The Commonwealth of The Bahamas is a 100,000 square mile archipelago in the Atlantic Ocean just 50 miles from Florida’s east coast. The country maintains a stable environment for investment with a long tradition of parliamentary democracy, respect for the rule of law, and a well-developed legal system. U.S. companies find that The Bahamas’ proximity to the United States, common English language, and exposure to U.S. media and culture contribute to Bahamian consumers having general familiarity with, and positive attitudes towards, U.S. goods and services. The Bahamas is a high-income developed country with a Gross Domestic Product (GDP) per capita of $32,218 (2018) that conducts more than 85 percent of its international trade with the United States. The Free National Movement (FNM) government, elected in May 2017, has sought to manage an economy dealing with the dual, unprecedented economic crises wrought by the passage of Hurricane Dorian in September 2019 and the effects of the global COVID-19 pandemic, projected to inflict combined losses of $7.5 billion or 60 percent of GDP. According to Standard & Poors April 2020 forecasts, The Bahamas’ GDP growth is expected to fall by an unprecedented 16 percent in 2020 due to COVID-19. Full economic recovery is not anticipated until 2022, subject primarily to the buoyancy of the tourism sector and post-pandemic global economic recovery. Both the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB) predict The Bahamas could suffer the most severe economic contraction of all Caribbean countries.
Tourism is the country’s largest sector, and economic growth is mainly driven by the industry and related services. With few natural resources and a limited industrial sector, the Bahamian economy is heavily dependent on tourism and, to a lesser degree, financial services. These sectors have traditionally attracted the majority of foreign direct investment (FDI). Tourism contributes over 50 percent of the country’s GDP and employs just over half of the workforce. The Bahamas relies primarily on imports from the United States to satisfy its fuel and food needs for local and tourist consumption. More than seven million tourists, mostly American, visit the country annually. U. S. exports in 2019 to The Bahamas valued $3.06 billion, resulting in a trade surplus of $2.6 billion in the United States’ favor.
The Bahamas maintains an open investment climate and actively promotes a liberal tax environment and freedom from many types of taxes, including capital gains, inheritance, and corporate or personal income taxes. The Bahamas does not offer export subsidies, engage in trade-distorting practices, or maintain a local content requirement. The country continues to attract FDI from various parts of the world and has recently benefitted from significant investments in the tourism sector from international companies based in China. Investments from the United States are also primarily in the tourism sector and range from general services to billion-dollar resort developments to million-dollar homes on the major islands of the archipelago.
Positive aspects of The Bahamas’ investment climate include: political stability since independence in 1973, a parliamentary democracy since 1729, an English-speaking labor force, a well-capitalized and profitable financial services infrastructure, established rule of law and general respect for contracts, an independent judicial system, and high per-capita GDP. Negative aspects of The Bahamas’ investment climate include: a lack of transparency in government procurement, shortages of skilled and unskilled labor in certain sectors, a bureaucratic and inefficient investment approvals process, time consuming resolution of legal disputes, the high cost of labor, and the high cost of energy, which averages four times higher than in the United States – primarily driven by antiquated generation systems and almost complete dependence on inefficient fossil-fueled power plants. To remedy this deficiency, however, the current government has prioritized infrastructure projects focused on non-oil energy, including an LNG plant on New Providence and various solar projects on the Family Islands.
A major challenge to investment in the country is the prohibition of foreign investment in 15 areas of the economy. The current government initially set a goal of accession to the WTO by the end of 2019, which would require opening at least some of these protected sectors to foreign investment. However, the government later described the 2019 target as purely aspirational, confirming it was unlikely accession would take place before 2025.
The absence of transparent investment procedures and legislation is also problematic. U.S. and Bahamian companies alike report the resolution of business disputes often takes years and collection of amounts due can be difficult even after court judgments. Companies also describe the approval process for FDI and work permits as cumbersome and time-consuming. The Bahamian government does not have modern procurement legislation and companies have complained the tender process for public contracts is not consistent, and that it is difficult to obtain information on the status of bids. In response, the FNM administration drafted a Public Procurement Bill, 2020 and launched an e-procurement and suppliers registry system to increase levels of accountability and transparency in governance. The government confirmed public consultation on the draft legislation is complete and it is being finalized for tabling in the House of Parliament by May 2020.
The Bahamas scored 64 out of 100 in Transparency International’s Corruption Perception Index in 2019 (where zero is perceived as highly corrupt and 100 is very transparent). This represents a slight improvement of the year on year score following a stabilization in 2018 and a marked increase in perceptions of corruption between 2014 and 2016. The Bahamas still lacks necessary legislation to establish an office of the ombudsman to strengthen access to information, nor has it fully enacted its Freedom of Information Bill or appointed an independent Information Commissioner. Although the current government is pursuing legislative reforms to strengthen further its investment policies, progress on these efforts has been mixed.
Women have raised concerns regarding the ease of their doing business in The Bahamas, particularly bureaucratic hurdles to register businesses and difficulty in securing financing on their own. The Prime Minister’s wife has committed to supporting women’s empowerment, particularly economic, as a priority of the Office of the Spouse of the Prime Minister. The Small Business Development Centre (SBDC) has also made economic empowerment of women entrepreneurs and lessoning the income gap priorities.
|TI Corruption Perceptions Index||2019||64 of 100||http://www.transparency.org/
|World Bank’s Doing Business Report “Ease of Doing Business”||2020||119 of 190||http://www.doingbusiness.org/rankings|
|Global Innovation Index||2019||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country (M USD, stock positions)||2018||18.5B||http://apps.bea.gov/
|World Bank GNI per capita||2018||30,520||http://data.worldbank.org/
1. Openness To, and Restrictions Upon, Foreign Investment
Policies towards Foreign Direct Investment
The government encourages FDI, particularly in the tourism and financial services sector. The country provides incentives for second home ownership and currently has over 270 licensed banks and trust companies, 120 broker dealers and investment advisory firms, and 60 fund administrators operating in the jurisdiction. The National Investment Policy (NIP) and the Commercial Enterprises Act (CEA) explicitly encourage foreign investment in certain sectors of the economy. These sectors are : touristic resorts; upscale villas, condominium, timeshare, and second home development; international business centers; aircraft and maritime services; marinas; information and data processing; information technology services; light industry manufacturing and assembly; agro-industries; mari-culture; food and beverage processing; banking and other financial services; offshore medical centers and services; e-commerce; arbitration; international arbitrage; computer programming; software design and writing; bioinformatics and analytics; and data storage and warehousing.
