Doing Business In The Bahamas

I. INTRODUCTION

Higgs & Johnson, counsel and attorneys at law were established as a firm in legal practice 50 years ago.

Higgs & Johnson has a comprehensive commercial practice based in Nassau and are available to assist their clients in all legal aspects of 'doing business in The Bahamas'. The firm intends, by way of this on-line presentation, to provide users with an overview of legal requirements and procedures which will be relevant to any serious interest in doing business in The Bahamas or of using the various financial services which are available in The Bahamas to the offshore client.

'Doing Business in The Bahamas' can, for our purposes be divided into 2 parts (1) direct inward investment and (2) use of offshore financial services.

The various main areas within each of the two categories which attract the greatest interest and which will be covered in subsequent submissions are set out at the end of this introduction.

Before we set out our main areas of doing business it will be helpful to preface that treatment with a statement of the Bahamas Government's current National Investment policy which follows verbatim:

• Bahamas Investment Policy

A. Government Economic Policy

The Government of the Commonwealth of The Bahamas is committed to building an economic environment in which free enterprise can flourish; where the Government assumes its proper role as regulator and facilitator of economic development; where the ideals of transparancy, fair play and equality of treatment are paramount; and a policy that maintains a stable society in which all people are afforded the opportunity to realize their maximum potential. In this regard, the National Investment Policy is designed to support an investment friendly climate; guarantees the complementarity of Bahamian and overseas investments; fosters appropriate linkages with all sectors of the economy, in particular, the tourism and financial services sectors; encourages the exploitation of our natural resources in an environmentally sound and sustainable manner; provides for the maximum level of employment; guarantees an acceptable level of economic security and generally fosters the economic growth and development of The Bahamas.

B. The Investment Environment

To undergird the National Investment Policy the Government will provide:

• A politically stable environment conducive to private investment;
• An atmosphere where investments are safe and the expropriation of investment capital is not a considered option;
• A legal environment based on a long tradition of parliamentary democracy, the rule of constitutional and statute laws and where security of life and personal property are guaranteed;
• A stable macroeconomic environment bolstered by a prudent fiscal policy, a stable exchange rate, flexible exchange control rules and free trade;
• An environment in which freedom from Capital Gains, Inheritance, Withholding, Profit Remittance, Corporate, Royalties, Sales, Personal Income, Dividends, Payroll and Interest Taxes is ensured.
• Essential public services, an adequately equipped police constabulary, modern health and education facilities and other social services;
• Dependable public utilities; and
• Essential public infrastructure such as roads, ports and airports.

C. International Financial Centre

The Government is committed to enhancing the image of The Bahamas as an international financial centre. To this end the Government will:

• maintain The Bahamas as a leading financial services centre;
• monitor all developments in the international financial markets and amend any rules, regulations or legislation that would preserve and enhance the competitiveness of the financial services sector of the Bahamian economy;
• ensure the operation of a clean financial centre with specific rules and regulation to prevent the laundering of criminally derived assets;
• support The Central Bank of The Bahamas in its commitment to bank supervision and promoting high standards of conduct and sound banking practices;
• support the self regulatory measures of the Association of International Bank and Trust Companies (AIBT), particularly, the established code of conduct for bank and trust companies;
• continue enforcement of our bank secrecy laws.

D. Investment Incentives

Investment incentives under the following Acts include exemption from the payment of customs duties on building materials, equipment and approved raw materials and real property taxes for periods up to twenty years:

• The Hotels Encouragement Act
• The Industries Encouragement Act
• The Export Manufacturing Industries Encouragement Act
• The Bahamas Free Trade Zone Act
• The Agricultural Manufactories Act
• The Spirits and Beer Manufacture Act

Note: Custom duty exemption do not apply to personal consumables.

• Investors may acquire publicly owned lands for approved developments on concessionary terms; and
• Acquire low cost space for lease for industrial enterprises.
• Government will provide special training and retraining for Bahamian workers to ensure the continuing availability of a highly skilled labour force.

E. Preferential Trade Incentives

Business located in The Bahamas may benefit from the following preferential trade arrangements:

• The Lome Convention
• General System of Preference (GSP)
• Caribcan
• Caribbean Basin Initiative

F. Administration of The Investment Policy

Executive Management of the Investment Policy is resident in the National Economic Council (NEC), headed by the Prime Minister and operational activities will be the responsibility of the Bahamas Investment Authority (BIA) or the Investors' "One-Stop-Shop".

