Caribbean Focus: The Bahamas

The Bahamas is a coral-based archipelago located partially in the Atlantic Ocean and the Caribbean Sea and consists of 700 islands – 30 inhabited, and about 2,400 keys or coral reefs. This island nation borders Cuba, Haiti, the United States, and Turks Caicos Islands. Lucayans, Arawaks, Tainos and Seminoles originally inhabited the islands until Christopher Columbus arrived in 1492. Within 25 years of his arrival, chattel slavery and disease decimated the native population. British settlement in The Bahamas was established in 1647 by a group of English settlers in search of religious freedom, and by 1783, the islands had become a British colony.

The Bahamas derives its name from the Spanish “baja mar,” meaning “shallow sea,” which describes the waters of the Bahama Banks. The climate is semitropical to tropical marine, moderated by warm waters of the Gulf Stream. Today, the Bahamas has become one of the world’s foremost vacation resorts, attracting more than five times its population in tourists. It is home to some of the most intriguing natural phenomena, such as Stromatolites, the oldest known macro-fossils on earth, the world’s deepest blue hole, the third-largest fringing barrier reef in the world, pink-sand beaches, many natural caves with interesting formations, nature preserves, the world’s largest colony of pink flamingos, the Andros Iguana, the endangered Abaco Parrot, and the Bimini Boa… just to name a few. A growing number of eco-friendly hotels and resorts now offer vacation packages promoting ecotourism.

The population of The Bahamas today is approximately 396,000 with over 85% of African descent and 80% of that population living in urban communities. Nassau city, located on the island of New Providence, is the political capital and the commercial hub of The Bahamas. English is the official language, and the government is a constitutional parliamentary democracy with a common law system based on the English model. The head of government is the Prime Minister, and the bicameral parliament consists of the Senate and the House of Assembly representing 31 districts.

Since achieving independence from the United Kingdom in 1973, The Bahamas has become one of the wealthiest Caribbean countries through tourism, international banking, and investment management. The Office of the Prime Minister is responsible for direct foreign investment in the country where tourism and tourism-driven construction and manufacturing account for approximately 60% of GDP and directly or indirectly employ half of the nation’s labor force. Financial services are the second-most important sector of the Bahamian economy and, when combined with business services, account for about 35% of GDP. The country also has one of the world’s largest open-registry shipping fleets.

Natural resources of The Bahamas include salt, aragonite, timber, and arable land. Agriculture products include citrus, vegetables, and poultry. Exports also include commodities such as crawfish, aragonite, crude salt, and polystyrene products. Major exports partners areSingapore, the USA,Dominican Republic, Ecuador, Canada,Switzerland, and China, while imports partners include theUSA, India, Singapore, South Korea, China, , and Canada. Utilities are modern and highly developed. The major seaports are located in Freeport and Nassau.

The Bahamas has become a particularly favorable location for international investment. It has established generous legal incentives to attract foreign investors and has streamlined government bureaucracy for expeditious project approval. The country possesses an outstanding infrastructure for commercial and industrial activity, and offers a highly-skilled workforce. The large professional community of accountants, international bankers, trustees, and investment specialists is diverse and highly skilled with a full complement of respected and experienced law firms. The climate for foreign investment is particularly favorable to the financeindustry, insurance,manufacturing, shipping, import & export trade, and tourism development.

One of the most attractive elements of investing in The Bahamas is the tax-free status accorded to income. There are no taxes levied on capital gains, corporate earnings, personal income, sales, inheritance, or dividends. This tax freedom is available to all resident corporations, partnerships, individuals and trusts. Investors are also attracted to the stability of the economy, which is steadied by the solid value of the Bahamian dollar. Pegged to the US dollar on a 1:1 ratio, both currencies are used interchangeably throughout the country.

The inducement of a tax-free environment and a stable currency are enhanced by a series of investment incentives that provide relief from customs duties on approved raw materials, equipment, and building supplies, as well as exemptions from business licenses and real property taxes for up to 20 years. In accordance with terms of the International Monetary Fund Agreement, The Bahamas has no restriction on current account transactions. Additionally, there are no restrictions on the free repatriation of profits. This tax freedom is available to all resident corporations, partnerships, individuals and trusts.

Exchange control is administered by the Central Bank. International financing is very accessible as The Bahamas is associated with several organizations that ease access to financing and provide important safeguards for investors. The US Government’s Overseas Private Investment Corporation (OPIC), for example, makes direct financing and loan guarantees available to foreign investors. The Multilateral Investment Guarantee Agency is a World Bank unit and parent of the Multilateral Investment Guarantee Convention, which provides protections similar to those of OPIC. The Bahamas also recently agreed to become a party to the convention on the settlement of investment disputes.

While incorporation and registration have been facilitated by The International Business Companies Act of 1989 and the Companies Act of 1992 to establish a commercial presence in The Bahamas, the immigration policy is also flexible. Necessary work permits for key personnel are readily granted along with accelerated consideration for annual or permanent residence. Today’s Bahamian investors would be joining renowned  actor and diplomat Sir Sidney Poitier, former NBA stars Mychal Thompson and Rick Fox, international supermodel Shakara Ledard, Grammy-winning artist Lenny Kravitz, and a number of famous Olympians, scholars, and high-achievers as residents of  The Bahamas.

Marilyn Douglas-Jones, DD is a

professor, translator and financial services coach in Houston as well as founder of the Caribbean Impact Network.