The Bahamas has an investment promotion strategy that includes multiple government agencies working to attract foreign direct investment. The Bahamas Investment Authority (BIA) (www.bahamas.gov.bs/bia) administers the NIP, functions as the investment facilitation agency and acts as a ‘one stop shop’ to assist investors in navigating a potentially cumbersome approvals process. The Embassy is not aware of any formal retention strategies, but each administration has consistently supported new investment and has generally honored agreements made by previous administrations. The current government has introduced policies and legislative support for Micro, Small and Medium Enterprises (MSMEs), defined as companies with fewer than 10 employees, representing 85 percent of registered businesses. In late 2018, the government created an MSME policy and the Small Business Development Centre (SBDC) which provides business advisory services for startups and entrepreneurs, training and entrepreneurial professional development opportunities, mentorship and incubation services, access to capital, and advocacy for individual businesses, sectors within the economy and MSMEs as a community.
The Bahamas still reserves certain sectors of the economy for Bahamian investors. The reserved areas are: wholesale and retail operations (although international investors may engage in the wholesale distribution of any product they produce locally); commission agencies engaged in import or export; real estate and domestic property management; domestic newspapers and magazine publications; domestic advertising and public relations firms; nightclubs and restaurants except specialty, gourmet, and ethnic restaurants and those operating in a hotel, resort or tourist attraction; security services; domestic distribution of building supplies; construction companies except for special structures; personal cosmetic/beauty establishments; commercial fishing including deep water fishing, shallow water scale fish, crustacean, mollusk, and sponge-fishing; auto and appliance service operations; public ground transportation, cabotage and the domestic gaming industry.
With the exception of these sectors, the Bahamian government does not give preferential treatment to investors based on nationality, and investors have equal access to incentives, which include land grants, tax concessions, and direct marketing and budgetary support. The government provides guidelines for investment through its NIP, which BIA administers in the Office of the Prime Minister, and through the Commercial Enterprises Act (CEA) administered through the Ministry of Financial Services, Trade & Industry and Immigration. The CEA provides incentives to domestic and foreign investors to establish specific investment projects, including approval of a specified number of work permits for senior posts and the expedited issuance of work permits.
Large foreign investment projects, particularly those that do not fit within the NIP or CEA require approval by the National Economic Council (NEC) of The Bahamas. This process generally requires environmental and economic impact assessments for review by multiple government agencies prior to NEC consideration.
Bureaucratic impediments are not limited to the NEC approvals process, and the country continues to lag on international metrics related to starting a business. According to the 2020 World Bank Doing Business rankings, The Bahamas scores 119 overall, 181 in registering property, 77 in getting construction permits, 152 in access to credit, and 71 in resolving insolvency. All these categories saw a decrease in ratings from 2018 metrics, with the exception of getting construction permits. The Embassy is aware of cases where the Bahamian government failed to respond to investment applications, and several cases where there have been significant delays in the approvals process. Despite challenges, investment continues to grow in tourism, finance, construction, and quick-serve restaurant franchises.
Efforts to accelerate Foreign Direct Investment (FDI) have been announced but remain unclear. In response to the losses from Hurricane Dorian and the economic fallout from COVID-19, the government announced requirements for domestic and foreign investment would be liberalized and eligible investment proposals under review would be accelerated to speed up economic recovery. Public pronouncements alluded to a streamlined approach for reviewing lower value applications that now go to the NEC for approval, prioritizing foreign investment proposals that could generate inflows and stimulate construction activity, and expediting investment applications to specifically assist Grand Bahama and the Abacos post-Hurricane Dorian. Despite these announcements, the Embassy is not aware of any formal guidelines concerning changes to investment procedures that have been made publicly available.
Limits on Foreign Control and Right to Private Ownership and Establishment
Foreign investors have the right to establish private enterprises and, after approval, companies operate unencumbered. Key considerations for the Bahamian government include economic impact, job creation, infrastructural development, economic diversification, and environmental protection. With the assistance of a local attorney, investors can create the following types of businesses: sole proprietorship, limited or general partnership, joint stock company, or subsidiary of a foreign company. The most popular all-purpose vehicles for foreign investors are the International Business Company (IBC) and the Limited Duration Company (LDC). Both benefit from income, capital gains, gift, estate, inheritance, and succession tax exemptions. Investors are required to establish a local company and be registered to operate in The Bahamas.
Regarding the reserved sectors of the economy referenced above, the government has made exceptions to this policy on a case-by-case basis but generally, there is no guarantee of market access or right of establishment in these areas. The Embassy is aware of several cases in which the Bahamian government has granted foreign investors waivers to the policy and allowed full market access.
Other Investment Policy Reviews
The Bahamas ranks 119 out of 190 countries in terms of the ease of doing business in the 2020 World Bank Doing Business Report, with a Distance to Frontier score of 59.9, indicating its economy was 40.1 percentage points away from the frontier constructed from the best performances across all economies and across time. ( )
The Bahamas has not benefitted from a WTO trade policy review as it is the only Western Hemisphere country that is not a member of the global organization. The current government has re-engaged with the Accessions Division of the WTO, initially announcing an aim of full membership by 2019 and formerly relaunching accession negotiations at the Fourth Working Party in April 2019. However, the Minister with responsibility for international trade later described the 2019 target as purely aspirational, confirming it was unlikely accession would take place before 2025. There is a growing and vocal domestic constituency against WTO accession that has likely slowed the government’s course.
Neither the OECD nor UNCTAD have conducted investment policy reviews. The Bahamas achieved the G-20 standard on transparency and cooperation on tax matters, a standard initially advanced by the OECD.
