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CNM : BUSINESS

Banking and Finance In the Bahamas . . .

By Tom Thompson

“Most people would surmise that tourism is

the Bahamas’ major industry, but you may

not realize that the second largest is banking.”

islands. There are no income, corporate, actions.
capital gains, value added, inheritance, or
sales taxes here. Second is international commercial
The Bahamian government is able to fi- banking. To take advantage of the Ba-
nance its activities adequately through hamas as a tax heaven, many corpora-
collection of import duties, indirect taxes tions have been set up or have relocated
and licensing fees as well as moderate do- here by establishing what is known as
mestic and foreign borrowing. an International Business Company or
Because of the sound fiscal and econom- IBC. Bahamian law does not require a
ics policies, the Bahamian dollars has re- corporation to declare income if funds
mained at par with the U.S. dollar since held in a local bank are generated from
1966, when it was created to be the official business transacted entirely outside the
currency of the islands. country. No tax information is shared
Nassau’s geographical locations also plays with other countries, and only that
an important part in making it attractive which may pertain to criminal activity
Over the past half century, the uncer- for banking. The Islands are in the eastern is divulged.
tainties of international politics and eco- Standard Time Zone, the same as the New Setting up an IBC doesn’t take much
nomics have fostered the growth of what York and Toronto stock exchanges. Of all time, typically 24 hours, and requires
are often called “offshore” banks. The the offshore centers in the Caribbean, Nas- little paperwork if proper references
financial institutions offer a number of sau is the most convenient to reach, being and fiscal confirmation are in order.
services to both individuals and corpora- less than an hour’s flying time from Mi- Most international banks can handle
tions, which at the bottom line, mean a ami’s major international airline hub. An- the entire transaction. However, they
safe haven for assets. other plus, being able to clear the U.S. will not accept applications from just
Nassau is the leading offshore banking Customs here, means beating the crowds anyone, and often impose strict stan-
center of North and South America, and in Miami. dards with regard to the quality of the
ranks is the top five worldwide. There The availability and widespread use of account they will open for business.
are also 400 banking firms licensed to high technology such as computer net- Among other corporate services offered
do business here, representing the pre- works, fiber optics, and fax transmission by Bahamian bank and trust companies
mier institutions of the global financial means that Nassau is plugged into the are:
industry. global stream of financial and business . Serving as trustees for pension funds
The two main reasons for this are the po- date. Electronic funds transfer is as easy benefiting foreign employees of inter-
litical stability of the Bahamian govern- here as anywhere. Securities orders can be national enterprises.
ment and the absence of taxes. placed and executed within 24 hours. . Acting as registrar and transfer agent
Under British rule since the early eigh- There are three main types of financial for the securities of publicly owned in-
teenth century, The Bahamas had its business carried out by banks in The Ba- ternational companies.
own elected legislature and developed hamas. . Setting up and running re-invoicing
a strong tradition of English common facilities for trading companies.
law and legal procedures. Since gaining First, of course, is domestic commercial . Assisting foreign shipping concerns
independence on July 10, 1973, The Ba- banking – the day-to-day activities of in- to register commercial vessels under
hamas have had a stable leadership com- dividuals and organizations such as check- the Bahamian flag and to incorporate
mitted to encouraging investment in the in any jurisdiction.
ing, savings, loans and other routine trans-
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