Business in the Caribbean – Corporate formation in the Bahamas against the United States: the Caribbean shines
Americas News, NEW YORK, NY, Sat May 15, 2021: It is believed that it was in the Bahamas that Christopher Columbus first set foot in the Americas. Since then, this nation has had its exotic location and strategic position to its advantage. It was a British colony for most of the 17e and 18e centuries. Pirates preferred hiding places around islands for stolen treasure from ships passing through the region’s shipping lanes. Civil war and Prohibition benefited the Bahamas, but these 700 islands were economically devastated when they ended, that is, until they opened their doors to tourism.
Today, the Bahamas is not only a popular Caribbean tourist destination, but has a highly developed service sector. Despite some restrictions, the Bahamas generally have business-friendly regulations that make it easier start an LLC. It is also an attractive investment location. Compared to the 28% corporate tax proposed by President Biden in the United States, the 0% corporate tax in the Bahamas is very attractive to businesses.
What are the advantages of doing business in the Bahamas compared to the United States?
A pro-business and investor-friendly approach was encouraged by the International Business Companies Act passed in 1990. This made the Bahamas more than a popular tourist destination and opened the doors to foreign investors.
Foreign investment approval
All investors from all sectors of the Bahamas economy must seek approval from the Bahamas Investment Authority (BIA). The proposed activities must convince the BIA that they will benefit the nation. Some areas are reserved for islanders. These include property management, wholesale and retail, the domestic game industry, security services, are a few.
Some key areas such as financial literacy, capital investment, business plan, employment opportunities for islanders, source of business funds and all basic information on proposed shareholders are all taken into consideration. by the BIA.
All proposals approved by the BIA are presented to the National Economic Council, headed by the Prime Minister, for further consideration before a decision is made.
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Salaries for employees on sick leave, maternity leave, other employment related issues and pensions are covered by the program administered by the National Insurance Board (NIB). Everyone who works on the islands must make NIB contributions. All businesses, businesses and freelancers must register.
Contribution rates are 9.8% of actual wages with an insurable limit of just over 3,000 BSD per month. Employers pay 5.9% of contributions and the rest is paid by the employee.
Each company applies for a business license as soon as it obtains BIA approval. The process is quick and requires filling out a business license application form and a BSD 100 fee. Licensing is an annual requirement. Certain cases of non-resident companies are eligible for payment of an annual subscription of 300 BSD.
Regardless of turnover, all permanent businesses must file annual income tax returns. These are due before January 31st and taxes are payable before March 31st. Companies with a turnover of 100,000 BSD or more also submit financial results and a certified statement issued by a professional independent accountant.
Business license taxes are based on turnover and type of business and range from 0.5% to 3% of gross annual income.
Types of businesses
The type of business most frequently used by foreigners is the International Business Company (IBC). However, other types of businesses commonly used are the limited liability company (LLC) and the segregated account company (SAC).
Value added tax (VAT)
The standard rate of VAT is 12% and applies to almost all goods and services in the Bahamas. Businesses that expect to achieve an annual turnover of 100,000 BSD must register for VAT.
Persons carrying on business in the Bahamas are exempt from personal or corporate income tax on their profits. However, a 5% stamp duty is imposed on all types of currency exchange and money transfer paid outside the Bahamas for amounts of $ 500,000 and more transferred out of the country. Stamp duty applies to the sale of a business at 6% and mortgages at 1%.
There is also a property tax of between 0.75% and 2% on the market value of properties with a few exceptions.
About 50% of Bahamian government revenue comes from customs and excise duties with an average import duty of 45%. Some items like electronics, watches, jewelry and perfumes are duty free, while cigars are subject to 220% import duty.
Investments are encouraged in the Bahamas and the government has ensured a stable and secure environment for doing business. Maybe getting started can be a bit trickier than in the US, but the process is reasonably straightforward. Low taxes make the Caribbean extremely attractive to American businesses.