According to the 2020 World Bank Doing Business Index, starting a business in The Bahamas takes 12 days, requires seven separate procedures, and costs the same for both men and women. In 2017, the Bahamian government streamlined this process and launched an e-business portal, which facilitated limited liability companies to register online ( ). In early 2018, the government removed certain documentary requirements to register or renew registration of companies and is considering allowing company fees to be applicable on the date of incorporation to expedite the annual process.
All companies with an annual turnover of $100,000 or more are required to register with the government to receive a tax identification number. The registration process is generally viewed as an impediment to the ease of doing business. Additionally, companies are required to provide financial reports on a monthly or quarterly basis.
In mid-2019, as part of the business license application process, the government announced provisional licenses for “low-risk” businesses including home-based businesses, sole proprietors, and other small businesses in non-regulated sectors. The government also removed the fee for starting a new business and implemented a system to renew business licenses in under 48 hours. Foreign companies, as well as incorporated companies, businesses with storefronts or operating in regulated industries, are not eligible for provisional licenses, expedited renewals, or new business license fee exemptions.
The Bahamian government does not promote nor incentivize outward investment. The government does not prohibit its citizens from investing internationally, however, all outward direct investments by residents require the prior approval of the Exchange Control Department of the Central Bank of The Bahamas ( – controls). Applications are considered in light of the probable impact the investments may have on The Bahamas’ balance of payments, specifically business activities that promote the receipt of foreign currency.
During the COVID-19 pandemic, in an effort to maintain adequate foreign reserves to support the Bahamian dollar fixed exchange rate and preserve access to foreign exchange for priority international transactions, on May 4, 2020, the Central Bank announced the suspension of approvals of applications to purchase foreign currency for transactions via the Investment Currency Market (ICM) and the Bahamas Depositary/Depository Receipt (“BDR”) program. The Central Bank announced foreign exchange access through the channels would resume once market uncertainties around the COVID-19 pandemic subsided. Meanwhile, the ICM was expected to continue to facilitate the repatriation of foreign currency income, capital gains, and liquidated capital at the appropriate premium.
3. Legal Regime
Transparency of the Regulatory System
The Bahamas’ legal and regulatory systems are transparent and consistent with international norms, and the Bahamian government is engaged in making reforms to public accounting procedures to conform to international financial reporting standards.
Proposed legislation is available at the government Publications office and public comment and engagement of stakeholders is encouraged, particularly on legislation perceived as controversial. There is no equivalent to the Federal Register, but the government regularly updates its website ( ) to list draft, new, or amended legislation, bills before parliament, bills for consultation, and its legislative agenda. There is regulatory system reform legislation, but it has not been fully implemented. In some instances, there is public consultation on investment proposals, but the process is not required by law. The Embassy is unaware of any informal regulatory processes managed by non-governmental organizations (NGOs) or private sector associations that restrict foreign participation in the economy.
The Fiscal Responsibility Act (FRA) was passed in 2018 to establish broad parameters related to revenue, expenditure, deficits, and public debt. It also calls for a Fiscal Strategy Report (FSR) which provides a three-year fiscal forecast that sets targets for the preparation of the government’s annual budgets. The 2019 FSR gives a broad explanation about how the government established these targets and the various internal and external fiscal pressures constraining its actions. The government presents the FSR and makes information on public finances and debt obligations available during the budget submissions to parliament. The information is also published on the government’s budget website ( ) in simple and non-technical language.
International Regulatory Considerations
The Bahamas is not a member of the WTO, so does not notify draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT). As part of its accession negotiations, The Bahamas announced it is reviewing investment policies with the aim of developing comprehensive, WTO-compliant investment legislation. Nevertheless, the government confirmed it was unlikely accession would take place before 2025.
The country is not a member of UNCTAD’s international network of transparent investment procedures, nor is it a member of a regional economic block.
The Bahamas Bureau of Standards and Quality (BBSQ), launched in 2016, serves as the country’s focal point on TBT issues and continues to benefit from EU-funded technical assistance at the national level and through the Caribbean Regional Organization for Standards and Quality (CROSQ) in the development of national standards.
In January 2019, BBSQ appointed a Japanese company as an accredited inspection company for a Pre-shipment Verification of Conformity (PVoC) program for the roadworthiness of used vehicles imported to The Bahamas. All used vehicles arriving in The Bahamas on or after April 1, 2019, from Japan, the United Kingdom, Singapore, and the United Arab Emirates, will require a Certificate of Conformity (COC) to comply with import regulations on arrival in The Bahamas. Vehicles arriving from the United States are not currently required to conform with this requirement, considered a TBT.
Legal System and Judicial Independence
The Bahamian legal system is based on English common law and foreign nationals are afforded full rights in Bahamian legal proceedings. In theory, contracts are legally enforced through the courts; however, there are many cases where local and foreign investors have civil disputes tied up in the court system for many years. Others have lost entire sums ranging from several hundred thousand to several million dollars due to fraud. In these instances, the court system has not been a viable option to recover their investments.
The judiciary is independent and allegations of government interference in the judicial process are rare. The Chief Justice of the Supreme Court; the Attorney General, who serves as the government’s chief legal advisor; the Director of Public Prosecutions, who is responsible for public prosecutions; and the President of the Court of Appeals are appointed by the Governor-General upon recommendation of the Prime Minister in consultation with the leader of Her Majesty’s Loyal Opposition. The Bahamas is a member of the Commonwealth of Nations and uses the Privy Council Judicial Committee in London as the final court of appeal and also contributes financially to the operations of the Caribbean Court of Justice. The country announced its intention to develop itself as a center for international arbitration, tabling in the House of Assembly an Arbitration (Amendment) Bill, 2018 intended to govern domestic arbitration and an International Commercial Arbitration Bill, 2018 which incorporates key provisions of the Model Law of the United Nations Commission on International Trade Law (UNCITRAL).
Judgments by British courts and select Commonwealth countries can be registered and enforced in The Bahamas under the Reciprocal Enforcement of Judgments Act. Court judgments from other countries, including those of the United States, must be litigated in the local courts and are subject to all Bahamian legal requirements. The judiciary is independent, and judicial process can be slow and less than transparent; however, the current government is taking steps to increase judicial transparency and efficiency and to modernize the justice system, including investments in streamlined court administration and efforts toward a new Supreme Court Complex, a Court Services Bill and new Supreme Court rules.
