Thinking beyond borders
In The Bahamas there are no income, capital gains, wealth, inheritance, succession, and gift or unemployment taxes. Extended business travelers are not taxed on their income in The Bahamas, however, they may be required to pay national insurance contributions
Liability for social security (Bahamas National Insurance)
Under the National Insurance Act 1972 and the amendments thereto, employers and employees in The Bahamas are required to pay national insurance contributions. Employees and employers are obligated to pay 3.9 percent and 5.9 percent, respectively; of the employees’ earnings up to a maximum annual earnings level of 670 weekly Bahamian dollars (BSD) or BSD2,903 monthly (totaling a maximum annual salary of BSD34,836). This maximum level is effective from 1 July 2018 and is subject to a further increase every 2 years thereafter by the estimated increase in average wages. An update to the National Insurance rates and ceiling is scheduled for 1 July 2020. Details of the changes are currently not available.
National insurance is deducted from an employee’s salary and the employer is responsible for submitting the total of 9.8 percent contribution to the National Insurance Board by the 15th day of the following month.
Non-compliance with regulations regarding national insurance is considered an offence, and can result in imprisonment and/or fines.
Work permit / visa requirements
Work permits are required for all expatriate employees who plan to work in The Bahamas. A “Short Term Work Permit / Visa” is required for any non-Bahamian who wishes to work in the Bahamas for up to 90 days. A “Long Term Work Permit” is required for any non-Bahamian who wishes to work in the Bahamas for a period that exceeds 90 days.” The work permit fee depends on the level/position of the employee, and ranges from BSD250–BSD15,500 per annum. Work permits are approved by The Bahamas Department of Immigration and the fee is determined on a case-by-case basis.
Double taxation treaties
As the Bahamas does not levy direct taxes, there are no double tax treaties between the Bahamas and other countries/jurisdictions. However, The Bahamas has entered into Tax Information Exchange Agreements (TIEA) with several countries/jurisdictions, which provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the relevant parties, concerning taxes covered under TIEAs.
Permanent establishment implications
If an entity is deemed to be conducting business in The Bahamas, it may be subject to business license fees, which are generally calculated based on a percentage of the entity’s turnover. The impact of a permanent establishment on extended business travelers will not impact their Bahamian tax status, but will have implications concerning immigration, exchange control and national insurance matters.
Value Added Tax (VAT), came into effect in The Bahamas on 1 January 2015 at a rate of 7.5 percent and was increased to 12 percent effective 1 July 2018.
Local data privacy requirements
The Bahamas has data privacy laws. Organizations have a legal duty to keep data private and secure.
In The Bahamas, exchange control is administered by The Central Bank of The Bahamas (“CBOB”). The inflow and outflow of foreign currencies is monitored by CBOB and generally CBOB’s prior approval is required to transfer foreign currency out of The Bahamas.
Investment incentives for international investors
The Commonwealth of The Bahamas welcomes international investors who wish to establish a business in The Bahamas. The Government of The Bahamas offers incentives for certain projects. These incentives include duty free import of materials/machinery and real property tax exemptions/concessions. The minimum capital requirements for such investments are BSD500,000 and the investment must not be in an area reserved exclusively for Bahamians. A proposal with supporting documents must be provided to the Bahamas Investment Authority (BIA). The application will be forwarded to the National Economic Council for determination. Once approval is granted, The BIA will coordinate with other Government agencies where required to facilitate the implementation of the project.
Annual residence status consideration is accelerated for owners of residences in The Bahamas. Permanent residence status consideration is accelerated for major investors of at least BSD1,500,000 and owners of residence valued at least BSD1,500,000. International persons owning residences in The Bahamas are also eligible to receive a “Home Owners Card”, which entitles the owner, their spouse and minor children to enter and remain in The Bahamas for the duration of the validity of the card.
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All information contained in this publication is summarized by KPMG Advisory Services Ltd., a Bahamian company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the National Insurance Act of 1974 and its subsequent amendments; the website of The National Insurance Board of the Commonwealth of The Bahamas; the Immigration Act of 1967 and its subsequent amendments; the website of the Department of Immigration of the Commonwealth of The Bahamas; the website of the Custom’s Department of the Commonwealth of The Bahamas; the Value Added Tax Act of 2014 and its subsequent amendments; the Data Protection (Privacy of Personal Information) Act of 2007; the website of The Investment Authority of the Commonwealth of The Bahamas.