Bahamas Tax Haven. Bahamas IBC
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Bahamas Tax Haven
The Bahamas is an ideal financial location for individuals and corporations seeking to gain tax advantages with confidentiality. A Bahamas tax haven can be used for asset protection, estate planning, tax mitigation and privacy. The most direct path toward attaining these advantages is by the formation of an international business company, commonly referred to as a Bahamas IBC.
Political And Economic Stability
In order to properly assess and recognize the full advantages offered by a Bahamas tax haven it s important to start by looking at the island nation of the Bahamas itself. A former British colony, until its independence in 1973, this member of the Commonwealth has a solid history of having a stable and reputable government. Its law system is based on English common law and has English as its official language. Its infrastructure, in terms of technology and communication systems, is highly advanced and reliable. Its financial structure is renowned internationally. Nearly every major bank in the world has a presence in the Bahamas. Its geographic location, just fifty miles to the east of Florida, also make the Bahamas convenient in terms of accessibility and time zone accommodation. Since 1990, when the Bahamas passed the International Business Companies Act, tens of thousands of individuals and companies from throughout the globe have established Bahamas IBCs and all have enjoyed the benefits of privacy and tax mitigation that they offer. Succinctly put, the Bahamas tax haven model is real, it is safe, it is legal and it is not difficult to setup with the help of a reputable registering agent.
Overview of The Advantages of A Bahamas IBC
Confidentiality and Privacy With a Bahamas Tax Haven
A Bahamas tax haven provides a unique set of advantages for individuals and companies in terms of privacy and anonymity. Such an entity has the benefit of not requiring the disclosure of the names of the member owners or the shareholders of the entity. Directors for a Bahamas IBC share equal confidentiality. Even when the company decides to disclose the name of a director for operational reasons, director nominees can be used to retain anonymity in this area as well.
An important feature of the Bahamas IBC is that it is not party to any double taxation treaties. Financial information is required to be maintained solely by Bahamas IBC, but this may be kept outside of the jurisdiction of the Bahamas and need only be kept for five years. There are no statutes requiring auditing of this material. If shareholder meetings are held, they can be held outside of the jurisdiction and can be held via electronic communication including via telephone. There are no annual report filings required. This further fortifies the shield of privacy.
Zero Taxes in a Bahamas Tax Haven
The tax structure of the Bahamas has no corporate or personal income tax for non-residents of the Bahamas. That means that any income generated by the Bahamas IBC will be free of all Bahamian taxes. Additionally, there is no capital gains tax, estate tax, inheritance tax, gift tax, dividend tax, wealth tax or sales tax either for the IBC or its shareholders. This makes the Bahamas tax haven ideal not just as a base to headquarter a business, but also for estate planning, tax mitigation and royalty income routing. In the case of estate planning, there is a provision written into law for Bahamas IBCs that exempts the estates of a deceased shareholder from any taxes for a full twenty year period following the original registration . All transactions conducted by the Bahamas IBC, including the transfer of property, debt obligations, and securities to and from the IBC, are free of all taxes including any Stamp duties.
Not Subject to Exchange Controls With a Bahamas Tax Haven
A Bahamas tax haven can operate free of the burdens of any exchange controls. It may transact its operations in any currency that it so chooses. The provisions of the Exchange Control Regulations of the Bahamas do not apply to Bahamas IBCs.
Who Can Benefit from a Bahamas Tax Haven?
Individuals Seeking Asset Protection With a Bahamas Tax Haven
Asset protection is one the most common and practical reasons to form a Bahamas IBC. By placing the title to real estate property, investment holdings, fine art, expensive vehicles or even air and maritime vessels in the name of the IBC, it protects those assets from any attempts to garnish liens on them from other jurisdictions. It is a solid defense against creditors, frivolous lawsuits and overzealous seizures. The Bahamas tax haven is also effective at shielding assets during contentious divorce proceedings. It also shields the member owners from having to disclose their real identities as owners of those properties in the jurisdiction where they reside. The latter provides anonymity in ownership, something that provides privacy and security on a variety of levels.