Laws and Regulations on Foreign Direct Investment
No major laws, regulations, or judicial decisions on foreign direct investment have been passed since the 2018 Investment Climate Statement.
The Embassy is aware that a Foreign Investment Bill has been drafted and continues to monitor any movements towards public discussions on and/or tabling of the bill, which the government purports codifies the existing National Investment Policy into statute, aligns with international best practices, and aims to bring additional transparency, accountability, and predictability to the country’s foreign investment process.
Competition and Anti-Trust Laws
The Utilities Regulation and Competition Authority (URCA) regulates the telecommunications sector and new regulations have expanded the mandate to include the regulation of the energy sector. URCA continues to build technical capacity with the support of the U.S. government. There is no legislation governing competition or anti-trust.
The Embassy is aware that a Competition (Antitrust) Bill has been drafted, reportedly in line with The Bahamas’ CARIFORUM-EU obligations and WTO accession requirements, and tailored to the Bahamian context. Initial public consultations were held in August 2018. The Embassy continues to monitor any movements towards additional public discussions and/or tabling of the bill.
Expropriation and Compensation
Property rights are protected under Article 27 of the Bahamian constitution, which prohibits the deprivation of property without prompt and adequate compensation. There have been compulsory acquisitions of property for public use, but in all instances, there was satisfactory compensation at fair market value.
The Emergency Power (COVID-19) Regulations, passed in March 2020 upon declaration of a state of emergency imposed to stem COVID-19 infection, grant the Competent Authority the authorization to requisition any building, ship, aircraft, or article if the Competent Authority is satisfied it is reasonably required for any statutory purpose for the duration of the emergency or any period. At the conclusion of the requisition, the Competent Authority is to make prompt and adequate compensation to the owner or occupier of such building, ship, aircraft, or article. The Regulations are expected to expire, however, upon cancelation of the state of emergency.
ICSID Convention and New York Convention
The Bahamas is a member of both the International Centre for Settlement of Investment Disputes (ICSID) Convention (adopted 1995) and the New York Convention (adopted 1958). The Arbitration Act of 2009 enacted the New York Convention and provides a legal framework. The Bahamas is also a member of the Multilateral Investment Guarantee Agency. This agency insures investors against current transfer restrictions, expropriation, war and civil disturbances, and breach of contract by member countries.
Investor-State Dispute Settlement
Order 66 of the Rules of the Bahamian Supreme Court provides rules for arbitration proceedings. The 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards entered into force for The Bahamas on March 20, 2007. This convention provides for the enforcement of agreements for commercial disputes. Under the convention, courts of a contracting state can enforce such an agreement by referring the parties to arbitration. There are no restrictions on foreign investors negotiating arbitration provisions in private agreements. The government announced its intention to establish The Bahamas as a center for international arbitration cases, and although an alternative dispute resolution institute at the University of The Bahamas is often mentioned, a body has yet to be formally established.
The Bahamas is a signatory to the Economic Partnership Agreement between CARIFORUM and the European Union since October 2008 and the Economic Partnership Agreement between CARIFORUM and the United Kingdom since November 2019. Both agreements include specific dispute settlement provisions and procedures. The country has not yet ratified either of the trade agreements, and provisionally applies both.
Investment disputes in The Bahamas that directly involve the Bahamian government are rare and there is no history of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
The Bahamas is a member of the Multilateral Investment Guarantee Agency, which insures investors against current transfer restrictions, expropriation, war and civil disturbances, and breach of contract by member countries. Local courts enforce and recognize foreign arbitral awards and foreign investors are provided national treatment. Disputes between companies are generally handled in local courts but foreign investors can refer cases to ICSID and in at least one instance, recourse was sought in a U.S. court in a dispute involving a $4 billion resort development. The Embassy is not aware of any cases involving state owned enterprises that resulted in litigation.
Company liquidations, voluntary or involuntary, proceed according to the Companies Act. Liquidations are routinely published in newspapers in accordance with the legislation. Creditors of bankrupt debtors and liquidated companies participate in the distribution of the bankrupt debtor’s or liquidated company’s assets according to statute. U.S. investors should be aware that there is no equivalent to Chapter 11 bankruptcy law provisions to protect assets located in The Bahamas.
The Bahamas ranked 152 out of 190 countries with regards to getting credit in the 2020 Ease of Doing Business report, indicating relatively weak credit reporting systems and the ineffectiveness of collateral and bankruptcy laws in facilitating lending. Recognizing the need for credit reforms, the Credit Reporting Act was passed in February 2018, a credit bureau operator was selected in January 2019, and the Central Bank confirmed the intention to operationalize a credit bureau in 2020.
4. Industrial Policies
Tax relief is the most significant investment incentive in The Bahamas. The government does not impose taxes on income, estates, or inheritances in the country. Other incentives for investment include waivers on import duties, property tax abatement, and, in some cases, land grants or extended leases for private development at below-market rates. Certain incentives are negotiated directly with the BIA and require the approval of the NEC. In some instances, terms of the incentives are outlined in a Heads of Agreement and the size of the concessions will vary depending on the scale of a project.
Other investment incentives are outlined in concessionary legislation such as the Hotels Encouragement Act, the Bahamas Vacation Plan and Timeshare Act, the Agricultural Manufacturers Act, the Family Islands Development Encouragement Act, the Industries Encouragement Act, the Tariff Act, the International Persons Landholding Act, the Hawksbill Creek Agreement, Grand Bahama Act and the Commercial Enterprises Act. BIA either administers respective concessionary legislation or acts as the intermediary between the foreign investor and responsible government Ministry or designated authority. Further information on investment incentives is available at .
Foreign Trade Zones/Free Ports/Trade Facilitation
The city of Freeport on the island of Grand Bahama is a 233 square mile Free Trade Zone. The Hawksbill Creek Agreement (1955) between the Bahamian government and the Grand Bahama Port Authority guarantees that the “special economic zone” can continue to exist until 2054. Businesses operating in Freeport are exempt from most central government taxes (real property, excise, import, and business taxes) and subject to licensing by the Grand Bahama Port Authority. The Bahamian government has made several efforts to regulate business activities and extract tax revenues from the free zone. Most efforts have been litigated to the Port’s benefit and the FNM administration repealed legislation that differentiated between local and foreign licensees within the Port.
