Registering your business in the Bahamas offers tax benefits, privacy protection, political stability, a strategic location, business-friendly regulations, and access to international markets, making it an appealing choice for entrepreneurs and investors.
Congratulations, you've decided to start a company.
But have you thought about where you are going to register the company?
Choosing the jurisdiction for your company has a significant bearing on the overall operations, and this is a decision you cannot take lightly.
The Bahamas has always been on top of the list of founders as a preferred location to register an international business company for several reasons - one due to them having a fairly straightforward process.
So read on to find out what's in store for you if you are headed to this island nation.
1. No Minimum Paid-Up Capital
The corporate laws of the Bahamas don't require offshore companies (known as International Business Companies as per the Bahamian laws) to have any minimum paid-up share capital.
This means that you have complete control over how much you want to incorporate a company with, and that amount can be as little as you want.
2. Tax Neutrality
Tax benefits are one of the major advantages of establishing a business in the Bahamian economic landscape.
You don't have to pay any taxes — this includes corporate tax, capital gains tax, income tax, inheritance tax, or sales tax.
You are only liable for licensing fees, property and stamp taxes, and tariffs for imports.
3. Flexible Immigration Policy
The Economic Permanent Residency offered by the Bahamian Government makes it easy for individuals to work and live in the country.
Individuals who hold a permanent residence card can clear immigration freely and reside in the Bahamas for any length of time.
4. Absolute Anonymity
As per the provisions of the International Business Companies Act of 1990, a foreign company can conduct its business in the Bahamas with complete privacy.
Even the names of the shareholders don't have to be provided to the Corporate Registry.
The Bahamas international business companies also don't have to comply with any annual reporting requirements.
5. No Exchange Control Laws
The offshore companies in the Bahamas are not subject to any exchange control laws.
They are allowed to transact freely in any currency.
However, any dealings in Bahamian Dollars should be approved by the Central Bank.
6. No Filings are Needed
Offshore companies don't need to file any statements of accounts.
The only requirement is to maintain the records that set out all the transactions, and the records should be maintained for five years from the date of the transaction.
Companies also have the flexibility to maintain the records outside the Bahamas.
However, the registered agent in the Bahamas should be informed about the incorporation documents.
7. Flexible Rules for Appointing a Director
Offshore companies only need a single director.
Both corporate and individual directorships are allowed, and the director doesn't have to be a resident of the Bahamas.
Appointment of nominee directors is also permitted.
The directors are also free to hold their meetings in any location and don't have to remain confined to the registered office address.
The Bahamian Company Law doesn't require you to appoint a company secretary either.
8. Bookkeeping Is Extremely Simple
There are no obligations for filing the account or annual returns.
Offshore companies are also not subject to any audit requirements.
9. Shareholder Requirements are Straightforward
You need to have at least one shareholder.
The shares should be registered, but no bearer shares are permitted to be issued by offshore companies.
You can issue both voting and non-voting shares.
Nominees shareholders can be appointed.
No annual general meetings need to be conducted for the shareholders.
How to Register an Offshore Company in the Bahamas
To register an offshore company in the Bahamas, you typically follow these steps:
- Choose a Registered Agent: You need a registered agent who is authorized to conduct business in the Bahamas. They will handle your incorporation process and represent you locally.
- Choose a Company Name: Select a unique name for your offshore company that complies with Bahamian regulations. Ensure it is not already in use and does not infringe on any trademarks.
- Prepare Documents: You will need to prepare various documents including Articles of Association, Memorandum of Association, and a registered office address in the Bahamas. You may also check if other supporting documents are needed.
- Submit Application: Your registered agent will help you submit the necessary application forms and documents to the Registrar General's Department of the Bahamas. These documents typically include the company's name, purpose of business, registered office address, and details of directors and shareholders.
- Pay Fees: You'll need to pay the required fees for the incorporation process, which vary depending on the type and size of the company.
- Wait for Approval: Once your application is submitted along with the required fees, you'll need to wait for approval from the Registrar General's Department. This process may take a few days to several weeks.
