The Bahamas Individual Tax Guide

Worldwide Personal Tax and Immigration Guide 2021–22

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Bahamas ey.com/globaltaxguides

Nassau EY Mail address: P.O. Box N 3231 Nassau Bahamas

GMT -5 Street address: Caves Corporate Center Third Floor West Bay Street and Blake Road Nassau Bahamas

Executive contacts Michele Thompson Christopher J. Larkin

(resident in Grand Cayman, Cayman Islands)

+1 (242) 502-6000 Email: michele.thompson@bs.ey.com +1 (345) 814-8919 Email: chris.larkin@ky.ey.com

Immigration contact Bethany Martinez

(resident in Grand Cayman, Cayman Islands)

+1 (345) 814-8268 Email: bethany.martinez@ky.ey.com

A. Income tax Income is not taxed in the Bahamas.

B. Other taxes Capital gains. No tax is levied on capital gains.

Stamp duty. Transfers of real property are subject to a stamp duty

of 2.5% if realty is valued under BSD100,000 and 10% if the value exceeds BSD100,000. Although stamp duty typically applies to real estate transactions, it can also apply to other financial and commercial transactions.

Value-added tax. The Bahamas imposes value-added tax (VAT) on the purchase of various consumer goods and services. The VAT rate is 12%. Specific items that are subject to VAT can be found on the Bahamas Government website.

Business license fee. Business license fees are payable by any

person conducting or “carrying on” business in the Bahamas.

The rate ranges from a flat fee of BSD100 to 1.25% based on turnover. The license year is the calendar year. For businesses that do not need an annual business license, options, such as the Occasional Business License and Temporary Business License, are available.

On 30 May 2019, the government released the budget communication, which proposes changes to the current tax regime. At the time of writing, such tax changes had not taken effect.

C. Social security All employees and employers must contribute to the social security (national insurance) scheme. Contribution rates are based on the amount of weekly or monthly wages. Effective from 1 July

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2020, the ceiling increased to BSD710 weekly, BSD3,077 monthly or BSD36,924 annually. The total contribution rate is 9.8% of the employees’ wages, of which 3.9% is withheld from the employee and 5.9% is paid by the employer.

D. Tax treaties The Bahamas has not entered into any double tax treaties. The Bahamas has entered into Tax Information Exchange Agreements with several countries, including, but not limited to, Canada, Germany, the United Kingdom and the United States.

E. Temporary visas To enter the Bahamas, visitors from countries other than the United States or Canada must hold a passport that is valid for six months beyond the dates of travel and/or a valid Bahamas visa.

All visitors entering the Bahamas must have return or onward tickets. If visitors intend to stay for more than a few days, they may be asked to provide evidence of financial support.

Visas are required for all foreign nationals entering the Bahamas except the following: • British Commonwealth citizens and landed immigrants of Canada for visits not exceeding 30 days, if they possess Form 100 • US citizens (including those from Hawaii) entering as bona fide visitors for less than eight months • US residents (non-citizens) for visits of up to 30 days • Citizens of the following countries who have valid passports for stays up to the stated periods: — Eight months: Belgium, Greece, Iceland, Italy, Liechtenstein, Luxembourg, Netherlands, Norway, San Marino, Spain, Switzerland and Turkey — Three months: Austria, Denmark, Finland, France, Germany, Ireland, Israel, Japan, South Africa and Sweden — Fourteen days: Argentina, Bolivia, Brazil, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Uruguay and Venezuela Citizens of all other countries require both a valid passport and visa to enter the Bahamas.

F. Work permits The right of expatriates to work in the Bahamas is restricted and regulated by the Bahamas Government through the Department of Immigration. The government attempts to ensure that immigrants do not create unfair employment competition for Bahamians. An expatriate may not be offered a position for which a suitably qualified Bahamian is available.

No quota system exists for work permits. A work permit application is not considered if the employee is already in the Bahamas as a visitor.

The Department of Immigration considers the employment of a non-Bahamian if the prospective employee would be an asset to the Bahamas, and if the following conditions are met: • The employer has advertised and interviewed locally and has found no suitable Bahamian to fill the position.