In the aftermath of Hurricane Dorian in September 2019, both Abaco and Grand Bahama were declared Special Economic Recovery Zones (SERZ), which allows residents and businesses to benefit from several tax exemptions and incentives for a period of three (3) years. Features of the SERZ include:
- Duty-free imports of all materials, fixtures, furniture, vehicles, and equipment for approved commercial and residential construction and rehabilitation efforts;
- Waived Business License fees for all operations within the SERZ for new and existing businesses that return their employment count to at least 60% of its pre-Dorian level by December 2020;
- Waived Real Property Tax on eligible properties that are reconstructed, restored or otherwise inhabitable by October 2020;
- VAT credit of up to 50% on sale of qualifying real property; $10.0 million loan guarantee and equity financing program for Bahamian SMEs to secure financing for rebuilding and restarting; An extension of the provisional Business License program to allow fast and efficient startups; and
- The creation of a One-Stop-Shop for business assistance in both Abaco and Grand Bahama to aid with the facilitation of regulatory requirements within five working days
In late October 2019, the government announced Abaco and Grand Bahama would be VAT-free zones until June 2020. Both residents and businesses on these islands are exempt from paying VAT on various items including, but not limited to, water, fruit and vegetable juice, clothes, shoes, unprepared food of all types, cleaning supplies, household furniture, tents, air-conditioning units, electrical generators, and office supplies.
Performance and Data Localization Requirements
The Bahamas maintains few formal performance requirements for investments. During the approvals process, an investor provides proof of adequate and legitimate sources of funding and, depending on the type of investment, produces economic and environmental impact assessments. The government negotiates requirements on a project-by-project basis, and, particularly in the case of larger developments, writes a “heads of agreement” between the government and the investor. These agreements also include government obligations to the investor. There is no official mandate for hiring local personnel, though many heads of agreement stipulate the proportion of workers who must be Bahamian.
There is no policy of forced localization or a legal requirement for technology transfers, but there is official encouragement to direct benefits to local producers and the transfer of skills to the local labor market. This engagement is a part of the negotiations with the government and it is not uncommon for an investor to gain greater concessions where there is a direct benefit to local businesses, job creation, or an investment that supports the transfer of skills and technology.
The government negotiates work permits, but generally facilitates them for key employees, as part of the investment approvals process, and particularly under the Commercial Enterprises Act. For non-essential services, the Bahamian government requires that investors document efforts to recruit local Bahamians as part of their applications for work permits, but the law does not stipulate an exact percentage. Investors in second homes can apply for permanent residency and can benefit from expedited approval for investments that exceed $500,000. Fees for work permits do not cover the administrative costs, and the government collects them as a revenue measure. Depending on the category, work permits can cost up to $15,000 annually and fees can be accessed via .
5. Protection of Property Rights
The Bahamas’ score for ease of “registering property” in the World Bank’s 2020 Doing Business Report is 181 out of 190 countries, ranking it among the worst in the world given the steps, time, and cost involved in the process. The cost of registering property in The Bahamas had a marked increase to 11.8 percent of property value, as compared with 5.9 percent for Latin America and The Caribbean, and 4.7 percent for OECD high-income countries. The time to complete the registration process remains extremely high at 122 days, and there has been limited progress in creating digital land registries or establishing time limits for procedures. These facts resulted in the World Bank ranking quality of land administration remaining at 3 on a scale of 0 to 30. The Bahamian government does not publish an official number citing the proportion of land without clear title. Property legally purchased, but unoccupied, cannot revert to other owners, such as squatters.
The various forms of land ownership in The Bahamas have their foundation in English law and can include crown land, commonage land, and generational land. The legal system facilitates the investor’s secured interest in both mobile and immobile property and is recognized and enforced in law. Mortgages in real property and security interests in personal property are recorded with the Registrar General of The Bahamas.
The Embassy has received reports of problems obtaining clear title to property, either because the seller had no legal right to convey, or because separate claims to ownership arose after a purchase was made.
Intellectual Property Rights
The Bahamian government is taking steps to strengthen Intellectual Property Rights (IPR) as part of its efforts to protect citizens, residents, foreign investors and as part of its protracted WTO accession process. These new regulations cover patents, trademarks, copyrights, integrated circuits, false trade descriptions act, protection of new plant varieties, and geographical indicators. The government anticipates the new regulations will bring The Bahamas into compliance with the terms of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.
The Bahamas is a member of the World Intellectual Property Organization (WIPO) but has not ratified the WIPO Internet treaties. The Bahamas is also signatory to the following intellectual property conventions and agreements:
Berne Convention for the Protection of Literary and Artistic Works;
Paris Convention for the Protection of Industrial Property;
Universal Copyright Convention (UCC);
Convention establishing the World Intellectual Property Organization (WIPO);
Convention on the means of prohibiting and preventing the illicit import, export, and transfer of ownership of cultural property.
The Bahamas has not recently been listed as a country of concern in the U.S. Trade Representative’s (USTR) Special 301 Report and is not considered a notorious market.
The Bahamas’ intellectual property registry is maintained by the Department of the Registrar General and enforcement responsibility is coordinated by the Royal Bahamas Police Force with support from Bahamas Customs. The Copyright Royalty Tribunal (established under the Copyright Act) is responsible for royalty-related activities, such as collecting and distributing royalties.
6. Financial Sector
Capital Markets and Portfolio Investment
The Bahamian government encourages the free flow of capital to markets, and the Central Bank of The Bahamas supports this flow through its functions. The Bahamas is an Article VIII member of the IMF and has agreed not to place restrictions on currency transactions, such as payments for imports. The Bahamas Securities Commission regulates the activities of investment funds, securities, and capital markets ( ). The fledgling local stock market excludes foreign investors but is effectively regulated by the Securities Commission.
There are no legal limitations on foreigners’ access to the domestic credit market, and commercial banks make credit available on market terms. The government encourages Bahamian-foreign joint venture businesses, which are eligible for financing through both commercial banks and the Bahamas Development Bank ( ).
