Bahamas Tax Regime

The Bahamas has no general corporate income tax, no personal income tax and no capital gains tax, a policy position that has defined the jurisdiction's role as a leading centre for international financial services, tourism-linked investment and offshore corporate structuring. Government revenue is instead raised through consumption and transaction-based levies — principally value added tax, import duties, stamp duty and a turnover-based business licence fee — together with real property tax and payroll-based National Insurance contributions. This broad no-income-tax position changed at the margin, though not for the general economy, with the enactment of the Domestic Minimum Top-up Tax Act on 29 November 2024, which introduced a narrowly targeted 15% minimum tax applicable only to Bahamian constituent entities of the very largest multinational enterprise groups, in direct response to the OECD/G20 Pillar Two initiative. The Bahamas continues to have no general corporate income tax outside this narrow Pillar Two scope, and the introduction of the DMTT Act should not be read as the beginning of a broader move toward an economy-wide income tax.

1.1 Sources

Primary legislation includes the Domestic Minimum Top-up Tax Act 2024, the Business Licence Act, the Value Added Tax Act 2014 (as amended), the Commercial Entities (Substance Requirements) Act, and the International Business Companies Act.

1.2 Recent developments

The Domestic Minimum Top-up Tax Act was enacted on 29 November 2024 to implement the OECD/G20 Pillar Two framework in The Bahamas, establishing a 15% global minimum tax for in-scope MNE groups — those with consolidated annual revenue of EUR 750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year. The DMTT Act is stated to be effective from 1 January 2024 and applies to fiscal years of an in-scope MNE group beginning after 31 December 2023, subject to an important transitional carve-out: the Act does not apply to a constituent entity for a fiscal year beginning before 1 January 2025 unless the MNE group, or a constituent entity of the group, is subject to an income inclusion rule (IIR) or undertaxed profits rule (UTPR) in another jurisdiction for that fiscal year. In practical terms, most in-scope groups' Bahamian constituent entities become exposed to the DMTT beginning with the 2025 fiscal year, other than groups already caught by a foreign IIR or UTPR with respect to an earlier period. In-scope MNE groups must prepare and file the OECD GloBE Information Return within 15 months of the relevant fiscal year-end and submit the required information to the Bahamian tax authorities, a wholly new compliance obligation for the jurisdiction. Outside this narrow Pillar Two population, no other Bahamian tax change of comparable significance has been made to the long-standing no-income-tax framework.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

The Bahamas levies no general corporate income tax on companies incorporated or operating in The Bahamas, irrespective of residence, source of income, or whether profits are retained or distributed. This applies equally to ordinary Bahamian companies conducting local business and to International Business Companies (IBCs) used for cross-border holding, trading and investment structures. The only exception is the Domestic Minimum Top-up Tax introduced by the DMTT Act, which applies a 15% minimum tax, but only to Bahamian constituent entities that form part of an in-scope MNE group with consolidated revenue of EUR 750 million or more, as described in section 1.2. Companies outside that narrow population — the overwhelming majority of Bahamian-registered entities — remain subject to no Bahamian income tax on profits.

Because the DMTT is a top-up mechanism rather than a standalone corporate income tax on gross book income, its operation depends on first computing a constituent entity's GloBE effective tax rate in The Bahamas (broadly, Bahamian income taxes paid divided by GloBE income) and then applying a top-up percentage sufficient to bring that effective rate up to 15%, following the OECD's GloBE computational rules as adopted domestically under the DMTT Act.

2.2 Dividends and participation-style treatment

With no general corporate income tax, The Bahamas has no need for, and does not operate, a domestic dividend participation exemption regime: dividends paid and received by Bahamian companies are simply outside the income tax base for all but DMTT-in-scope constituent entities. For a DMTT-in-scope entity, intra-group dividends between Bahamian constituent entities of the same MNE group are generally excluded from GloBE income under the OECD model rules adopted by the DMTT Act, consistent with the treatment applied in other jurisdictions implementing Pillar Two, so that intra-Bahamas group dividends do not inflate the GloBE income base used to test the 15% minimum.

