BahamasTax Obligations Detailed

In the Bahamas, employer tax obligations primarily revolve around social security contributions and business license fees, as there is no corporate or personal income tax.

Social Security Contributions

Employers are mandated to contribute 5.9% of their employees' salaries to the National Insurance Board (NIB), while employees contribute 3.9%. These contributions are capped at a weekly insurable wage ceiling of BSD 810 as of July 2024 and are due by the 15th of the following month. This applies to employees earning at least BSD 2687 per month.

Business License Fees

Businesses operating in the Bahamas are required to obtain annual business licenses, the cost of which is determined by their annual turnover. Businesses with a turnover less than BSD 100,000 are exempt from these fees. Businesses with turnovers exceeding specified thresholds require independently audited turnover statements. Renewals are due by January 31st, with payments due by March 31st.

Value Added Tax (VAT)

A 12% VAT applies to most goods and services in the Bahamas, and businesses are responsible for collecting and remitting this tax. The VAT filing deadline is April 21st, 2025. However, under the payroll support programme, eligible businesses can defer VAT payments due between April and June.

Other Taxes and Duties

Other relevant taxes include import duties, stamp duty, and real property tax. Real property tax assessments are issued by October 15th, payable by March 31st of the following year. Employers with employees earning over ten times the monthly minimum wage are subject to a 9% payroll tax with certain exceptions. Companies must also pay a professional risk contribution ranging from 0.522% to 8.7% based on the risk level of the job.

Important Considerations

• The information provided pertains to the 2025 tax year and is current as of February 5, 2025. Regulations are subject to change, and staying informed about the latest updates is crucial.
• This information is for general guidance only, and consulting with a tax professional is recommended for specific situations.
• While the Bahamas doesn't have personal or corporate income tax, US citizens and green card holders living in the Bahamas are still subject to US tax obligations, including filing an annual US tax return.

In the Bahamas, employee tax deductions primarily consist of National Insurance Contributions (NICs). There is no personal income tax in the Bahamas.

National Insurance Contributions (NICs)

The NICs are mandatory contributions for social security benefits, covering areas like sickness, maternity, and unemployment. As of July 1st, 2022, the insurable wage ceiling is $740 per week.

• Employee Contribution: 3.9% of insurable earnings up to the ceiling.
• Employer Contribution: 5.9% of the employee's insurable earnings up to the ceiling.

The total NIC contribution rate is 9.8% of insurable earnings. Employers are responsible for deducting the employee's portion from their wages and remitting both portions to the National Insurance Board (NIB).

Payment and Deadlines

NIC payments are due monthly. Employers must submit payments to the NIB by the 15th of the month following the month the contributions were payable. For example, contributions for January are due by February 15th.

Other Deductions

While not strictly taxes, employers may also deduct other amounts from employee salaries, such as:

• Pension contributions: If the employee participates in a private pension plan.
• Union dues: If the employee is a member of a trade union.
• Court-ordered deductions: Such as garnishments or child support payments.

It's crucial for employers to maintain accurate records of all deductions and provide employees with payslips detailing these deductions.

It's important to remember that this information is current as of today, February 5, 2025, and might be subject to change. Consulting the National Insurance Board (NIB) website or seeking professional tax advice is recommended for the most up-to-date information.

The Bahamas levies a Value Added Tax (VAT) on most goods and services.

VAT Rates and Registration

• Standard Rate: 10% (applicable to most goods and services). A reduced rate of 5% will apply to basic food items sold in food stores starting April 1, 2025. This includes fresh produce, baby food, snacks, and frozen foods, but excludes prepared meals. The 5% rate also applies to imports of these food items.
• Zero Rate: 0% (applies to exports and certain international services).
• Exempt Supplies: Certain goods and services are VAT-exempt, including domestic financial services (excluding those with explicit fees), insurance, medical services, and residential rent.
• Registration Threshold: Businesses with an annual turnover exceeding BSD 100,000 (equivalent to USD 100,000) must register for VAT. This includes non-resident businesses providing digital services to consumers in the Bahamas. There's no special registration process for non-residents. Businesses must apply for registration within 14 days of reaching the threshold, and obtain a Taxpayer Identification Number (TIN) before VAT registration.
• Voluntary Registration: Not available. Registration is mandatory when the threshold is met.