Customarily the government does not prohibit its citizens from investing internationally. However, all outward direct investments by residents, including foreign portfolio investments, require the prior approval of the Exchange Control Department of the Central Bank of The Bahamas ( – controls). Applications are assessed considering the probable impact the investments may have on The Bahamas’ balance of payments, specifically business activities that promote the receipt of foreign currency.
During the COVID-19 pandemic, in an effort to maintain adequate foreign reserves to support the Bahamian dollar fixed exchange rate and preserve access to foreign exchange for priority international transactions, on May 4, 2020, the Central Bank announced the suspension of approvals of applications to purchase foreign currency for transactions via the Investment Currency Market (ICM) and the Bahamas Depositary/Depository Receipt (“BDR”) program. Both programs fund foreign portfolio investments, the latter also promoting deepening of domestic capital markets. The Central Bank announced foreign exchange access through the channels would resume once market uncertainties around the COVID-19 pandemic subsided. Meanwhile, the ICM was expected to continue to facilitate the repatriation of foreign currency income, capital gains, and liquidated capital at the appropriate premium.
Money and Banking System
The financial sector of The Bahamas is highly developed and dynamic and consists of savings banks, trust companies, offshore banks, insurance companies, a development bank, a publicly controlled pension fund, a housing corporation, a public savings bank, private pension funds, cooperative societies, credit unions, commercial banks, and the majority state-owned Bank of The Bahamas. These institutions provide a wide array of services via several types of financial intermediaries. The Central Bank of The Bahamas, the Securities Commission, Insurance Commission, the Inspector of Financial and Corporate Service Providers, and the Compliance Commission regulate the financial sector.
According to the Central Bank’s Quarterly Economic Review ending December 2019, bolstered by the receipt of re-insurance proceeds, both bank liquidity and external reserves expanded during the fourth quarter, with the growth in the deposit base outpacing the rise in domestic credit. However, the latest indicators for the third quarter of 2019 indicated a decline in overall bank profitability, largely reflecting a rise in bad debt provisioning. Banks maintained robust capital levels during the fourth quarter, although the average ratio of capital to risk-weighted assets moved lower by 90 basis points, to 30.4 percent; remaining well in excess of the Bank’s regulatory prescribed target and trigger ratios of 17 percent and 14 percent, respectively. The ratios of provisions to both non-performing loans and total arrears, firmed by 6.0 percentage points each, to 94.4 percent and 62.5 percent, respectively. Further, banks also wrote-off an estimated $29.3 million in delinquent loans and recovered approximately $6.2 million, during the review quarter.
In the domestic banking sector, four of the eight commercial banks are subsidiaries of Canadian banks, three are locally owned, and one is a branch of a U.S.-based institution. Continued reorganization by the Canadian banks has severely limited banking services on some of the less populated islands.
The Central Bank’s strategic goals include responding to the loss of brick-and-mortar banks, particularly in the Family Islands, by implementing electronic funds transfer across the country and providing access for individuals to basic financial services through digital media. To this end, the Bank introduced a digital currency called the Sand Dollar in December 2019, with a pilot phase in the Exuma islands, extending to the Abaco islands during the first quarter of 2020. This initiative, known as Project Sand Dollar, targets improved outcomes for financial inclusion and access, making the domestic payments system more efficient and non-discriminatory in access to financial services. The project has the support of the domestic financial community, which welcomes the opportunity for financial inclusion of unbanked and underbanked residents. Authorized financial institutions participating in the pilot include clearing banks, money transfer services, and payment service providers. Additional information on the Sand Dollar can be accessed via .
Foreign Exchange and Remittances
Foreign Exchange Policies
The Bahamas maintains a fixed exchange rate policy, which pegs the Bahamian dollar one-to-one with the U.S. dollar. The legal basis for the policy is the Exchange Control Act of 1974 and Exchange Control Regulations. The controls ensure adequate foreign exchange flows are always available to support the fixed parity of the Bahamian dollar against the U.S. dollar. For the tourism-dependent economy, the peg removes issues of rate conversions and allows for unified pricing of goods and services for tourists and residents. To maintain this structure, individuals and corporations resident in The Bahamas are subject to capital or exchange controls.
Exchange controls are not an impediment to foreign investment in the country. The government requires all non-resident investors in The Bahamas to register with the Central Bank, and the government allows non-resident investors who finance their projects substantially from foreign currency transferred into The Bahamas to convert and repatriate profits and capital gains freely. They do this with minimal bureaucratic formalities and without limitations on the inflows or outflows of funds.
In the administration of exchange controls, the Central Bank does not withhold or delay approval for legitimate foreign exchange purchases for currency transactions and, in the interest of facilitating international trade, it delegates this authority to major commercial banks and selected trust companies. International and local commercial banks, which are registered by the Central Bank as ‘Authorized Dealers,’ may administer and conduct foreign currency transactions with residents of The Bahamas. Similarly, private banks and trust companies which are designated as ‘Authorized Agents’ are permitted to act as depositories for foreign securities of residents and to conduct securities transactions for non-resident companies under their management.
The Central Bank directly approves foreign exchange transactions that fall outside of the delegated authority, including loans, dividends, issues and transfer of shares, travel facilities, and investment currency. The government has continued gradual liberalization of exchange controls over the years with the most recent measure implemented in April 2016. The most recent measures delegated increased authority to commercial banks for exchange control and seek to regularize nationals holding accounts in the United States by allowing nationals to open U.S. dollar denominated accounts within the jurisdiction.
As mentioned, during the COVID-19 pandemic, in an effort to maintain adequate foreign reserves to support the Bahamian dollar fixed exchange rate and preserve access to foreign exchange for priority international transactions, on May 4, 2020, the Central Bank announced the suspension of approvals of applications to purchase foreign currency for transactions via the Investment Currency Market (ICM) and the Bahamas Depositary/Depository Receipt (“BDR”) program. The Central Bank announced foreign exchange access through the channels would resume once market uncertainties around the COVID-19 pandemic subsided. Meanwhile, the ICM was expected to continue to facilitate the repatriation of foreign currency income, capital gains, and liquidated capital at the appropriate premium.
