Starting a company in an overseas jurisdiction is one of the best ways to minimise your taxes, reduce business overheads, protect your personal assets and access offshore banking facilities. The Bahamas is an ideal destination for entrepreneurs who are looking for overseas jurisdiction business solutions. Located in the Caribbean Sea, the territory is not only a top-rated tourist destination, but also a stable jurisdiction with incredible tax incentives that attract a lot of foreign direct investment.
If you are planning to register a Bahamas company, you’ve definitely made the right decision. This article outlines the benefits of a Bahamas International Business Company (IBC), as well as a detailed procedure for establishing one.
Advantages of a Bahamas IBC
The main benefit of starting a Bahamas offshore company is to take advantage of the country’s low-tax environment. The country exempts all IBCs from paying the vast majority of local taxes, including corporation tax, withholding tax, sales tax, capital gains tax and dividends tax. There is also no personal income taxation in the Bahamas, even though individuals and corporations have to pay other forms of tax, such as stamp duty on purchase of local real estate.
A low-tax environment and strong secrecy laws alone are not enough to make an offshore jurisdiction a prime destination for foreign direct investment. A stable economic and political environment is just as crucial.
Since attaining independence from British rule in 1973, the Bahamas has never looked back. With a legal system based on English common law, the country prides itself as a stronghold of social, political and economic stability. You can do business and accumulate private property, confident that your rights will be enforced by the state.
Minimal Exchange Controls and Fixed Exchange Rate
Exchange and capital controls can have a huge impact on international trade and commerce, since they limit the amount of foreign money that can be transacted in and out of a country. Although the Bahamian government enforces some exchange and capital controls on its residents, foreigners can move foreign currency into the nation and repatriate their profits with minimal formalities.
Besides relaxed exchange and capital controls, the local currency (Bahamian dollar) is pegged to the US dollar in the ratio of 1:1. With a fixed exchange rate, the risks that come along with currency fluctuations are eliminated.
Flexible Company Administration
Starting and operating a company in an overseas territory located thousands of miles away from your home country may appear complicated and costly, but it’s an incredibly easy and straightforward task. Many offshore territories, including the Bahamas, have created laws that simplify the process of running offshore companies. There is, for instance, no requirement for a Bahamas IBC to hire a company secretary, and if one is needed, Starting Business can provide the service at a cost-effective rate. Additionally, meetings can be held anywhere in the world, by telephone or other electronic means of communication.
Strategic Location for North and South America
Given the close proximity of the Bahamas to North and South America, a Bahamian IBC can be an ideal entity for accessing trade markets in territories such as the US, Cuba, Puerto Rico, Venezuela and Columbia.
Procedure for Registering a Bahamas IBC
With the benefits of a Bahamas IBC in mind, let’s switch gears to how you can get it up and running.
Settle on a Corporate Services Provider
The first step to forming an IBC in the Bahamas is to find a company or agency that has been licensed to provide financial and corporate services.
When choosing a corporate services provider, it’s advisable to do some research on the various providers, so that you can identify the most competent and reliable one. Being licensed doesn’t necessarily mean the provider is able to offer services that closely match your offshoring needs. You can also consider additional services offered by a provider, such as legal and financial advice, provision of nominee shareholders and directors, company seal creation, offshore bank account opening, bank card application, and mail collection and forwarding.
That said, Starting Business is one of the best corporate service providers you can hire to help with the formation of a Bahamas IBC. With extensive experience in the business of international corporate service and consulting, you are assured prompt and professional services.
Provide the Required Documents/Information
The next step is to provide Starting Business with the information and documents that are required for a Bahamas company formation.
Here is a list of what you need to provide:
- A unique company name – To avoid unnecessary delays, provide at least three names, in order of preference. Starting Business will conduct a name search, and if available, reserve it for a period of up to 56 days. Name reservation is useful in cases where a client is not ready to register a company right away.
- Names of the shareholders; the minimum number of shareholders of a Bahamas IBC is 1; a shareholder can be a physical person or a corporate body.
- Capital for the issued shares – This can be any amount, since there is no specific minimum capital requirement. The standard authorized share capital is $5,000. It’s also important to note that IBCs are not permitted to issue bearer shares – shares owned by whoever is in possession of the physical stock certificate. All shares should be registered.
- Names of at least one company director. As with shareholders, a director can be a physical or legal person of any nationality or residence.
- Notarized copies of shareholders’ and directors’ passports, or national identity cards or photographic driving license.
- Proof of residential address and bank reference for shareholders and directors.
- Registration fees.
- Information about intended activities of your prospective Bahamas IBC
In addition to providing these details, it’s an incorporation requirement for IBCs to have a registered office in the Bahamas. This is where the registers of shareholders and directors, minutes of company meetings, imprint of company seal and other documents are kept. Starting Business provides registered office services, too.
Wait for Your Company to Be Incorporated
Once you have submitted all the required documentation, Starting Business will file a memorandum of Association with the Registrar General to initiate the incorporation process. Even though the government can register a company in a matter of hours, it will take Starting Business between 3 to 10 business days to legalise the documents and deliver them to you.
Additional Information on Bahamas IBCs
Naming an IBC
The names of all IBCs must end with any of the following words or their corresponding abbreviations: Limited, Incorporated, Corporation, Sociedad Anonima or Societe Anonyme. Names that require licensing include: Bank, Assurance, Insurance, Re-Assurance, Trust, Building Society, Chartered, Municipal, Fund Management, Savings and Royal. In general, the Bahamas permits names that are in any language that uses the Latin alphabet, and prohibits names that are offensive or signify connection to a government authority.
Doing Business with Residents
Although Bahamas IBCs are typically used to conduct international businesses, some entrepreneurs often choose to trade in the territory of incorporation. If you wish to sell your products or services to Bahamians, your company must obtain exchange control approval from the central bank.
Permitted and Prohibited Activities
Although Bahamas IBCs are allowed to engage in a wide variety of business activities, including owning shares in other Bahamian companies, hiring professionals from the local labour market, maintaining accounts with Bahamian banks and owning local real estate property, they are prohibited from providing registered agent services and engaging in criminal activities.
Maintenance of an IBC
On the second year after incorporation, and every year after, owners or managers of IBCs are required to pay an annual maintenance fee set by the Bahamian government. IBCs that fail to pay the annual fees for a period of one year risk getting struck off the Bahamas Company Registry. However, the company can be restored upon payment of the defaulted annual fee.
Starting Business will also charge you a recurring fee for the provision of registered agent services, registered office and other subscribed services.
Re-domiciling the Company
If, for whatever reason, you wish to relocate your IBC from the Bahamas to another jurisdiction, you don’t have to dissolve or close it down. Bahamas allows IBCs to re-domicile in other jurisdictions that support or allow the practice. Similarly, a company established in another country can re-domicile in the Bahamas.
Dissolution of an IBC
In the Bahamas, dissolution of an IBC is a straightforward matter. All you need to do is inform your registered agent, who must then fill out dissolution documents and file them with the relevant office in the Registrar General’s Department. Upon payment of the dissolution fees, your company will be dissolved and a certificate of dissolution will be issued within 30 days.
That is pretty much everything you need to know about Bahamas company formation. Be sure to keep taps on amendments to the international business corporation act to keep your entity compliant at all times.
Do you own an offshore organization in the Bahamas? You are welcome to share your incorporation and general business experience with us in the comments section below!