- Receive Certificate of Incorporation: Upon approval, you will receive a Certificate of Incorporation confirming that your offshore company is registered in the Bahamas.
- Comply with Regulations: Ensure that you comply with all legal and regulatory requirements for maintaining your offshore company in the Bahamas, including annual filings and fees.
It's advisable to work with a reputable law firm or corporate service provider experienced in offshore company registration in the Bahamas to navigate the process smoothly and ensure compliance with local laws and regulations.
Downsides to Incorporating In the Bahamas
Despite the advantages, there are certain challenges you may face when incorporating an offshore company in the Bahamas.
In 2018, the Bahamas passed the Commercial Entities (Substance Requirements) Act 2018 (the “Substance Act”) to prevent “shell” companies from being incorporated in the Bahamas to evade taxation in the home country.
As per the provisions of the Substance Act, require entities, including International Business Companies, that carry out the following activities to prove a substantial economic presence and real economic presence within the Bahamas.
These activities include:
- Banking business
- Insurance business
- Fund management business
- Financing and leasing business
- Headquarters business
- Distribution and service centers business
- Shipping business
- Commercial use of intellectual property
This is also applicable to a holding company that has one or more subsidiaries engaged in such activities.
To fulfill the substance test, a company needs to demonstrate:
- Full-time employees in the Bahamas
- An adequate level of annual expenditure incurred in the Bahamas or expenditure incurred towards outsourcing to service providers
- Adequate levels of board management and control in the Bahamas
- Physical offices in the Bahamas or expenditure incurred towards outsourcing to service providers in proportion to the entity's activities
Offshore companies cannot outsource any core income-generating activities to anyone outside the Bahamas.
While outsourcing to a third party within the Bahamas is allowed, the offshore company must exercise sufficient supervision and management.
Secondly, even though British English is the official language, most of the population speaks English with a Creole dialect.
Some even have a pronounced African accent.
As a result, you may find it challenging to communicate with various service providers and get the paperwork organized.
Thirdly, court systems in the Bahamas are not very efficient.
There is a significant backlog of cases, and it can take close to 545 days to resolve a commercial dispute.
It's not surprising that the Bahamas is ranked at 119 in the Doing Business 2020 report.
So What are My Options for Registering an Offshore Company?
While registering a company in the Bahamas looks fantastic on paper due to financial privacy and tax benefits, there are significant challenges involved in navigating your business.
But that's no reason to feel disheartened.
Why not head over to Hong Kong, which has emerged as the top choice for entrepreneurs in recent years for setting up an offshore company?
Hong Kong has been ranked 3rd by the World Bank for the ease of doing business and offers several advantages such as an attractive tax system, political stability, superior infrastructure, productive workforce, and access to Mainland China.
The process of setting up an offshore company in Hong Kong is incredibly straightforward, and you can register with Air Corporate to kickstart the process.
It only takes a few hours to register a company and open a corporate bank account, and you don't even need to travel to Hong Kong to get everything organized.
FAQs
The Bahamas Companies Registry, part of the Registrar General's Department, is pivotal in the country's business landscape by:
- Managing Company Incorporation: It oversees the incorporation of domestic and international business companies (IBCs), processing applications, maintaining records, and issuing certificates of incorporation.
- Providing Access to Company Information: The registry enables public access to company details, facilitating searches and providing certified copies of documents for transparency and accountability.
- Administering Corporate Governance: It ensures companies meet governance requirements by overseeing annual returns and maintaining statutory records.
- Fostering Economic Development: By streamlining registration processes and promoting transparency, the registry encourages entrepreneurship, attracts investment, and contributes to the country's economic growth.
This certificate serves as official proof that the company has been successfully incorporated and is recognized as a legal entity under Bahamian law. It typically contains important information such as the company's name, registration number, date of incorporation, and other relevant details related to its legal status. The certificate of registration is often required for various business transactions, contracts, and regulatory compliance purposes within The Bahamas and internationally.