2.3 Income determination

For the small population of DMTT-in-scope constituent entities, the relevant tax base is GloBE income, computed by starting from the financial accounting net income or loss used in the ultimate parent's consolidated financial statements and applying the standard OECD GloBE adjustments — including adjustments for net taxes, excluded dividends and equity gains, asymmetric foreign currency gains and losses, and other items specified under the model rules as incorporated into the DMTT Act. For the general population of Bahamian companies outside DMTT scope, there is no Bahamian corporate income concept at all: no return, no taxable income computation, and no need to track book-to-tax adjustments, since there is no tax base to compute income against. Ordinary Bahamian companies' principal recurring obligations relate instead to the Business Licence fee (section 6), VAT and, where relevant, real property tax, none of which requires a net-income calculation of the corporate-tax type.

2.4 Interest limitation

The Bahamas does not operate a general interest-deduction limitation rule of the kind found in jurisdictions with a broad corporate income tax, because there is no general corporate income tax base against which such a limitation would operate. For DMTT-in-scope constituent entities, interest expense is relevant only insofar as it affects the GloBE income computation used to test the entity's effective tax rate under the OECD model rules adopted by the DMTT Act; the DMTT itself is a top-up mechanism rather than a base-narrowing interest limitation rule, so groups should look to the GloBE rules' own treatment of interest (including any GloBE-specific adjustments) rather than to a Bahamian domestic interest cap.

2.5 Losses

There is no Bahamian tax loss carryforward regime for the general company population, since there is no corporate income tax base against which a loss could be carried forward or back. For DMTT-in-scope constituent entities, the OECD GloBE model rules adopted under the DMTT Act contain their own loss and negative-tax-expense carryforward mechanics operating within the GloBE effective-tax-rate computation, distinct from any domestic tax loss concept, and calibrated to ensure that a low or negative effective rate in one period is trued up appropriately against other periods within the GloBE framework.

2.6 Groups

The Bahamas does not have a domestic group relief or consolidation regime for general corporate income tax purposes, again because there is no general corporate income tax base to consolidate. For DMTT purposes, however, the relevant unit of analysis is inherently the MNE group: whether any Bahamian entity is in scope turns on the consolidated revenue of its ultimate parent group, and the effective-tax-rate and top-up calculations required under the DMTT Act are computed on a jurisdictional blended basis across all Bahamian constituent entities of the same in-scope group, following the OECD's jurisdictional blending approach rather than an entity-by-entity test.

2.7 Controlled foreign companies

The Bahamas does not operate a controlled foreign company regime, since it has no policy need to attribute low-taxed foreign income to a Bahamian parent in the absence of a general Bahamian corporate income tax. Bahamian entities that are foreign-owned subsidiaries of groups based in CFC-regime jurisdictions may be subject to those foreign jurisdictions' own CFC attribution rules looking into The Bahamas, a matter of foreign law. The DMTT Act does not itself operate as a CFC regime; it is a top-up minimum tax collected at the level of the Bahamian constituent entity itself, not an attribution of Bahamian income to a foreign parent.

2.8 Transfer pricing

The Bahamas does not impose a general statutory transfer pricing documentation regime applicable to the ordinary company population, reflecting the absence of a general corporate income tax base that transfer pricing rules would otherwise protect. DMTT-in-scope constituent entities should nonetheless expect that intra-group transactions affecting the GloBE income computation will be tested against OECD transfer pricing and GloBE-consistency principles as part of the broader Pillar Two compliance exercise, including in connection with the GloBE Information Return described in section 1.2, even though this arises through the Pillar Two framework rather than a freestanding Bahamian transfer pricing statute.