There are no restrictions on investment remittances. Foreign investors who receive a Central Bank designation as a non-resident may open foreign currency-denominated bank accounts and repatriate those funds freely. In addition, with Central Bank approval, a foreign investor may open an account denominated in Bahamian currency to pay local expenses. As mentioned, increased authority has been delegated to commercial banks and money transfer businesses.
Sovereign Wealth Funds
The Bahamian government passed omnibus legislation for the effective management of the oil and gas sector in 2017, which included the creation of a sovereign wealth fund, but has not yet promulgated supporting regulations. Discussions on a possible sovereign wealth fund have been reignited as the Bahamas Petroleum Company, an Isle of Man-registered company, received Bahamian government approval to begin drilling a test well in southern Bahamian waters off the north coast of Cuba.
7. State-Owned Enterprises
Bahamasair Holdings Ltd. (National Airline); Public Hospitals Authority; Civil Aviation Authority; Nassau Airport Development Authority; University of The Bahamas; Health Insurance Authority; Bank of The Bahamas (65 percent Bahamian government); Bahamas Power and Light (BPL); Water and Sewerage Corporation (WSC); Broadcasting Corporation of The Bahamas (ZNS); Nassau Flight Services; and the Hotel Corporation of The Bahamas.
Within the past decade, no SOE has returned profits or paid dividends. The government’s 2018-2019 budget listed $398m in subsidies allocated to SOEs and agencies for the 2018-2019 fiscal year, down slightly from the prior year’s $410m. The bulk of this sum, some $216m or more than 50 percent, was due to the Public Hospitals Authority (PHA) to cover its operational costs.
The government’s budget revealed the acquisition of, and investment in, the Grand Lucayan resort through the government’s capitalization of the special purpose vehicle, Lucayan Renewal Holdings incurring a $47m cost as at end-March 2019. The budget also disclosed transfers to non-financial SOEs rose by $29.2m to $75.8m during the first nine months of the 2018-2019 fiscal year. The government also facilitated the budgeted settlement of $7.2m in interest payment on Bahamas Resolve’s $167.7m promissory note to the Bank of The Bahamas. In April 2019, the government announced plans to introduce a State-Owned Enterprises Bill to impose proper corporate governance, accountability, and discipline and to address the risk loss-making, inefficient SOEs pose to its financial health.
The government has permitted investment in sectors where SOEs operate and has approved licenses to private suppliers of electrical and water and sewerage services. These licenses have been issued for private real estate developments or in locations in which there is limited government capacity to provide services. An exception is the city of Freeport on the island of Grand Bahama, which has its own licensing authority and maintains monopolies for the provision of electricity, water, and sanitation services.
In May 2019, the Bahamian government issued a Request for Proposal for the purchase or franchise agreement for Nassau Flight Services. Bahamian investor groups were targeted by the FNM administration, adding that only Bahamians needed to apply for the ground handling services provider’s takeover. However, in February 2019 the government announced its decision to ‘maintain the status quo’ in deciding against the privatization of Nassau Flight Services.
Privately owned domestic and foreign airlines have complained of the market distortions created by Bahamasair, claiming the national airline sells key routes below market value and benefits from not remitting licensing and other fees required by private companies. The airline has recorded annual losses for more than two decades.
The Bahamian government has not taken definitive steps to implement its proposed privatization plans but has indicated a preference for public-private partnerships as the model for privatizing SOEs. The government divested 49 percent of the Bahamas Telecommunication Company in 2011, but issued a second license for cellular services and retained 51 percent equity in the new company. In his February 2018 speech, the Deputy Prime Minister serving as Minister of Finance announced the government’s intention to divest additional equity in the Bahamian telecommunications sector. In February 2019, the Bahamian government selected UK-based Global Ports Holding’s $250 million proposal to redevelop the New Providence cruise terminal, entering a 25-year lease agreement with the company. In early 2019, the company announced a bond offering which is expected to fund $130 million of the capital for the new Port of Nassau.
8. Responsible Business Conduct
Local and foreign companies operating in The Bahamas have become more aware of and committed to Responsible Business Conduct (RBC). Local companies have led RBC-related initiatives, including educational programs directed at capacity building for specific industries, the maintenance of public spaces, and financial and technical assistance to charitable organizations.
The government encourages RBC through legislation, but it has been slow to enforce the legislation. The Bahamas enacted laws protecting individuals with disabilities from discrimination in the workplace, but lack of financial and human resources limits the enforcement of these laws. There have been no high-profile controversial instances of corporate violations of human rights, but civil society remains active in bringing attention to social issues.
Recent steps in support of RBC also include a requirement for local gaming houses to allocate three percent of net profits to community-based social development programs. Several have established foundations that support issues ranging from the environment to education. The Bahamas has strong trade unions, and labor laws prohibit discrimination in employment based on race, creed, sex, marital status, political opinion, age, HIV status, or disability.
The Bahamas is not an adhering government to the OECD Guidelines for Multinational Enterprise.
The government has laws to combat corruption of and by public officials, but they have been inconsistently applied. Reports of corruption, including allegations of widespread patronage, the routine directing of contracts to party supporters and benefactors, and wealthy and/or politically connected foreign nationals and permanent residents receiving favorable treatment have plagued the political system for decades.
In The Bahamas, giving a bribe to, or accepting a bribe from, a government official is a criminal act under the Prevention of Bribery Act. The penalty under this act is a fine of up to $10,000, or a maximum prison term of four years, or both. In October 2015, the government charged and convicted a former state energy company board member under the Prevention of Bribery Act, the first significant case brought under the Act since 1989. In May 2017, the current government won election on a mandate to end corruption. Early in the administration, the government charged a former senator with extortion and bribery, although the Chief Magistrate dismissed the case for lack of evidence. In May 2017, a former Deputy Speaker of the House of Assembly and former Chairman of the Bahamas Agricultural and Industrial Corporation was among nine people arrested for theft by reason of employment. Formal charges were never brought against them.
