2021 Investment Climate Statements: The Bahamas

Policies towards Foreign Direct Investment

The government encourages FDI, particularly in the tourism and financial services sector. The National Investment Policy (NIP) and the Commercial Enterprises Act (CEA) explicitly encourage foreign investment in certain sectors of the economy: 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 ) takes the lead on administering investment policies, functions as the investment facilitation agency, and acts as a ‘one stop shop’ to assist investors in navigating the cumbersome approvals process. All foreign investors must apply for approval from the BIA. 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 Small and Medium Enterprises (which represent 85 percent of registered businesses), and in 2018 launched the Small Business Development Centre (SBDC). The SBDC provides business advisory services, training, professional development opportunities, incubation services, access to capital, and advocacy for individual businesses. In response to the pandemic and to create opportunities for Bahamian entrepreneurs, the government earmarked $250 million in 2020 for loans and grants over five years to local small and medium enterprises.

The Bahamas 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); agencies engaged in import or export; real estate agencies 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 requiring foreign expertise; personal cosmetic or beauty establishments; commercial fishing including both deep water fishing and shallow water fishing of crustaceans, mollusks, fish, and sponges; auto and appliance services; public transportation including boat charters; and domestic gaming. The government does make exceptions to this policy on a case-by-case basis, and the Embassy is aware of several cases in which the Bahamian government has granted foreign investors full market access.

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 the National Investment Policy (NIP), administered by the BIA, and through the Commercial Enterprises Act (CEA) administered by 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 require environmental and economic impact assessments, require approval by the National Economic Council (NEC) of The Bahamas. This process generally requires 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 out of 190 countries 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 2019 metrics, with the exception of getting construction permits. The Embassy is aware of cases of significant delays in the approvals process, including cases where the Bahamian government failed to respond to investment applications. Despite bureaucratic challenges and the impact of COVID-19, investment continues in tourism, finance, construction, and fast-food franchises.

In response to the losses from Hurricane Dorian and the economic fallout from COVID-19, the government announced efforts to accelerate FDI, including liberalization of requirements for investment and accelerating the review process for proposals. In April 2020, the government also appointed an Economic Recovery Committee (ERC) – a public-private coalition to develop recommendations for government policies to addresses the economic impact of the COVID-19 pandemic. The ERC’s full report can be accessed via https://opm.gov.bs/economic-recovery-committee-executive-summary-report-2020/ .

The ERC’s nearly two dozen recommendations were intended to transform the Bahamian investment regime, remove structural impediments, and incentivize domestic and foreign investment. The government accepted certain recommendations, including the establishment of an entrepreneur visa for persons wishing to work or study from The Bahamas for one year ( www.bahamasbeats.com ), limiting approvals for projects under $10 million, creating special economic zones on lesser developed islands, and establishing an autonomous agency to oversee a modern investment regime (INVESTBAHAMAS). With this new agency in place, bureaucratic delays, functionality and transparency are expected to improve. The agency will reportedly give priority to high-tech financial products, biotechnology, renewable energy investments, and climate adaptability projects. INVESTBAHAMAS remains in the planning stages.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors have the right to establish private enterprises and, after approval, most companies operate unencumbered. Key considerations for approval include economic impact, job creation, infrastructural development, economic diversification, environmental protection and corporate social responsibility. 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.

Other Investment Policy Reviews

The Bahamas ranks 119 out of 190 countries in terms of “ease of doing business” in the 2020 World Bank Doing Business Report. See http://doingbusiness.org/rankings . The Bahamas is the only Western Hemisphere country not in the WTO, and therefore has never benefitted from a WTO trade policy review. The current government launched accession negotiations with the WTO in April 2019, initially announcing the goal of full membership later the same year. However, the government later described the 2019 target as purely aspirational, confirming it was unlikely accession would take place before 2025. A vocal domestic constituency opposes WTO accession on the grounds that membership will hurt domestic producers and service providers.

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.

Business Facilitation

According to the 2020 World Bank Doing Business Index, starting a business in The Bahamas takes 12 days, requires seven 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 allowed companies to apply for or renew their business licenses online ( http://inlandrevenue.finance.gov.bs/business-licence/copy-applying-b-l/ ).