2.9 Incentives

The Bahamas' principal 'incentive' for the general company population is structural: the absence of corporate income tax, capital gains tax and withholding tax altogether, rather than a system of credits or allowances layered on top of a taxed base. The International Business Companies Act provides a well-established, tax-neutral vehicle for international structuring, and sector-specific frameworks support the financial services, investment funds and maritime registration industries with predictable regulatory and fee-based (rather than tax-based) treatment. The DMTT Act contains no separate incentive regime of its own; its function is solely to impose a top-up tax on in-scope entities, and it does not restore any general Bahamian tax incentive framework for other taxpayers.

2.10 Pillar Two

The DMTT Act is The Bahamas' implementation of the OECD/G20 Pillar Two global minimum tax framework, applying a 15% minimum effective tax rate test to Bahamian constituent entities of MNE groups with consolidated annual revenue of EUR 750 million or more in at least two of the preceding four fiscal years. The Act is effective from 1 January 2024 and applies to fiscal years beginning after 31 December 2023, subject to the transitional rule described in section 1.2 that generally defers application to fiscal years beginning on or after 1 January 2025 for groups not already subject to a foreign IIR or UTPR. Where a Bahamian constituent entity's GloBE effective tax rate falls below 15%, the DMTT Act imposes a top-up tax calculated to bring the jurisdictional effective rate for all Bahamian constituent entities of the group up to 15% in the aggregate, collected directly by The Bahamas rather than left to be collected by a foreign jurisdiction's income inclusion rule or undertaxed profits rule. In-scope groups must prepare and submit the GloBE Information Return within 15 months of fiscal year-end (extended for the first year of application under the OECD's standard transitional timeline) and file with the Bahamian tax authorities, together with any locally prescribed DMTT return and payment.

2.11 Branch income and reorganisations

A branch or permanent establishment of a foreign company operating in The Bahamas is subject to the same general absence of corporate income tax as a locally incorporated company, and is likewise brought within the DMTT Act only where it forms part of an in-scope MNE group and meets the GloBE definition of a constituent entity or permanent establishment for Pillar Two purposes. There is no Bahamian branch profits or remittance tax. Corporate reorganisations, amalgamations, continuations and redomiciliations under Bahamian company law do not themselves trigger a Bahamian income tax charge for entities outside DMTT scope, since there is no general gains tax to trigger; for DMTT-in-scope groups, reorganisations should be reviewed against the GloBE rules' own treatment of restructurings to confirm they do not inadvertently affect the jurisdictional blending computation or GloBE Information Return.

3.1 No personal income tax

The Bahamas imposes no personal income tax on employment income, business income, investment income or any other category of individual income, for residents or non-residents alike. This is a long-standing and unchanged feature of the Bahamian tax system: the DMTT Act introduced in 2024 is a narrowly targeted corporate-level minimum tax on the largest MNE groups' Bahamian constituent entities and has no application whatsoever to individuals. There is no annual personal income tax return requirement in The Bahamas.

3.2 Capital gains and wealth

There is no capital gains tax and no net wealth tax in The Bahamas. Gains realised by individuals on securities, real property or other investments are not subject to Bahamian income tax. Real property held by individuals is instead subject to the annual real property tax described in section 6, which operates as a recurring property-based charge rather than a tax on income or capital gains.

3.3 National Insurance contributions

Employment income in The Bahamas is subject to National Insurance Board (NIB) contributions, a payroll-based social security contribution shared between employer and employee that funds pension, sickness, maternity, unemployment and other social insurance benefits. Contributions are calculated as a combined percentage of an employee's insurable wages up to a periodically adjusted wage ceiling, with the employer remitting both its own share and the amount withheld from the employee's pay to the National Insurance Board on a regular basis; the combined employer-plus-employee percentage has historically sat in the high single digits to low double digits of insurable wages, though employers should confirm the precise current-year percentage and wage ceiling directly with the National Insurance Board rather than relying on a fixed figure, since both are adjusted from time to time. NIB contributions are the closest Bahamian analogue to a payroll tax and represent the principal levy on employment income in the absence of a personal income tax.

