Bahamas International Business Company Formation: A Complete Guide

Introduction to the Bahamas as an Offshore Centre

The Commonwealth of the Bahamas, an archipelago of approximately 700 islands north of Cuba, is one of the oldest and most respected offshore financial centres in the Western Hemisphere. Nassau has been a financial services hub since the 1930s, and the Bahamas was the original home of many of the offshore banking and corporate practices that spread throughout the Caribbean and beyond.

The Bahamas financial services sector generates approximately 15-20% of GDP and employs a significant portion of the workforce. The jurisdiction hosts a sophisticated private banking sector, fund administration industry, and trust company framework alongside its corporate formation services.

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Legislative Framework

From the IBC Act to the Companies Act 2011

The Bahamas' original offshore vehicle was the International Business Company (IBC), created by the International Business Companies Act 1990. This Act was internationally recognised and effective, establishing zero-tax, privately-registered companies available to non-Bahamian residents.

The IBC Act was repealed and replaced by the Companies Act 2011 (sometimes called the Companies Act), which came into force on 1 January 2012. The Companies Act 2011 consolidated the IBC framework with a broader company law, creating a unified legislative framework for all Bahamian companies.

Key related legislation:

• Financial and Corporate Service Providers Act 2000 — regulates corporate service providers
• Financial Transactions Reporting Act 2018 — AML/KYC obligations
• Commercial Entities (Substance Requirements) Act 2018 — economic substance
• Beneficial Ownership Register Act 2018 — beneficial ownership disclosure

The Registrar General's Department (within the Attorney General's Office) maintains the Bahamas Companies Registry.

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Formation of a Bahamas Company

Entity Types Available

Entity Type	Description	Common Use
International Business Company (former IBC)	Non-resident company; zero offshore tax	International holding, trading, investment
Bahamas Resident Company	Trades in the Bahamas	Local business
Segregated Account Company (SAC)	Multiple segregated accounts	Fund structures, captive insurance
Limited Liability Company (LLC)	Pass-through taxation option	US-connected structures

Formation Process

Formation is conducted through a licensed corporate service provider (CSP) in the Bahamas:

1. Name search and reservation
2. Preparation of Memorandum and Articles of Association
3. Filing with Registrar General
4. Certificate of Incorporation issued

Formation timeline: 1–3 business days for standard structures.

Formation Costs

Cost Item	Amount (USD)	Notes
Government incorporation fee	USD 330–350	Standard for most structures
Corporate service provider / registered agent	USD 600–1,200	First year; includes registered office
Annual government fee	BSD 350 (approx USD 350)	Due on anniversary
Annual registered agent fee	USD 600–1,500	Ongoing
Certificate of Good Standing	USD 100–200	Required for banking

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Tax Position: Zero on Offshore Income

No Income Tax

The Bahamas has no income tax, corporation tax, capital gains tax, or withholding tax. This applies to both resident and non-resident companies. The government's revenue is derived primarily from:

• Customs duties and VAT (introduced 2015, now 10%)
• Government fees (including company registration fees)
• Property taxes

For non-resident Bahamian companies conducting activities outside the Bahamas, there is no Bahamian tax liability on any income, gains, or distributions.

Business Licence Tax

Companies conducting business in the Bahamas are subject to Business Licence Tax (a form of gross revenue tax). However, holding companies and internationally operating companies are typically exempt from Business Licence Tax as they do not conduct business within the Bahamas.

No Tax Treaties

The Bahamas has no bilateral tax treaties focused on income and capital. This is a meaningful limitation: royalties, dividends, and interest flowing to a Bahamian entity from treaty partners may be subject to full withholding tax in the source country (potentially 20–30%). This makes the Bahamas less suited to structures where withholding tax is a significant cost.

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Corporate Requirements

Minimum Requirements

Requirement	Position
Minimum directors	1 (no maximum)
Minimum shareholders	1 (no maximum)
Corporate directors	Permitted
Residency requirement	None
Bearer shares	Abolished (since 2012 under Companies Act 2011)
Public register of directors	No (not publicly searchable)
Company secretary	Not mandatory

Annual Return

All Bahamian companies must file an annual return confirming:

• Company name and registration number
• Registered address
• Current directors
• Current shareholders

The annual return is filed with the Registrar General through the corporate service provider.

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Beneficial Ownership: The Bahamas Register

The Central Beneficial Ownership Register

The Beneficial Ownership Register Act 2018 established a central beneficial ownership register for all Bahamian companies. Key features:

• Maintained by the Registrar General
• Not publicly accessible: restricted to law enforcement, the Central Bank, the Securities Commission, and authorised competent authorities under bilateral information exchange arrangements
• Beneficial owners (25%+ ownership or significant control) must be registered
• Changes must be notified within 21 days

The CSP (corporate service provider) is responsible for filing beneficial ownership information and keeping it updated.

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Economic Substance

The Commercial Entities (Substance Requirements) Act 2018 imposes economic substance requirements on Bahamian entities conducting relevant activities (the standard nine categories consistent with the OECD/EU framework). Reporting is due within 6 months of the entity's financial year end.

