s. As an independent nation since 1973, The Bahamas has been able to create legislation that meets the needs of the modern financial services industry. Unlike many other offshore financial centers, The Bahamas is not influenced by external pressures, such as those from the European Union and the United States, allowing it to chart its own course.
The Bahamas offers a variety of financial services including offshore banking, trust and company formation, and fund management. The introduction of the International Business Companies (IBC) Act in 1989 helped to establish The Bahamas as a modern offshore finance center, attracting fund management groups including Templeton. The Bahamas is a popular jurisdiction for offshore companies, with almost 100,000 International Business Companies (IBCs) registered there. The IBC Act in The Bahamas is highly flexible and user-friendly, making it easy to form an IBC within a few days. IBCs can hold Bahamian bank accounts, partnerships, and trust assets and can trade in any currency on any international exchange or market.
The Bahamas is also a well-regarded offshore trust jurisdiction and is expected to become even more popular in the future. The Trustee Act was recently updated and is now one of the most modern in the offshore world. In addition, the Fraudulent Dispositions Act of 1991 offers certain advantages to trust settlors. Trust assets are generally protected from litigation that begins more than two years after the assets were placed in the trust. Foreign judgments are not recognized, and creditors must bring an action in the courts of The Bahamas to recover trust assets, proving that the trust settlor had the intent to defraud creditors.
In addition to being a favorable location for offshore trusts, hedge funds, and companies, The Bahamas will soon launch the Bahamas International Securities Exchange (BISX). The exchange will have two tiers: a domestic exchange that will initially be closed to international investors and an international tier that will include both international companies listed exclusively on BISX and mirror listings for companies with other home exchanges. The Bahamas also plans to introduce Bahamas International Depository Receipts (BDRs), which are similar to the successful American Depository Receipts (ADRs) in the United States. BDRs will be marketed to small and medium-sized companies in emerging markets that cannot afford the costs and listing requirements of larger exchanges in other financial centers such as New York and London.
For the international investor, the advantages of The Bahamas include:
• Excellent financial supervision and regulation.
• Government very committed to supporting international financial activities.
• Trust and company law based on principles of English Common Law.
• Fast and inexpensive company and trust formation and registration.
• Access to the new BISX.
• Low overall administrative costs.
• No Bahamian estate or gift taxes.
• No Bahamian capital gains taxes.
• No Bahamian income tax.