3.4 Inbound individuals and estates

Because there is no personal income tax, there is no expatriate tax relief regime to speak of; the principal compliance consideration for individuals relocating to The Bahamas for work is immigration status (work permits and permanent residency) rather than tax residence. The Bahamas does not impose an inheritance tax or a comprehensive estate tax; the main charge arising on death is stamp duty payable in connection with the transfer of Bahamian real property or other Bahamian assets passing under a will or on intestacy, assessed under the same stamp duty rules that apply to lifetime transfers of real property described in section 6. There is no wealth transfer tax beyond this stamp-duty-based treatment.

The Bahamas imposes no withholding tax on dividends, interest or royalties paid by Bahamian companies, consistent with the absence of a general corporate or personal income tax base from which to withhold. This applies equally to Bahamian constituent entities that are in scope of the Domestic Minimum Top-up Tax Act: the DMTT is a top-up tax computed on the constituent entity's own GloBE income, not a withholding tax on outbound payments, and the DMTT Act does not introduce any new withholding obligation. The Bahamas does not maintain a broad bilateral double tax treaty network of the kind found in onshore, income-tax jurisdictions; the traditional rationale for such treaties — relieving double taxation of cross-border income — has limited application where the home jurisdiction itself imposes no income tax. Instead, The Bahamas relies primarily on Tax Information Exchange Agreements (TIEAs) with a substantial number of onshore jurisdictions, together with participation in the OECD Common Reporting Standard and a FATCA intergovernmental agreement with the United States, rather than a comprehensive network of general double tax treaties. Structures routing payments through The Bahamas should not assume treaty-based withholding relief is available from Bahamian tax law, and should instead look to the domestic law of the paying, counterparty jurisdiction for any relief needed on that side of the transaction.

Because there is no Bahamian withholding tax to relieve, cross-border groups with Bahamian operations should focus their treaty analysis on the counterparty jurisdiction's domestic withholding rules and its own treaty network, rather than on Bahamian relief. TIEA information exchange, CRS reporting and FATCA compliance mean that Bahamian entities and their beneficial owners remain visible to onshore tax authorities despite the absence of a Bahamian treaty-based withholding framework, and beneficial ownership register obligations under Bahamian law reinforce this transparency.

5.1 Economic substance

The Commercial Entities (Substance Requirements) Act requires Bahamian entities carrying on one or more prescribed relevant activities — including banking, insurance, fund management, headquarters business, shipping, holding company business, intellectual property business, and distribution and service centre business — to satisfy an economic substance test, generally requiring the entity to be directed and managed from within The Bahamas, to conduct core income-generating activities in The Bahamas, and to maintain adequate employees, physical presence and expenditure proportionate to the activity, with heightened requirements for intellectual property holding entities regarded as posing higher base erosion and profit shifting risk. Non-compliance can result in financial penalties, mandatory exchange of information with foreign competent authorities, and, in cases of continued non-compliance, striking off the entity from the register. Economic substance obligations apply independently of DMTT status, since the two regimes serve different international tax policy objectives.

5.2 CRS, FATCA and beneficial ownership

The Bahamas participates in the OECD Common Reporting Standard and has a FATCA intergovernmental agreement with the United States, requiring Bahamian financial institutions to identify and report reportable accounts held by persons tax resident in partner jurisdictions. The Bahamas also maintains a beneficial ownership register regime for companies and legal entities, including International Business Companies, consistent with international transparency standards developed by the Financial Action Task Force and the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. As with Bermuda and other international financial centres following a similar transparency-without-broad-treaty model, these measures ensure that the absence of Bahamian income tax and a broad treaty network is not matched by an absence of information exchange with onshore authorities.