In 2020, as part of the business license application process, the government expanded provisional licenses for many small, domestic businesses so the majority would be able to start operations while awaiting formal approval. The government also removed the fee for starting a new business and renewed business licenses in under 48 hours. Foreign companies and most larger businesses are not eligible for provisional licenses, expedited renewals, or new business license fee exemptions.

All companies with an annual turnover of $100,000 or more are required to register with the government to receive a Tax Identification Number and a Value Added Tax Certificate. The lengthy registration processes are generally viewed as an impediment to the ease of doing business.

Outward Investment

The Bahamian government neither promotes nor prohibits 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 ( https://www.centralbankbahamas.com/exchange-control-notes-and-guidelines ). 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.

The Bahamas has no bilateral investment agreements but has signed tax information exchange agreements with 34 countries, including the United States in 2002. The agreement designates The Bahamas as a qualified jurisdiction and allows U.S. companies to qualify for tax credits for conventions and related corporate expenses.

Tax information exchange agreements to date include: Argentina (2009), Aruba (2011), Australia (2010), Belgium (2009), Canada (2010), China (2009), Czech Republic (2014), Denmark (2010), Faroe Islands (2010), Finland (2010), France (2009), Georgia (2016), Germany (2010), Greenland (2010), Guernsey (2011), Iceland (2010), India (2011), Indonesia (2015), Ireland (2015), Japan (2011), Malta (2012), Mexico (2010), Monaco (2009), Netherlands (2009), Norway (2010), Poland (2013), Republic of Korea (2011), San Marino (2009), South Africa (2011), Spain (2010), Sweden (2010), United Kingdom (2009), and the United States of America (2002).

The Bahamas was the first in the Caribbean region to sign the Foreign Account Tax Compliance Agreement (FATCA) with the United States. Since September 2015, The Bahamas has implemented a non-reciprocal, inter-governmental agreement (Model 1B) to satisfy the obligations of the agreement. Additionally, in January 2017, the government implemented the OECD-developed Common Reporting Standard (CRS) through the Automatic Exchange of Financial Account Information Act and has activated exchange relationships with 63 partners ( www.taxreporting.finance.gov.bs/ ).

The Bahamas is a signatory to the 2008 Economic Partnership Agreement between the Caribbean Forum (CARIFORUM) and the European Union, and the 2019 Economic Partnership Agreement between CARIFORUM and the United Kingdom. Both agreements provide for the asymmetrical liberalization of trade in goods and services between CARIFORUM and the other signatories and include specific commitments on investments and trade in services. The Bahamas has not yet ratified either trade agreement, but provisionally applies both.

The Bahamas remains a member of the Caribbean Community (CARICOM) but does not participate in the customs union. The Bahamas does not have a free trade agreement with the United States but, as a member of CARICOM, is signatory to the US-CARICOM Trade and Investment Framework Agreement (2013).

Transparency of the Regulatory System

The Bahamas’ legal and regulatory systems are transparent and generally consistent with international norms. The Bahamian government is reforming public accounting procedures to conform to international financial reporting standards. In March 2021, the government passed a suite of legislation aimed at improving the country’s fiscal governance by enhancing transparency and accountability. The legislation included the Public Debt Management Bill (2021) that seeks to enshrine proper debt management policies into law and improve transparency concerning central government and SOE debt; the Public Finance Management Bill (2021) that expands budgetary and fiscal reporting requirements for central government and SOEs; the Statistics Bill (2021) that transforms the current Department of Statistics into a quasi-independent National Statistics Institute; and the Public Procurement Bill (2020), that overhauls current arrangements for government contracts to improve transparency and accountability.

Proposed legislation is available at the Government Publications Office and public engagement is encouraged, particularly on controversial legislation. There is no equivalent to the Federal Register, but the government regularly updates its website ( www.bahamas.gov.bs ) to list draft legislation, bills before parliament, and its legislative agenda. Regulatory system reform legislation has not been fully implemented. Public consultation on investment proposals 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 an annual Fiscal Strategy Report (FSR) which provides a three-year fiscal forecast that sets targets for the preparation of the government’s annual budgets. The 2020 FSR gave a detailed synopsis of the state of public finances and future plans for revenue, expenditure, debt, and economic growth. The government presents the FSR and makes financial information available during the budget submissions to parliament. The information is also published on the government’s budget website ( www.bahamasbudget.gov.bs ) in simple and non-technical language.