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• The employer has obtained a vacancy certificate stating that no qualified Bahamian is registered who might fill the position.

Normally, it is the employer’s responsibility to submit the work permit application for the prospective employee. This includes all necessary documentation, along with a copy of the local job advertisement, the results of interviews with local applicants and a vacancy certificate. Employment may commence only after the work permit is approved and the fee is paid.

Cost of work permits. The annual fee for a work permit ranges from BSD2,000 for farm workers to BSD15,500 for senior professionals, such as executives. The fee is payable on the granting of the work permit.

Duration of initial work permit and renewals. A work permit is usu-

ally issued for one year, but may be issued for a longer p­ eriod for certain key positions under contract. Contracts should indicate that renewal is subject to obtaining immigration permission.

Many employment contracts stipulate that the employee is expected to train or be replaced by a suitable Bahamian within a stipulated period of time.

The renewal of a work permit on expiration is not automatic.

Application for renewal must be made, and generally permits are not renewed for expatriates who have been employed in the same capacity for more than five years. However, the government exercises some flexibility with respect to this policy and considers various mitigating circumstances.

The Bahamas does not issue permanent work permits, but does issue permanent residence permits that grant the right to work.

For further details, see Section G. Other important stipulations. Work permits are issued for a spe-

cific position only. Changes in position within an organization require the issuance of a new work permit, which is subject to the same conditions stated above.

An employer must inform the Department of Immigration within 30 days if an international employee is no longer employed. An expatriate who ceases to be employed must take his or her work permit to the department for cancellation within seven days after ceasing employment.

For each expatriate work permit issued, employers must post a bond to repatriate the employee and his or her dependents, if necessary, and to pay any public charges incurred by the employee.

Due to the complexity of the employment confirmation process, it is recommended that employers submit all applications three to four months in advance of the desired start of employment.

G. Residence permits Temporary residence. Individuals making the Bahamas their tem-

porary home may apply for annual residence permits. The annual cost of this permit is BSD2,000 for the head of a household and BSD100 for a spouse and each dependent. A person attending an institute of higher education in the Bahamas must pay BSD100 per year for an annual residence permit. Holders of annual

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residence permits may not work in the Bahamas under any circumstances.

Overseas investors who acquire residential property in the Bahamas are eligible for Home Owners’ Residence Cards, which are renewable annually. The annual cost of the card is BSD500.

The card facilitates entry into the Bahamas and entitles the owner, spouse and minor children to remain in the Bahamas for the period covered by the card. This card is most appropriate for seasonal residents. Holders of the card may seek local employment.

Permanent residence. Permanent residence with the right to work

is typically reserved for spouses of Bahamians or overseas individuals who can demonstrate strong financial and family ties to the Bahamas.

Male spouses of Bahamians may apply for permanent residence after five years of marriage. Females married to Bahamians may apply any time after marriage. The cost of a certificate of permanent residence for the spouse of a Bahamian is BSD1,000.

A permanent residence permit without the right to work may be suitable for foreign nationals who wish to reside in the Bahamas permanently. The one-time cost of a permanent residence permit ranges from BSD1,000 to BSD15,000 for the head of a household, depending on the length of prior residency in the Bahamas.

This type of permit is suitable for retirees who plan to spend most of their time in the Bahamas or for persons who will not be conducting business in the Bahamas. Applicants must provide evidence of adequate financial support, and character and financial references. The Bahamas Government gives accelerated consideration to owners of Bahamian residences valued at BSD500,000 or more.

Foreign nationals holding permanent residence certificates may have their spouses and dependent children under 18 years of age endorsed on the certificate at the time of the original application or at a subsequent date.

H. Family and personal considerations Family members. Spouses and dependents of expatriates holding valid work permits should apply for annual residence permits as outlined in Section G. Driver’s permits. Visitors to the Bahamas may drive legally using

their home country driver’s licenses for up to three months.

However, holders of work permits must have Bahamian driver’s licenses when they start to work.

Drivers holding valid licenses issued outside the Bahamas may present the license and receive a Bahamian license for BSD20 without completing verbal or written examinations. First-time drivers must take verbal and driving examinations.