6.1 Value added tax

Value added tax was introduced in The Bahamas in 2015 and is currently levied at a standard rate of 10%, having been reduced from a previous rate of 12%. VAT applies to most supplies of goods and services made in The Bahamas and to imports, with registration required for businesses exceeding the statutory turnover threshold and voluntary registration available below it. Certain supplies — including specified breadbasket food items, medical services and other categories identified in the Value Added Tax Act 2014 (as amended) — are zero-rated or exempt. VAT has become the single largest source of recurring tax revenue for the Bahamian government since its introduction, progressively displacing import duties as the fiscal centre of gravity, although import duties remain material.

6.2 Import duties, Business Licence fee and other charges

Import (customs) duties historically formed the core of Bahamian government revenue and remain a significant, though now secondary, source of revenue following the introduction of VAT and a broader programme of trade liberalisation associated with World Trade Organization accession commitments; duty rates vary by tariff heading and have been reduced over time on many categories of goods. All businesses operating in The Bahamas must hold an annual Business Licence, administered by the Department of Inland Revenue, with the licence fee calculated as a percentage of the business's annual turnover on a tiered scale that increases at higher turnover bands — functioning as a de facto tax on gross revenue rather than net profit, and applicable regardless of whether the business is profitable. Real property tax is levied annually on the market value of real property, with exemptions or capped rates for owner-occupied residential property up to a threshold value and materially higher rates for foreign-owned, investment and higher-value residential and commercial property; owner-occupied properties below a de minimis value are typically exempt altogether. Stamp duty applies to conveyances of real property, mortgages, leases and a range of other legal instruments, with rates varying by instrument and transaction value. There is no VAT-equivalent excise regime of the scale seen in larger economies, though selective excise duties apply to items such as tobacco, alcohol and fuel, generally collected alongside customs duty at the border.

7.1 Administration

VAT, the Business Licence fee, real property tax, stamp duty and import duties are administered by the Department of Inland Revenue and Bahamas Customs, with VAT returns generally filed monthly or on another prescribed cycle depending on turnover, Business Licence renewals filed annually, and real property tax assessed and billed annually by the Treasury against the Department's property valuation roll. The Domestic Minimum Top-up Tax Act introduces, for the first time, a Pillar Two-specific administration function responsible for registration of in-scope MNE groups' Bahamian constituent entities, receipt of the GloBE Information Return and any local DMTT return, and assessment and collection of top-up tax, operating alongside but separately from the long-standing VAT, Business Licence and property tax administration. In-scope groups should expect a distinct registration process for DMTT purposes and should not assume the light-touch administrative posture historically associated with the absence of income tax will apply unchanged to this new function.

7.2 Rulings, appeals and enforcement

The Department of Inland Revenue provides guidance and, in appropriate cases, rulings on the application of VAT, the Business Licence Act and related legislation, with an administrative objection and appeal process available to taxpayers who dispute an assessment, and ultimate recourse to the Bahamian court system. For DMTT purposes, disputes are likely in practice to be heavily informed by the OECD's own GloBE administrative guidance and commentary, since consistency with the OECD consensus is important to preserving the DMTT's status as a qualified top-up tax mechanism recognised by other jurisdictions' Pillar Two rules, reducing the risk that the same profits are taxed twice under competing IIR, UTPR and DMTT claims. Outside the DMTT and VAT context, enforcement of import duty, stamp duty and property tax obligations follows established Bahamian customs and revenue administrative procedures.

Because the DMTT Act's transitional rule generally defers application to fiscal years beginning on or after 1 January 2025 for most in-scope groups, calendar-year MNE groups will typically encounter their first substantive DMTT filing and payment obligations in respect of the 2025 fiscal year, with the GloBE Information Return and any Bahamian DMTT return falling due around 15 months later in 2026, subject to any further transitional filing extension under OECD-aligned administrative guidance. Businesses outside DMTT scope continue to follow only the long-standing VAT, Business Licence, property tax, NIB and economic substance calendar.