Although efforts have been made to fulfill FRA reporting obligations, The Bahamas’ supreme audit institution, the Office of the Auditor General, has not published a timely audit report of the government’s budget for several years. The last publicly available audit covers fiscal year 2016/2017. Acknowledging the need to meet international standards, the Office of the Auditor General is liaising with the U.S. Global Accountability Office to identify ways to fulfill its reporting obligations.

The government has taken on increasing levels of debt during the COVID-19 pandemic in order to provide social safety nets while stimulating the economy. Some observers consider the debt levels unsustainable and have even speculated about the possibility of default. The Central Bank of The Bahamas denies this speculation and provides quarterly updates on debt obligations on its website ( www.centralbankbahamas.com ).

International Regulatory Considerations

The Bahamas is not a member of the WTO, so does not notify the WTO Committee on Technical Barriers to Trade (TBT) of draft technical regulations. As part of WTO accession negotiations launched in 2018, The Bahamas announced it is reviewing investment policies with the aim of developing comprehensive, WTO-compliant investment legislation. The Bahamas is not a member of UNCTAD’s international network of transparent investment procedures, nor is it a member of a regional economic bloc.

The Bahamas has enacted basic laws governing standards. The Bahamas Bureau of Standards and Quality (BBSQ), launched in 2016, governs standards for goods and services, particularly metrology (weights and balances). BBSQ also cooperates with other ministries on quality standards, such as sanitary and phytosanitary standards with the Ministry of Agriculture and Marine Resources and the Bahamas Health and Food Safety Agency (BAHFSA). BBSQ serves as the country’s focal point on trade barrier issues and is supported by the EU and the Caribbean Regional Organization for Standards and Quality (CROSQ) in the development of national standards. Trade barriers are not a hindrance to trade with the United States and U.S. products are widely accepted.

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. Contracts are legally enforced through the courts, however, there are instances where local and foreign investors have civil disputes tied up in the court system for many years. Investors have been defrauded of sums ranging from several hundred thousand to several million dollars, but the court system has lacked the capacity to recover their investments. Throughout 2020, a U.S. investor and a government utility company were engaged in a civil dispute concerning the termination of a contract, non-payment for services provided, and ownership of equipment and materials. This case is ongoing.

The judiciary is independent and allegations of government interference in the judicial process are rare. With the recommendation of the Prime Minister, the Governor General appoints the highest-ranking officials in the judicial system, including the Chief Justice of the Supreme Court, the Attorney General, the Director of Public Prosecutions, and the President of the Court of Appeals. 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 Bahamas continues to advance efforts to develop its reputation as a center for international arbitration by drafting legislation to govern domestic arbitration and incorporate key provisions of the Model Law of the United Nations Commission on International Trade Law (UNCITRAL). The legislation has not yet been passed.

In 2020, the government announced it continued to leverage alternative dispute resolution (ADR) as a method of resolving disputes without resorting to the court system, including by establishing an ADR unit in mid-August 2020 and developing a two-year strategic plan to promote this method for settling commercial and other types of disputes.

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 local courts and are subject to Bahamian legal requirements. The current government is taking steps to increase judicial transparency and efficiency. Their goal is to modernize the justice system by digitizing court records, streamlining court administration, constructing a new Supreme Court complex, and drafting new rules and legislation to govern court procedures. Progress has been mixed.

Laws and Regulations on Foreign Direct Investment

While some public pronouncements have been made on FDI policies, no major laws, regulations, or judicial decisions have been passed since the 2020 Investment Climate Statement. The government has drafted a Foreign Investment Bill purported to codify the existing National Investment Policy, align with international best practices, and bring additional transparency, accountability, and predictability to the country’s foreign investment process. The Embassy is not aware of efforts to advance this Bill in 2020.

Competition and Anti-Trust Laws

The Utilities Regulation and Competition Authority (URCA) regulates the telecommunications and energy sectors and imposes antitrust restrictions in these sectors. However, there is no legislation governing competition or anti-trust. A Competition (Antitrust) Bill has been drafted in line with The Bahamas’ CARIFORUM-EU obligations and WTO accession requirements, and initial public consultations were held in August 2018. The Embassy is not aware of any efforts to advance this Bill in 2020.

URCA continues to build technical capacity with the support of the U.S. Government.