In late 2017, a former Senator and Public Hospitals Authority (PHA) Chairman was charged with bribery and extortion over the award of a 2016 contract. At trial, the magistrate found that prima facie case had not been made and dismissed the case in February 2019. A writ has been filed in the Supreme Court while awaiting a Privy Council hearing following the Crown’s appeal of the acquittal. In August 2017, a former Minister of Labor and National Insurance was charged with soliciting and accepting bribes to expedite payments owed to a service provider under the former administration. He was acquitted on all counts in November 2019 and the government confirmed it had no intention to appeal the acquittal. Following the acquittals, the former PHA Chairman and former Labor Minister sued the government for malicious prosecution and are seeking aggravated and exemplary damages and disciplinary proceedings for the Commissioner of Police, the Director of Public Prosecutions, and an Assistant Superintendent of Police.
seeking aggravated and exemplary damages and disciplinary proceedings for the Commissioner of Police, the Director of Public Prosecutions, and an Assistant Superintendent of Police.
In February 2019, the government arraigned a former Urban Renewal Deputy Director on charges related to defrauding the government. The case is ongoing.
The Public Disclosure Act requires senior public officials, including senators and members of Parliament, to declare their assets, income, and liabilities on an annual basis. The government publishes a summary of the individual declarations.
According to Transparency International’s 2019 Corruption Perceptions Index, The Bahamas ranked 29 out of 180 countries with a score of 64 out of 100. There are no protections for NGOs involved in investigating corruption. U.S firms have identified corruption as an obstacle to FDI and have reported perceived corruption in government procurement and in the FDI approvals process.
The government does not, as a matter of government policy, encourage or facilitate illicit drug production or distribution, nor is it involved in laundering the proceeds of the sale of illicit drugs. No charges of drug-related corruption were filed against government officials in 2019.
The Bahamas ratified major international corruption instruments, including the Inter-American Convention against Corruption since signing in 1998 (ratified in 2000), and has been a party to the Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption (MESICIC) since June 2001. The Bahamas is not party to the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.
Resources to Report Corruption
Contact at government agency or agencies responsible for combating corruption:
Royal Bahamas Police Force
Anti- Corruption Unit
P.O. Box N-458
Contacts at “watchdog” organizations:
Citizens for a Better Bahamas
Transparency International (Bahamas Chapter)
Organization for Responsible Governance (ORG)
Bay Street Business Center, Bethell Estates
East Bay Street (at Deveaux St.)
10. Political and Security Environment
The Bahamas has no history of politically motivated violence and, barring a few incidents leading up to the last general elections, the political process is violence-free and transparent. These incidents were minor and included damage to political party installations, signage, billboards, and a few reported altercations between opposing party members.
11. Labor Policies and Practices
The Bahamian labor force is considered well-educated by international literacy and numeracy standards. According to the government’s December 2019 Labor Force Survey, the 2019 labor force was approximately 170,800 and the unemployment rate was 10.7 percent. Youth unemployment rates remain high at 24.6 percent (IMF). Wage rates are slightly lower than in the United States but higher than most countries in the region. The minimum wage for private sector employees is $5.25 per hour ($210 per week). There are significant numbers of foreign workers. The Bahamian government has approximately 40,000 registered work permit holders and the majority are designated as unskilled or semi-skilled. The majority of this group is comprised of Haitian nationals working in a range of services.
The Bahamian government has granted special permission to large-scale tourist developments to bring in foreign laborers to support construction activities. These numbers have ranged from a few hundred (The Pointe Development) to several thousand temporary workers during the construction of the Baha Mar resort. The concession for large groups of foreign workers was negotiated as part of the Heads of Agreement for the specific investment but generally, employment requires applications for individual work permits. The terms and conditions of work for foreign workers is subject to Bahamian law.
The Fair Labor Standards Act (FLSA) requires at least one 24-hour rest period per week, paid annual vacations, and employer contributions to National Insurance (Social Security). The Act also requires overtime pay (time and a half) for hours in excess of 40 or on public holidays. A 1988 law provides for maternity leave and the right to re-employment after childbirth. The Minimum Labor Standards Act, including the Employment Act, Health and Safety at Work Act, Industrial Tribunal and Trade Disputes Act, and the Trade Union and Labor Relations Act were passed in 2001 and in early 2002. Foreign workers also have claim to social security benefits after five consecutive years of contributions.
Bahamian law also specifically grants labor unions the right to free assembly and association and to bargain collectively. The unions and associations exercise these rights extensively, particularly in state-owned industries, and although government officials have downplayed perceptions of strained labor relations, there has been growing industrial unrest throughout 2019 with formal protests by the Bahamas Public Services Union, the Union of Public Officers, the Nurses Union, the Doctors Union, the Consultant Physicians Staff Association, the Bahamas Educators and Managerial Union, Customs, Immigration and Allied Workers Union, the Union of Tertiary Educators, and the Union of Teachers.
In 2016, the government amended legislation to require employers to inform the Minister of Labor in instances where more than 10 persons were being laid off. The action came in response to a hotel chain using union-busting tactics to lay off the majority of its employees and hire non-union workers as contractors. In sectors where unions are active, the Industrial Relations Act governs the right to strike, which requires a simple majority of union members to vote in favor of a strike before it can commence. The Ministry of Labor oversees strike votes and manages overall industrial relations.
The Bahamas ratified most International Labor Organization (ILO) Conventions and domestic law recognizes international labor rights. The Bahamian government lacks fiscal and human resources to adequately investigate occupational safety and health issues, but is taking steps to improve this. The country is committed to eliminating the worst forms of child labor, and the Ministry of Labor has periodically inspected food stores and other establishments to ensure the enforcement of laws governing child labor. 12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
The Bahamas is a member of the Multilateral Investment Guarantee Agency of the World Bank, which insures investors against currency transfer restrictions, expropriation, war, civil disturbances, and breach of contract by member countries.
As The Bahamas is a high income country (as defined by the World Bank), it generally does not qualify for DFC support.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 3: Sources and Destination of FDI
Data not available.
Table 4: Sources of Portfolio Investment
Data not available.
14. Contact for More Information
U.S. Embassy Nassau
New Providence, The Bahamas
P.O. Box N-8197
Telephone: (242) 322-1181