How to Start a Business in the Bahamas?

Starting a business in the Bahamas can still be attractive due to its investor-friendly climate, but the jurisdiction is no longer entirely tax-neutral. Recent reforms have introduced licence fees and, in some cases, corporate tax obligations to align with international tax standards.

1. Decide on Your Business Structure

The first step is choosing the right entity. Options include a sole proprietorship, a partnership, or a company incorporated under the Companies Act of 1992. For foreign investors, an International Business Company (IBC) remains a popular structure, providing flexibility and global recognition. However, IBCs are now subject to updated business licence requirements and, in some cases, taxation on foreign-sourced income, especially if they carry on business in or from The Bahamas.

2. Register Your Business

To operate legally, your company must be registered with the Registrar General’s Department. The process involves:

• Conducting a name search and reserving your company name.
• Submitting incorporation documents, including Memorandum and Articles of Association.
• Paying the required government fees, which vary depending on the company type and capital.

3. Obtain Necessary Licenses and Approvals

Typically, most businesses need a business license from the Department of Inland Revenue. There are also some situations where you will need only industry-specific authorizations, for example, from the Central Bank, Securities Commission, or Ministry of Tourism. Foreign investors may need to apply for approval from the Bahamas Investment Authority (BIA), especially for projects in sectors such as tourism, large-scale real estate, or other strategic industries.

4. Open a Business Bank Account

There are both local and international banks in the Bahamas that form a solid banking sector. The required documents for the opening of a corporate account include incorporation certified documents, beneficial ownership details, and compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.

5. Meet Tax and Compliance Obligations

Traditionally, the Bahamas did not levy corporate income tax. However, under the new Business Licence Act 2023, all companies carrying on business in or from The Bahamas must obtain a business licence and pay annual licence fees based on turnover. In addition, from 2024, new rules have been introduced requiring certain International Business Companies (IBCs) to pay taxes on foreign-sourced income, in line with global tax compliance standards.

Businesses must pay annual business licence fees and, if their annual turnover exceeds BSD 100,000, they are required to register for Value Added Tax (VAT), which is generally charged at 12% on most goods and services.

The procedure of starting a business in the Bahamas is simple and easy when the proper steps are followed, but success is mainly a matter of good planning and regulatory compliance. Most of the entrepreneurs cooperate with advisors like Offshore Company Services to get through the process quickly and to be sure that their business is geared for long-term growth in this attractive offshore jurisdiction.

=> Learn more: Doing Business in the Bahamas