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 to stem COVID-19 infections, grant the government authorization to requisition any building, ship, aircraft, or article if it is reasonably required for any statutory purpose for the duration of the emergency. At the conclusion of the requisition, the government is to make prompt and adequate compensation to the owner. The Regulations are expected to expire upon cancelation of the state of emergency. The Embassy is not aware of any instance in 2020 where the government invoked this law.

Dispute Settlement

ICSID Convention and New York Convention

The Bahamas is a member of both the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) Convention and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the New York Convention). 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 Bahamas’ Arbitration Act of 2009 enacted the New York Convention and provides a legal framework.

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 Bahamas is a signatory to Economic Partnership Agreements between CARIFORUM and the European Union (2008) and CARIFORUM and the United Kingdom (2019). Both agreements include dispute settlement provisions and procedures. The Bahamas has not yet ratified either of the trade agreements, but 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 World Bank’s Multilateral Investment Guarantee Agency (MIGA), 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. The Embassy is not aware of any cases involving state owned enterprises that resulted in litigation.

Bankruptcy Regulations

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, and the Central Bank confirmed that Italian-based CRIF S.P.A. would launch The Bahamas’ first credit bureau in 2021. Bahamian commercial banks and other lenders will be required to share their clients’ credit history with CRIF and allowed to access credit reports.

Investment Incentives

Tax relief is by far the most compelling and significant investment incentive in The Bahamas. The government does not impose taxes on income, estates, or inheritances. 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 Bahamas Investment Authority (BIA) and require the approval of the National Economic Council (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 and impact 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 the legislation or acts as the intermediary between the foreign investor and relevant authority. Further information on investment incentives is available at http://www.bahamas.gov.bs .

Foreign Trade Zones/Free Ports/Trade Facilitation

The city of Freeport is a 233-square-mile Free Trade Zone on the island of Grand Bahama. The Hawksbill Creek Agreement (1955) between the Bahamian government and the Grand Bahama Port Authority guarantees the “special economic zone” until 2054. Businesses operating in Freeport are subject to licensing by the Port Authority but exempt from most taxes (including property, excise, import, and business taxes). The Bahamian government has made efforts to regulate business activities and extract tax revenues from the free zone, but most have been litigated to the Port’s benefit. The current government has repealed legislation that differentiated between local and foreign licensees within the Port.

In the aftermath of Hurricane Dorian in September 2019, the two islands of Abaco and Grand Bahama were both declared Special Economic Recovery Zones (SERZ), which allowed residents and businesses to benefit from wide-ranging tax exemptions and incentives until December 31, 2020. In late December 2020, the government extended most of the tax concessions to June 2021, including tax-free sale of fuel and importation of household goods; continuing tax concession on replacement vehicles; and a discount on the value-added tax (VAT) on the sale of real estate valued up to $500,000.

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 include government obligations to the investor. There is no official mandate to hire local personnel, though many Heads of Agreement stipulate the proportion of workers who must be Bahamian.

There is no policy of forced localization to compel foreign investors to purchase locally or transfer technology, but the government encourages commercial enterprises to source from local producers and transfer skills to the local labor market. This engagement is a part of the negotiations with the government during the approval phase, and it is common for an investor to gain concessions where they can benefit local businesses, create jobs, or support the transfer of skills and technology.

The government negotiates and sometimes facilitates work permits for key employees as part of the investment approvals process, and particularly under the Commercial Enterprises Act (CEA). For non-essential services, the Bahamian government requires investors to document efforts to recruit local Bahamians as part of their applications for work permits, but the law does not stipulate an exact percentage. Buyers of second homes can apply for permanent residency and benefit from expedited approval for home purchases that exceed $500,000. The government generates revenue by collecting fees for work permits. Depending on the category, work permits can cost up to $15,000 annually. Fees can be assessed and paid at www.immigration.gov.bs .

Real Property

Despite the high number of second-home owners in The Bahamas, the country’s score for ease of “registering property” in the World Bank’s 2020 Doing Business Report is 181 out of 190 countries. This makes it among the worst in the world. The cost of registering property in The Bahamas increased to 11.8 percent of property value, 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 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 a World Bank ranking of 3 for quality of land administration (on a scale of 0 to 30). The Bahamian government does not publish an official number citing the proportion of land without clear title. Unoccupied property cannot revert to other owners, such as squatters. This leads to a high incidence of unoccupied, derelict, and partially constructed residences in The Bahamas, with little evidence of successful government policies to encourage their sale or productive use. Abandoned buildings are also in evidence in commercial districts, such as downtown Nassau.