For pure holding companies, the lighter substance test applies (directed and managed in the Bahamas; compliance with filing requirements).

Penalty for non-compliance: BSD 5,000 first offence, BSD 10,000–15,000 subsequent offences, potential involuntary dissolution for persistent failure.

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FATF Status: The Enhanced Monitoring Period

2018 Grey Listing

The Bahamas was added to the FATF grey list (Jurisdictions Under Increased Monitoring) in October 2018. The listing reflected concerns about the Bahamas' AML/CFT regime, including:

• Weakness in financial institution supervision
• Incomplete beneficial ownership framework
• Limited effectiveness in investigating financial crime

The grey listing had an immediate impact on the Bahamas' banking access — major correspondent banks applied enhanced due diligence to all Bahamian financial institution relationships, and some reduced or eliminated their Bahamian correspondent bank relationships.

Removal from Grey List: 2020

The Bahamas was removed from the FATF grey list in December 2020, having passed a follow-up assessment demonstrating substantial improvements in its AML/CFT framework, including:

• Implementation of the Beneficial Ownership Register Act 2018
• Strengthened CSP supervision
• Enhanced effectiveness in detecting and prosecuting financial crime
• Improved international cooperation

Post-2020 Banking Access Recovery

Banking access for Bahamian entities has improved since the 2020 grey list exit but has not fully recovered to pre-2018 levels. The Bahamas has retained strong private banking infrastructure (Scotiabank, RBC, Citibank, Deltec Bank), and major correspondent bank relationships have been partially restored. However, some US-correspondent banks remain cautious about Bahamian financial institution exposure.

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Banking Access: Current Position

Domestic Banking

The Bahamas has a well-developed domestic banking sector:

Bank	Key Services
Scotiabank Bahamas	Commercial banking, private banking
Royal Bank of Canada (Bahamas)	Private banking, commercial banking
Citibank (Bahamas)	Commercial banking, corporate banking
Deltec Bank & Trust	Private banking, investment management
Commonwealth Bank	Local retail banking

For offshore Bahamian companies seeking banking, Deltec Bank is the most accessible for holding company accounts. Citibank and Scotiabank require more substantial business relationships.

International Banking

Bahamian companies seeking accounts at international banks (outside the Bahamas) face the same EDD requirements as other offshore entities. The post-grey-list period has not fully resolved banking access difficulties outside the Bahamas itself. Malta, Cyprus, and Isle of Man banking remains generally more accessible for offshore entities than the Bahamas.

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Comparison with Other Caribbean Jurisdictions

Feature	Bahamas	BVI	Cayman	Antigua (IBC)
Annual government fee	BSD 350	USD 550	CI$854+	USD 300
Formation cost (all in)	USD 1,500–2,500	USD 900–1,500	USD 1,500–3,000	USD 800–1,500
Tax treaties	None (no income tax treaties)	None (UK OT)	None (UK OT)	None
LLC available	Yes	Yes	Yes	No
FATF status (2025)	Not listed	Not listed	Not listed	Not listed
Beneficial ownership register	Yes (non-public)	Yes (BOSS; non-public)	Yes (REEFS; non-public)	Yes (non-public)
Banking access	Moderate-good	Moderate	Good (post-FATF exit)	Moderate

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Use Cases for Bahamas Companies in 2025

Where Bahamas Companies Remain Effective

1. Investment holding for non-US, non-UK families: where treaty access is not critical, the zero-tax, flexible governance framework remains attractive
2. Fund vehicles: the Bahamas SMART Fund framework provides a tiered regulatory structure for private funds
3. Private banking clients: Deltec and other Bahamian banks offer private banking for the right client profile
4. Trading company for non-European activity: where goods or services are traded in markets without significant withholding tax implications
5. Crypto and digital asset entities: the Bahamas Digital Assets and Registered Exchanges (DARE) Act 2020 provides a regulatory framework for digital asset businesses; FTX was unfortunately Bahamas-registered, causing reputational damage, but the regulatory framework itself has been strengthened post-FTX

Where Cayman or BVI May Be Preferred

• Fund structures requiring maximum bank access and institutional investor acceptance: Cayman
• Holding companies in BEPS-sensitive groups: Malta or Cyprus (EU treaty network)
• Entities requiring demonstrated substance: Malta or Cyprus (easier to establish genuine substance)

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HPT Group and Bahamas Formation Advisory

HPT Group advises clients on Bahamas company formation and ongoing maintenance, including beneficial ownership register filing, economic substance compliance, and annual return management. We work with licensed Bahamian corporate service providers and assist clients in assessing whether the Bahamas or an alternative jurisdiction best meets their requirements for tax efficiency, banking access, and compliance sustainability. For clients with existing Bahamas entities established under the IBC Act, we advise on the transition to the Companies Act 2011 framework and any required documentation updates. Contact HPT Group to discuss Bahamas corporate structures.