The General Guide To Starting An IBC In The Bahamas

The Bahamas is one of the most sought-after offshore jurisdictions where investors far and wide have come to establish their businesses.

With more than 700 islands and islets a part of its territory, this Caribbean country is home to various international consortiums and corporations looking to operate without complicated legal, financial, and tax-related matters.

An IBC (International Business Company) remains the most picked entity type to incorporate in this jurisdiction, mainly due to its tax-friendly nature and other legally less restrictive aspects.

If you’re looking to start an IBC in the Bahamas, look no further than this guide right here with all the necessary procedural information you need and more.

Pros & Cons of IBCs in the Bahamas

Here we’ll go through the prime hallmarks and potential minuses that an offshore jurisdiction like the Bahamas has to offer.

Pros

High Business Confidentiality

An IBC entity in the Bahamas has a high level of business confidentiality that safeguards shareholders. No public record of names or any other kind of personal information concerning its shareholders is to be maintained or disclosed publicly without consent.

Names of directors and officers are publicly available since they are prerequisites when filing the Register of Directors with the Bahamas Registrar General’s Department. However, the use of a nominee director is still allowed. Shareholder meetings can happen via telephone or any other electronic communication.

Furthermore, an IBC in the Bahamas does not have to file annual returns and financial records can be either kept domestically or outside of the jurisdiction.

They are retrievable upon compliance requests and are not subject to any third-party auditing. However, the company is still required to pay an annual fee according to its size of operation.

Stable Government and Economy

Ever since exiting a three-century-long suzerainty from the British Crown, the Bahamas has developed a robust and reliable legal system based on the English common law. This was the foundation for the country’s subsequent growth and development over the ensuing decades.

Aside from its flourishing tourism industry, the country’s main streams of revenue were from property taxes, customs duties, and stamp duties. All of which have tax mitigation policies to further facilitate a business-friendly environment.

Favorable Taxation

Most investors come to the Bahamas for its corporate tax exemptions. According to The International Companies Act 2000, an IBC incorporated in the Bahamas is relieved of stamp duties and taxes as follows:

• Corporate income tax
• Capital gains tax
• Value-added tax
• Wealth tax
• Sales tax
• Estate tax
• Gift tax
• Inheritance tax

The Bahamas is different from other low-tax jurisdictions in the sense that it reinforces its favorable tax apparatus with a robust economy and a stable political landscape that will continue to see growth as the number of investors increase.

Relaxed Exchange Control

Exchange control is regulated via fiscal policies that limit the number of foreign transactions going in and out of the country. This is to ensure the stability of the external reserves and integrity of the Bahamian dollar which is pegged 1:1 to the US dollar, making it a currency fit for investment.

All IBCs in the Bahamas are free of exchange controls and can circulate their foreign money and repatriate it freely with little to no formalities.

Cons

 Language Barrier

Although conducting business in a foreign land is already an administrative headache on its own, the biggest hindrance that many will encounter is the inability to converse in another native tongue.

And the fact that about 75% of Bahamians are not English speakers further adds to the necessity of having a solid command of the native language before attempting to do business on their shore.

Possible Shift in Legislation

Changes in legislation can often affect business operations in unprecedented ways, and there’s no way of telling the time and scale of the change. This can come under disruptive tax-reformation policies or tightened regulations.

Complicated Logistics

The global expansion comes at a cost as moving assets and operations to the international landscape involves a lot of complex strategic planning.

Entrepreneurs have to navigate through the legal and infrastructural complexities while also considering the cultural difference of an entirely new business environment.

On top of this, factors such as product quality and integrity will probably be hard to maintain as not all offshore workforces have sufficient expertise to cater to production requirements.

The Bahamas IBC Incorporation Procedure

The following is an overview of an IBC incorporation procedure in the Bahamas.

Choose a Company Name

The first thing is to get your company name in place, which you need to comply with the IBC naming requirements.

In particular, the names of all IBCs must end with any of the following words: Limited, Incorporated, Corporation, Sociedad Anonima or Societe Anonyme or their corresponding abbreviations: “Ltd.”, “Inc.” or “SA”.

The name must also not have ties to any existing governmental agenda or group and must be void of all controversial and offensive implications.

A special license is needed for IBC names that have the following words: bank, building society, savings, loans, insurance, assurance, reinsurance, fund management, investment fund, trust, trustees, Chamber of Commerce, university, and municipal.

Seek an Incorporation Service Provider

It’s required by relevant law that a company that wishes to incorporate as an IBC in the Bahamas must seek out a third-party registered filing agent to do the application.