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 by law. Mortgages in real property and legal rights 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) in response to pressure from the business community and as part of its protracted WTO accession process. These new regulations cover patents, trademarks, copyrights, integrated circuits, false trade descriptions act, 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 included in USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.

The Bahamas’ intellectual property registry is maintained by the Department of the Registrar General ( https://www.bahamas.gov.bs/rgd ), and enforcement 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.

The government and the Economic Recovery Commission (ERC) have recognized the need to strengthen the intellectual property regime in The Bahamas. The government announced plans to develop a functional and efficient Intellectual Property/Copyright Legislative Department and accelerate the digitization of intellectual property registration and interconnectivity of government agency systems.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The government encourages the free flow of capital markets, and the Central Bank supports this flow through its regulatory 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 ( www.scb.gov.bs ). The fledgling local stock market, established in 1999, 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 at market rates. The government encourages Bahamian-foreign joint ventures, which are eligible for financing through both commercial banks and the Bahamas Development Bank ( http://www.bahamasdevelopmentbank.com/ ).

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 ( www.centralbankbahamas.com/exchange – controls). Applications are assessed by their probable impact on The Bahamas’ balance of payments, specifically business activities that promote the receipt of foreign currency.

In an effort to maintain adequate foreign reserves during the economic crisis brought on by COVID-19, the Central Bank suspended purchases of foreign currency on May 4, 2020 for specific transactions that could drain reserves and jeopardize the country’s ability to maintain a fixed, one-to-one exchange rate with the U.S. dollar. The Central Bank also suspended Bahamian investments in U.S.-dollar denominated investment funds created by local brokers seeking higher returns in overseas markets. The Central Bank warned it was prepared to act swiftly in imposing even harsher restrictions, if necessary, to maintain the country’s fixed exchange rate and to conserve foreign currency reserves. The suspension remained in place throughout 2020 and had not been lifted as of spring 2021.

Money and Banking System

The financial sector of The Bahamas is highly developed 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 state-owned Bank of The Bahamas. These institutions provide a wide array of services via several types of financial intermediaries. The financial sector is regulated by The Central Bank of The Bahamas, the Securities Commission, Insurance Commission, the Inspector of Financial and Corporate Service Providers, and the Compliance Commission.

According to the Central Bank’s Quarterly Economic Review of December 2020, the contraction in domestic credit outpaced the reduction in the deposit base during the fourth quarter of 2020. Consequently, both bank liquidity and external reserves expanded, bolstered by foreign currency inflows from the government’s external borrowings. However, banks’ credit indicators deteriorated during the fourth quarter due to the adverse impact of the COVID-19 pandemic. Further, data from the third quarter revealed a reduction in banks’ overall profitability, reflecting higher levels of provisioning for bad debt.

In the external sector, the estimated current account balance went from a surplus in 2019 to a deficit during the final quarter of 2020. The services account also moved from surplus to deficit, as travel restrictions associated with the COVID-19 pandemic led to a significant reduction in travel receipts. In contrast, the surplus on the capital and financial account increased considerably, owing primarily to an expansion in debt-financed government spending.

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 by implementing digital banking across the country. To this end, the Central Bank introduced the “Sand Dollar” in December 2019, the first central bank-backed digital currency in the world. The introduction of the new currency aims to provide individuals with efficient and non-discriminatory access to financial services. Since its launch, domestic financial and political elites have welcomed the financial inclusion of unbanked and underbanked residents. To date, nine firms (including clearing banks, money transfer services, credit unions and payment service providers) have successfully completed the cybersecurity assessment and been authorized to distribute Sand Dollars within their proprietary mobile wallets.

Although Sand Dollar accounts and transactions are theoretically subject to the same stringent anti-money laundering and Know Your Customer (KYC) safeguards as traditional commercial banks, the Central Bank’s capacity to enforce these safeguards, as well as account audit capabilities, may be limited. Additional information on the Sand Dollar can be accessed via www.sanddollar.bs/ .

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. 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 restrictions on foreign exchange transactions, including currency purchases, payments, and investments. Similarly, Bahamians cannot make payments or investments in foreign currencies without Central Bank approval.

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.

Remittance Policies

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.