G. Establishing a Business In The Bahamas

An international investor seeking to do business in The Bahamas should submit to BIA a project proposal, along with supporting documents. The proposal should provide the information indicated in the following Project Proposal Guideline.

PROJECT PROPOSAL GUIDELINE

Name

Address:                 (include telephone /fax)

Description of Proposal: (an executive summary of project)

Type of Business:        (state whether entity is share company,
                          partnership, Individual or joint-venture)

Principals:              (persons investing in the venture or major
                          beneficial shareholders)

Proposed Location

Land or Factory Space Requirements

Proposed Start Up Date

Management/Personnel     (years of experience, success of similar
Requirements:             previous or current activity; work permits,
                          if any, required for key personnel and or
                          non-key personnel)

Employment Projections:  (number of Bahamian and non-Bahamian employees)

Capital Investment:      (indicate the total capital investment to be
                          made in the project, and provide a breakdown
                          of the items involved and an estimate for
                          start up costs)

Financial Arrangement:   (i.e. a letter of credit from a financial
                          institution or a net worth statement for each
                          principal)

Environmental Impact:    (toxic waste, disposal procedures; toxic input)

Concessions Sought:      (Customs Duty Exemptions) 

H. General

To ensure the maximum benefit to The Bahamas from the National Investment Policy, certain immigration provisions will apply:

WORK PERMITS -
Necessary work permits for key personnel will be granted. Businesses requiring permits for persons other than key personnel are encouraged to discuss these requests with the Bahamas Investment Authority in advance.

INTERNATIONAL OWNERS OF SECOND HOMES -
Overseas Investors may acquire residential properties in The Bahamas of up to five acres without prior Government approval. Such acquisitions are required to be registered in accordance with the International Persons Landholding Act. Second Home Owners are eligible for a Home Owners Residence Card, renewable annually. This card will facilitate entry into The Bahamas, and entitle the owner, his spouse and minor children to enter and remain in The Bahamas for the duration of the validity of the card. Application may be made to the Director of Immigration.

ANNUAL OR PERMANENT RESIDENCE -
Accelerated consideration of applications for annual or permanent residence will be given to major international investors and fit and proper owners of residence valued at $500,000 or more.

AREAS ESPECIALLY TARGETED FOR OVERSEAS INVESTORS -

• Touristic Resorts
• Upscale Condominium, Time share and Second Home Development
• International Business Centre
• Marinas
• Information and Data Processing Services
• Assembly Industries
• High-Tech Services
• Ship Repair and other services
• Light Manufacturing for export
• Agro-Industries
• Food Processing
• Mariculture
• Banking and other Financial Services
• Captive Insurance
• Aircraft Services
• Pharmaceutical manufacture
• Off-shore Medical Centres

NB. This list is not exhaustive and investors interested in areas not included are encouraged to bring their interest to the attention of BIA. Please note that investments of less than $250,000 will not be considered.

LOCAL PARTNERS IN JOINT VENTURES -
International investors are encouraged to establish joint ventures with Bahamian partners. The choice of such Bahamian partners is in the absolute discretion of the investor.

AREAS RESERVED FOR BAHAMIANS -

• Wholesale and Retail Operations;
• Commission agencies engaged in the import/export trade;
• Real estate and domestic property management agencies;
• Domestic newspapers and magazine publications;
• Domestic advertising and public relations firms;
• Nightclubs and restaurants, except specialty, gourmet and ethnic restaurants, restaurants operating in a hotel, resort complex or tourist attraction;
• Security services;
• Domestic distribution of building supplies;
• Construction companies, except for special structures for which international expertise is required;
• Personal cosmetic / beauty establishments
• Shallow water scale-fish, crustacea, mollusks and sponge-fishing operations;
• Auto and appliance service operations; and
• Public transportation.

International Investors may engage in the wholesale distribution of any product they produce locally.

1. DIRECT INVESTMENT INTO THE BAHAMAS

• Residential Purchases
• Land and resort development
• Establishment of offshore banks and trust companies
• living in The Bahamas
• working in The Bahamas
• special projects
• labour law

2. BAHAMAS OFFSHORE FINANCIAL SERVICES

• ship registration
• external and captive insurance
• private banking and portfolio management
• the Bahamas Corporate regimes
• the Bahamas Trust
• the mutual funds industry
• the Stock Exchange
• regulation and investor protection
• confidentiality

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.