What makes the Bahamas a financial sanctuary?

Image source: LOM Financial

The Bahamas is a natural Atlantic paradise that attracts millions of tourists every year but it’s not only tourism that makes it an international favorite—it’s also an important global financial services center for offshore investments, offshore portfolio management, and offshore discretionary management, among others. The island-nation has a stable economy and is considered one of the few tax-neutral jurisdictions that serve as financial sanctuary not just to its residents but also to international investors and businesses.

Non-residents can enjoy the benefits of working and investing in the country because of several tax treaties in the Bahamas. However, it’s important to take note that living full-time in the Bahamas does not excuse foreign residents from fulfilling their tax responsibilities in their home country.

Income tax and national insurance

One attractive benefit of working in the Bahamas is its zero personal income tax policies. Both employed by a company and self-employed individuals, however, are not excluded from paying a national insurance on salary if you are a resident.

The proceeds of these funds keep the country’s benefits system alive. However, the fund will only benefit Bahamian residents. Refunds, depending on how long they’ve been working in the Bahamas, can be claimed by expats after retirement, given that they return to their home country.

Value Added Tax

As of January 2015, a new tax policy—the value added tax—has been introduced to the Bahamas. Because of this, hotel, home rental, and similar services will have to pay 7.5 percent of the VAT, as an alternative to the previous 10 percent guest tax.

Stamp Duty and other taxes

This tax policy covers a different variety of circumstances. Examples are real estate transactions or even large amounts of currency transactions abroad. The fees are shared and divided between the two parties, the buyer, and the seller.

The Bahamas don’t have inheritance taxes and wealth taxes. Moreover, there is no need for a declaration of earnings in the country. This Caribbean gem holds very high regard to its bank privacy law.