The Bahamas is one of 25 member countries that make up the Caribbean Financial Action Task Force (CFATF), an organization dedicated to address the problem of money laundering. The organization’s most recent peer review evaluation and follow-up reports can be found at ( https://www.cfatf-gafic.org/index.php/member-countries/the-bahamas ).

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 of a possible sovereign wealth fund were reignited when the Bahamas Petroleum Company, an Isle of Man-registered company, began exploratory oil drilling in Bahamian waters. The company confirmed in February 2021 that its exploratory drilling did not produce commercially viable quantities of oil.

The government nevertheless announced plans in January 2021 to accelerate the establishment of a Sovereign Wealth Fund and an accompanying National Infrastructure Fund. The government stressed the funds would derive income from royalty payments from all the country’s natural resources (such as salt, sand, rock and aragonite exports), not just potential earnings from oil exploration. The government suggested both funds would mobilize public assets and private capital to generate hundreds of millions of dollars in infrastructure investments across the country. The government committed to embrace international best practices designed to address issues of transparency, accountability and the governance structure of such funds.

State-Owned Enterprises (SOEs) are active in the utilities and services sectors of the Bahamian economy. A list of the 25 SOEs available on www.bahamas.gov.bs  includes key SOEs, such as Bahamasair Holdings Ltd. (the national airline); Public Hospitals Authority; Civil Aviation Authority; Nassau Airport Development Authority; University of The Bahamas; Health Insurance Authority; Bank of The Bahamas; 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.

In April 2019, the government announced plans to introduce a State-Owned Enterprises Bill to impose proper corporate governance and address the risk inefficient SOEs pose to its financial health. The Embassy is unaware of efforts to advance this Bill in 2020, though a suite of legislation passed in March 2021 aimed at improving the country’s fiscal governance may also improve the performance and accountability of SOEs.

Within the past decade, no SOE has returned profits or paid dividends, although SOEs account for significant government expenditure, with approximately $408 million budgeted for fiscal year 2020-2021. The latest budget also reveals that on average, nearly 16 percent of the government’s recurrent spending goes to SOE subventions, noting several SOEs required increased funding given the financial stress brought on by the COVID-19 pandemic. However, the government has maintained SOE reforms are integral to its fiscal consolidation plans and announced plans to reduce subsidies by $100 million annually over the next four years. Cost-recovery measures are to begin in mid-2021 for Bahamasair and the Water & Sewerage Cooperation in particular. The savings from SOE reform are expected to assist with meeting additional debt servicing obligations.

The government has permitted foreign 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 where 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.

Privatization Program

The Bahamian government has not taken definitive steps to privatize SOEs but has held up public-private partnerships as the preferred model going forward. 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 then-Deputy Prime Minister announced the government’s intention to divest additional equity in the Bahamian telecommunications sector. In February 2019, the government accepted UK-based Global Ports Holding’s $250 million proposal to redevelop the Nassau Cruise Port, entering a 25-year lease agreement with the company. In early 2019, the company announced a bond offering to raise $130 million for the new port.

Local and foreign companies operating in The Bahamas have recently become more committed to the tenets of responsible business conduct (RBC). Local and foreign 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 enforcement has been slow. The government has also enacted laws protecting individuals with disabilities from discrimination in the workplace, but again, enforcement is limited. There have been no high-profile or 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.

Additional Resources 

Department of State

• Country Reports on Human Rights Practices;
• Trafficking in Persons Report;
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities and;
• North Korea Sanctions & Enforcement Actions Advisory

Department of Labor

• Findings on the Worst Forms of Child Labor Report;
• List of Goods Produced by Child Labor or Forced Labor.
• Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World and;
• Comply Chain.

The government has laws to combat corruption among public officials, but they have been inconsistently applied. The law provides criminal penalties for corruption by public officials, and the government generally implemented the law effectively. However, there was limited enforcement of conflicts of interest related to government contracts and isolated reports of officials engaged in corrupt practices, including by accepting small-scale “bribes of convenience”. The political system is plagued by reports of corruption, including allegations of widespread patronage, the routine directing of contracts to political supporters, and favorable treatment for wealthy or politically connected individuals. In The Bahamas, bribery of a government official is a criminal act carrying a fine of up to $10,000, a prison term of up to four years, or both.