Day Traders and Investors Trading Through a Bahamas Tax Haven
The favorable tax laws in the Bahamas apply no tax on income, capital gains or dividends. This creates an ideal situation for high frequency traders and large volume investors to use a Bahamas IBC as the main instrument for establishing their broker accounts, funding them and conducting their transactions. All earnings generated by their trading activity would be tax free.
This type of benefit does not have to be limited to high figure traders, it can also be taken advantage of by small or individual investors holding modest portfolios. It can also be used to manage retirement funds outside of the owner’s home jurisdiction. It is a great vehicle for shielding any type of legitimate investment or trading income from the burdens of heavy taxation commonly found in other parts of the world.
Headquartering a Company in a Bahamas Tax Haven
Most jurisdictions apply a heavy burden to entrepreneurs when it comes to corporate taxes. In some parts of the world this can equate to more than half of a company’s earnings being consumed by taxes. This can easily stifle growth, expansion, and even the very survival of any business, large or small. Using a Bahamas IBC as the primary conduit for a business enterprise is a simple and effective method to mitigate a company’s exposure to heavy taxation. Remember, a Bahamas IBC can hold bank accounts as well as commercial and financial titles in its own name
A Bahamas IBC pays neither corporate tax nor income tax. Neither do its shareholders. This allows a business to conduct normal business transactions via the Bahamas tax haven — booking all profits through Bahamas IBC and mitigating their tax exposure at home. Repatriation of income generated by Bahamas IBC can be done at the timing and discretion of the shareholders. Some Bahamas IBCs choose to keep the majority, if not all, of their business generated income within the tax friendly jurisdiction of the Bahamas.
Sheltering of Intellectual Property in a Bahamas Tax Haven
For companies that own intellectual property, a Bahamas tax haven provides an excellent way to house the intellectual property while allowing it to accrue its inherent value and generate earnings from it. Since earnings from royalties and licensing do not generate any taxes for this type of entity in the Bahamas, having the Bahamas IBC hold title over the intellectual property while charging licensing fees, franchise dues and royalties for its use, to clients located in any jurisdiction in the world, would result in zero tax liability on all of those earnings. This can be very useful for technology and software companies, as well as those involved in traditional and digital publishing. The licensing and franchise model can also be extrapolated further and applied to many other service related businesses.
The Bahamas IBC Registration Process
For all of the benefits that can be derived from a Bahamas IBC, forming one is relatively fast and easy. The individual or corporate entity forming the Bahamas IBC does not need to be present for the formation.
Directors and Shareholders
A Bahamas IBC requires a minimum of one director and one shareholder. Directors and shareholders need not be residents of the Bahamas. They may be of any nationality. The shareholders, as well as the directors, may be individuals or companies. The number of directors must be fixed and stated in the Memorandum of Association. There is no mandate to have annual director meetings. Likewise, their is no requirement for a corporate secretary. If, however, a corporate secretary is designated, it is important to note that there is equally no residency or nationality restrictions placed on those holding that office.
The names of the shareholders are never filed with the Registrar General. The same is true for any of the company’s directors or corporate officers. The name of the shareholders are only kept by the registered agent as part of their confidential records and are not part of any public record. In the event that those forming Bahamas IBC decide it prudent to have the name of a directer appear as a part of the public record filed with the Registrar General, the services of a nominee director could be used. This, in essence, assigns a third-party to act in the role of a director, shielding once again the names of the actual participating parties.
The only name that has to appear as a matter of public record within the Registrar General is that of the designated registered agent. It is that person that acts as the liaison between the entity and the Bahamian government. The registered agent would be the person that receives any official notifications, if any, on behalf of Bahamas IBC.
Since there is no statute that requires yearly filings, nor is there any requirement for dividend disbursements, a Bahamas IBC may retain its earnings or issue distributions at its leisure.
Taking into account the complex and burdensome tax legislation found in the majority of countries, it is logical and prudent for individuals and companies seeking relief from such pressures to pursue the Bahamas tax haven. Be it for tax mitigation, enterprise operation, privacy, estate planning or any combination of these, a Bahamas tax haven is one the most trusted options available.
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