Banking on the Bahamas
First The Good News
The island nation has come a long way from its financial roots as a small, offshore, tax-haven consisting of a few branches of foreign banks, during the 1960s. Today, the Bahamas is home to the some of the most prestigious financial institutions in the world.
More than 400 foreign banks, representing 36 countries are licensed to do business in the Bahamas. Many are branches or subsidiaries of banks operating in countries such as the United States, Japan, Canada, Switzerland and the U.K. While offshore banking is one of the more popular services offered by the licensees, many offer trust, portfolio, and mutual fund management services as well.
These banking services along with robust confidentiality and privacy laws have helped solidify the Bahamas’ international reputation as a safe financial repository for corporations and individuals alike.
Now The Bad News
Under legislation such as the International Business Companies (IBC) Act, investors were able to form incorporated companies anonymously and reap the benefits of 100% tax-free business income, providing of course, that the revenue was derived from outside of the Bahamas.
However, under pressure from the OECD for a commitment to transparency and information exchange for tax purposes, the Bahamas had little choice but to enact new banking confidentiality legislation, and cooperate with tax reporting initiatives regarding the citizens of other countries.