In May 2017, the current government won the election on a platform to end corruption. Early in the administration, the government charged a number of former officials with various crimes including extortion and bribery, theft by reason of employment, and defrauding the government. These cases were either dismissed, ended in acquittals, or are ongoing. The government reported no new cases of corruption in the executive, legislative, and judicial branches during 2020. Nevertheless, three Cabinet Ministers resigned in the first three years of the current administration under allegations of corruption, including the Deputy Prime Minister, the Minister of Financial Services, and the Minister of Youth, Sports and Culture.

The Public Disclosure Act requires senior public officials, including senators and members of Parliament, to declare their assets, income, and liabilities annually. For the 2020 deadlines, the government gave extensions to all who were late to comply. The government did not publish a summary of the individual declarations, and there was no independent verification of the information submitted.

The campaign finance system remains largely unregulated, with few safeguards against quid pro quo donations, creating a vulnerability to corruption and foreign influence. The procurement process also remains susceptible to corruption, as it contains no requirement to engage in open public tenders, although the government routinely did so. In February 2021, the government passed the Public Procurement Bill (2020), which reportedly overhauls current governance arrangements for government contracts to improve transparency and accountability.

According to Transparency International’s 2020 Corruption Perceptions Index, The Bahamas ranked 30 out of 180 countries with a score of 63 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 2020.

The Bahamas ratified major international corruption instruments, including the Inter-American Convention against Corruption (signed 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 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
(242) 322-4444
Email: info@rbpf.bs 

Contacts at “watchdog” organizations:

Citizens for a Better Bahamas
Transparency International (Bahamas Chapter)
(242) 322-4195
Website: www.abetterbahamas.org 
Email: info@abetterbahamas.org 

Organization for Responsible Governance (ORG)
Bay Street Business Center, Bethell Estates
East Bay Street (at Deveaux St.)
Website: www.orgbahamas.com 
Phone: 1-242-828-4459
Email:  info@orgbahamas.com 

The Bahamas has no history of politically motivated violence and, barring a few incidents leading up to general elections in 2019, the political process is violence-free and transparent. These incidents were minor and included damage to political party installations, signage, billboards, harassing social media posts and a few reported altercations between opposing party members.

The Bahamian labor force is considered well-educated by international literacy and numeracy standards. Although a formal Labor Force Survey has not been completed since December 2019 when the unemployment rate was 10.7 percent, government and international agencies estimate the unemployment rate at 25 to 40 percent in 2020 because of the effects of the COVID-19 pandemic. Under normal conditions, wage rates are slightly lower than in the United States but higher than most countries in the region. The minimum wage is $5.25 per hour ($210 per week). There are significant numbers of foreign workers, both documented and undocumented. There are 40,000 registered work permit holders in The Bahamas, 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 resort developments to bring in foreign construction workers. These numbers have ranged from a few hundred at the Pointe Development in Nassau to several thousand during the construction of the Baha Mar mega resort. These concessions were negotiated as part of the Heads of Agreement for specific, large-scale investments, but in most other cases, the employment of foreigners requires applying for individual work permits. Bahamian labor law governs all workers, both foreign and domestic.

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 working more than 40 hours a week 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 the right to social security benefits after five consecutive years of contributions.

Bahamian law 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. 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. Although government officials have downplayed perceptions of strained labor relations, industrial unrest has grown throughout 2020 due to longstanding issues and the effects of the pandemic. In 2020, demonstrations were organized 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 ten persons were being laid off. This legislation has been useful to the Bahamian public, as many employers laid off or furloughed workers due to the pandemic throughout 2020.

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 has announced steps to improve this including strengthening the Department of Labor’s Inspection Section to conduct inspections randomly and on request. The country is committed to eliminating the worst forms of child labor, and the Ministry of Labor has periodically inspected grocery stores and other establishments to ensure the enforcement of laws governing child labor.

The Bahamas is a member of the Multilateral Investment Guarantee Agency of the World Bank (MIGA), which insures investors against currency transfer restrictions, expropriation, war, civil disturbances, and breach of contract by member countries. Because the World Bank designates The Bahamas as a high-income country, it generally does not qualify for development assistance.

Table 3: Sources and Destination of FDI
Data not available.

Table 4: Sources of Portfolio Investment
Data not available.

Political-Economic Section
U.S. Embassy Nassau
New Providence, The Bahamas
P.O. Box N-8197
Telephone: (242) 322-1181
Email: NassauPolEconDL@state.gov