All IBCs in the Bahamas are registered under one main piece of legislation, namely the International Business Companies Act 2000.

The act of incorporation is done through the filing of the Memorandum and Articles along with the compliance certificate from the chosen registered agent of the company in question.

Processing time is usually around 3-5 business days, after which a Certificate of Incorporation is issued with the time of initial document filing stated.

Fulfill Incorporation Requirements

Required documents for registering a Bahamas IBC

• Notarized passport copies
• Bank reference
• Notarized proof of residence
• Professional character reference
• Due diligence form

Bahamas IBCs’ corporate structure requirements

In addition to the above submission, there are other corporate details that an IBC needs to comply with, including:

Company shares. IBCs are allowed to issue the following types of shares: registered shares, shares of no par value, voting and non-voting shares, preference shares, and redeemable shares.

*Two subscribers are required and shares can be transferred to a person or entity.

Required capital. The normal share capital requirement is U.S. $50,000 which has the minimum duty and a license fee of US 350$, applicable upon registration and annually.

Directors. At least one director is needed as part of incorporation prerequisites, note that this title can be a person or corporate entity and does not have a requirement on nationality. Particulars of a director are available to the public but a nominee director is permitted if anonymity is required.

Shareholders. Just a single shareholder is required but there should be two subscribers. Offers may then be moved to a solitary individual or substance. A Register of Members must be kept at the Registered office, away from the general public.

Registered office. An IBC in the Bahamas needs to have a registered office in place in which meetings between shareholder meetings are held and important documents like the Register of Members, Register of Directors and Shareholders, Meetings Minutes, the Memorandum & Articles of Association, etc.

Restriction on business activities. Certain business activities are restricted for an IBC in the Bahamas such as banking, collective investment schemes, trust management, trusteeship, the rendering of investment advice, etc.

Approval by the Bahamian government and corresponding business licenses are required if an IBC wishes to move on with the mentioned activities.

Once the submission has been made to the registered agent, the Memorandum will then be filed to the Registrar to begin the incorporation process. As mentioned before, this will usually take 3 – 5 business days to complete.

Economic Substance Impact on the Bahamas IBC

The Bahamian government issued The Commercial Entities (Substance Requirements) Act, 2018 (“CESRA”) which came into force on December 31st. Bahamas economic substance rule applies to certain “included entities” carrying out relevant activities as below:

• Banking business
• Insurance business
• Fund management business
• Finance and leasing business
• Headquarters business
• Shipping business
• Distribution and service center business
• Intellectual property business
• Subsidiaries of a holding company that are engaged in one of the above activities.

For an IBC to substantiate its economic presence, it must demonstrate its CIGA (Core Income Generating Activities) and adequate administrative control over its business. Visit our article on Bahamas Economic Substance to find out more about how to fulfill CESRA’s key compliance requirements.

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Other Information on IBCs in the Bahamas

Re-domiciliation

If an IBC requests to transfer to a different jurisdiction for whatever reason, it is allowed to do so as long as the recipient jurisdiction allows the practice.

This can be done without dissolution or cessation of operation of the IBC. The same applies to any foreign IBC that wishes to re-domicile in the Bahamas.

Dissolution

An IBC needs to inform its registered agent of the dissolution so that it can file the necessary paperwork and send them to the Registrar.

Once the dissolution fee has been paid, the IBC is officially dissolved and a certificate of dissolution should arrive after 30 days.

Mergers & Consolidation

If there is to be a merger or consolidation between an IBC and another IBC / international company/subsidiary/foreign company, a written agreement must be signed by the directors of both sides.

Opening a Bank Account

The Bahamas is home to some of the most reputable banks with more than half a decade of financial experience under their belt. They are highly regulated by the Banks Act and The Banks and Trust Regulations Act.

On top of this, the Bahamian Dollar proves to be a valuable investment currency as the regulatory system has made sure that it can stand at a 1:1 ratio with the US Dollar.

However, having a business bank account opened with local banks can be quite challenging for most non-resident Bahamas IBCs.

BBCIncorp has long-term relationships with top-listed banks and can offer bank account opening support as a supplement to our company formation service. Give us more information about your account opening need.

Conclusion

Incorporating as an IBC in the Bahamas gives your business valuable tax mitigations while staying legitimate in the eyes of regulators.

If you wish to start or continue your company in this widely recognized offshore jurisdiction, our support team is more than ready to assist you via chat messaging or email at service@bbcincorp.com.