Thinking beyond borders
Extended business travelers are not taxed on their income in The Bahamas, however, they may be required to pay national insurance contributions.
Under the National Insurance Act 1972 and the amendments thereto, employers and employees in The Bahamas are required to pay national insurance contributions. Employees and employers are obligated to pay 3.9 percent and 5.9 percent, respectively; of the employees’ earnings up to a maximum annual earnings level of 32,244 Bahamian dollars (BSD). This maximum level is subject to a further increase every 2 years thereafter by the estimated increase in average wages.
National insurance is deducted from an employee’s salary and the employer is responsible for submitting the 9.8 percent contribution to the National Insurance Board by the 15th day of the following month.
Work permits are required for all expatriate employees who plan to work in The Bahamas. The work permit fee depends on the level/position of the employee, and ranges from BSD500–BSD12,500 per annum. Work permits are approved by The Bahamas Department of Immigration and the fee is determined on a case-by-case basis.
The Bahamas has entered into Tax Information Exchange Agreements (TIEA) with several countries, which provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the relevant parties, concerning taxes covered under TIEAs. Some of these TIEAs provide certain exclusive taxing rights in respect of income sources in other contracting countries.
If an entity is deemed to be doing business in The Bahamas, it may be subject to business license fees, which are generally calculated based on a percentage of the entity’s turnover. The impact of a permanent establishment on extended business travelers will not impact their Bahamian tax status, but will have implications concerning immigration, exchange control and national insurance matters.
There are no sales tax on goods in The Bahamas but as of 1st January, 2015 goods and services are subject to value-added tax at a rate of 7.5% and very few exemptions are available. Persons carrying on business from within The Bahamas with annual turnover from taxable activities of $100,000 or more must register for VAT. Hotel room nights are also subject to taxes VAT and certain levies regardless of the residency of the guest.
The Bahamas has data privacy laws. Organizations have a legal duty to keep data private and secure.
In The Bahamas, exchange control is administered by The Central Bank of The Bahamas (CBOB). The inflow and outflow of foreign currencies is monitored by CBOB and generally CBOB’s prior approval is required to transfer foreign currency out of The Bahamas. Employees working in The Bahamas with work permit visas may be eligible to repatriate a portion of their earnings on an annual basis, and to repatriate their Bahamian assets upon leaving The Bahamas.
The Commonwealth of The Bahamas welcomes international investors who wish to establish a business in The Bahamas. The Government of The Bahamas offers incentives for certain projects. The minimum capital requirements for such investments are BSD500,000 and the investment must not be in an area reserved exclusively for Bahamians. A proposal with supporting documents must be provided to the Bahamas Investment Authority (BIA). The application will be forwarded to the National Economic Council for determination. Once approval is granted, The BIA will coordinate with other Government agencies where required to facilitate the implementation of the project.
Annual or permanent residence status consideration is accelerated for major investors and owners of residence valued in excess of BSD500,000. International persons owning residences in The Bahamas are also eligible to receive a “Home Owners Card”, which entitles the owner, his/her spouse and minor children to enter and remain in The Bahamas for the duration of the validity of the card.