VAT Filing and Payment

• Filing Frequency:
  • Monthly: for businesses with annual turnover exceeding BSD 5 million.
  • Quarterly: for businesses with annual turnover below BSD 5 million, but monthly filing can be requested. Businesses with annual turnovers less than BSD 400,000 may apply to file semi-annually.
• Filing Deadline: 21 days after the end of the VAT period. However, for large taxpayers (annual turnover exceeding $5 million) the deadline is 14 days after the end of the monthly VAT period. Returns and payments are submitted online via the Online Tax Administration System (OTAS).
• Record Keeping: Businesses are required to maintain records of all transactions for at least five years.

Additional Indirect Taxes

• Stamp Duty: 1% to 6% of the value of the instrument or transaction. Some transactions have fixed fees, such as BSD 0.40 per cheque or bank withdrawal.
• Business Licence Tax: Ranges from a flat fee of BSD 100 to 3% of turnover, depending on the industry. An annual license renewal is due by January 31st, and payment by March 31st.
• Real Property Tax: Rates vary according to the market value and property type (residential or commercial). Residential rates range from a flat fee of BSD 300 up to 0.625% of market value. Commercial rates range from 0.75% to 2% of market value. The declaration of property for assessment is due by December 31st each year. Tax payments are due by March 31st.

This information is current as of February 5, 2025, and may be subject to change. For the most up-to-date information, consult the Department of Inland Revenue (DIR) of The Bahamas.

The Bahamas offers a variety of tax incentives for individuals and businesses.

Tax Advantages for Residents and Businesses

The Bahamas boasts a tax-neutral environment, exempting residents from taxes on personal income, inheritance, capital gains, and corporate earnings. Dividends and sales are also tax-free. This applies to all resident corporations, partnerships, individuals, and trusts.

Investment Incentives

The government provides several investment incentives, including exemptions from customs duties on approved raw materials, equipment, and building supplies. Real property tax exemptions are also available for up to 20 years. Additional incentives, such as waivers on import duties and property tax abatement, are sometimes granted, and in certain cases, land grants or extended leases for private development are available at below-market rates. These incentives are often negotiated directly with the Bahamas Investment Authority (BIA).

Industry-Specific Incentives

Several acts offer industry-specific incentives:

• Hotels Encouragement Act: Provides duty-free entry of approved construction materials, furnishings, and fixtures for hotel development, along with real property tax exemptions/concessions for the first 20 years of operation. Hotels with a minimum of four guest rooms on a Family Island and ten rooms in New Providence qualify.
• Industries Encouragement Act: Offers duty-free concessions for importing machinery, raw materials, and building supplies for manufacturing entities, in addition to a 15-year exemption from Real Property Tax. Duty-free concessions are valid for the first five years of operation, followed by a reduced duty rate of 10% on approved imported materials and equipment.
• Bahamas Vacation Plan and Time Sharing Act: Provides duty-free concessions for building supplies used in timeshare facility construction.
• City of Nassau Revitalization Act: Offers incentives and duty concessions for restoring, repairing, and upgrading residential and commercial buildings in Nassau.
• Other Acts: The Export Manufacturing Industries Encouragement Act, Agricultural Manufactories Act, and Spirits and Beer Manufacture Act provide exemptions from customs duties on building materials, equipment, and approved raw materials, plus real property tax exemptions for up to 20 years.

Free Trade Zones

• Free Trade Zones Act: Designates specific areas as free industrial and commercial zones.
• Hawksbill Creek Agreement Act: Grants the Freeport Port Area, a free trade zone in Grand Bahama, freedom from all taxes until 2015 and exemption from excise taxes, stamp duties, and most customs duties until 2054.

Special Tax Regimes

• Economic Permanent Residency: Individuals investing at least $750,000 in real estate can apply for permanent residency, which includes tax benefits.
• Annual Residence Scheme: Allows individuals to maintain tax residency in the Bahamas by residing in the country for a specific number of days annually.

Additional Considerations

• Small & Medium Business Tax Concessions: These concessions provide duty-free exemptions on items needed to start or expand businesses, including first-time inventory. Specific guidelines and an application process are available.
• Value Added Tax (VAT): Businesses with an annual revenue turnover of at least $100,000 must register with the government to obtain a Tax Identification Number and a VAT Certificate. The standard VAT rate in the Bahamas is 10%.

Note: This information is current as of February 5, 2025, and may be subject to change. Consulting with a tax professional is recommended for the most up-to-date information and personalized advice.