9.1 Entity choice

The International Business Company (IBC), formed under the International Business Companies Act, remains the classic vehicle for international structuring, holding and investment activity conducted from The Bahamas, offering flexible corporate governance, no local ownership requirement, and — for activity outside DMTT scope — no Bahamian income tax. Ordinary Bahamian companies conducting domestic business are typically used where the business is intended to operate substantially within The Bahamas and interacts with Business Licence, VAT and property tax obligations in the ordinary course. Neither entity type is itself determinative of DMTT exposure, which turns on MNE group membership and consolidated group revenue rather than on the choice between an IBC and an ordinary company; but IBCs used by large groups should be reviewed for DMTT scope in the same way as any other Bahamian constituent entity.

9.2 Structuring and incentives

For groups below the EUR 750 million MNE revenue threshold, The Bahamas continues to offer a genuinely tax-neutral environment for holding, investment fund, trust and international trading structures, subject only to Business Licence fees, VAT on relevant supplies, real property tax where applicable, and economic substance compliance for relevant activities. For groups above the threshold, structuring attention should focus on correctly identifying Bahamian constituent entities within the meaning of the DMTT Act, modelling the jurisdictional blended GloBE effective tax rate across all Bahamian entities of the group, and coordinating DMTT compliance with the group's broader Pillar Two IIR/UTPR filings elsewhere to avoid double counting or double payment of top-up tax on the same low-taxed Bahamian profits. Fund and investment management structures, a core segment of the Bahamian financial services sector, should pay particular attention to the treatment of investment income and gains under the GloBE excluded-dividend and equity-gain rules referenced in section 2.2.

9.3 Worked effective-rate illustration

Out-of-scope entity. A Bahamian IBC used as a regional trading and marketing company, wholly independent of any large MNE group and with annual turnover of USD 3,000,000, is not part of an in-scope MNE group and therefore falls entirely outside the DMTT Act. Bahamian income tax payable is USD 0. The company's Bahamian-level charges are limited to its annual Business Licence fee, calculated on a tiered percentage of turnover — for illustration, at an assumed blended rate of 1% of turnover for its band, the fee is 3,000,000 × 0.01 = USD 30,000 — plus VAT collected and remitted on taxable supplies (which is a pass-through cost to customers rather than a cost borne by the company) and modest annual company filing fees. The company's effective tax rate on its own net profit is 0%, its only direct fiscal cost being the USD 30,000 Business Licence fee, a charge on turnover rather than profit.

In-scope entity. A Bahamian constituent entity of an MNE group with consolidated global revenue of EUR 900,000,000 (above the EUR 750 million threshold) reports GloBE income of USD 20,000,000 for its first fiscal year within DMTT scope. Because The Bahamas has no general corporate income tax, the entity's covered taxes for GloBE purposes before any top-up are assumed, for illustration, to be USD 400,000 (reflecting limited foreign withholding taxes suffered on cross-border income, since there is no domestic income tax paid). The pre-top-up GloBE effective tax rate is therefore 400,000 / 20,000,000 = 2%, well below the 15% Pillar Two minimum. The top-up percentage required is 15% − 2% = 13%, and the top-up tax amount is 20,000,000 × 0.13 = USD 2,600,000. Cross-check: total tax after top-up is 400,000 + 2,600,000 = USD 3,000,000, and 3,000,000 / 20,000,000 = 15%, confirming that the top-up correctly brings the jurisdictional effective rate up to exactly the 15% minimum required under the DMTT Act. This USD 2,600,000 is collected by The Bahamas under the DMTT Act rather than by a foreign jurisdiction's income inclusion rule or undertaxed profits rule, which is the core policy purpose of a qualified domestic minimum top-up tax.

9.4 Compliance

Groups with any Bahamian presence should first determine, and then re-test annually, whether they form part of an in-scope MNE group for DMTT purposes, since group revenue can move across the EUR 750 million threshold over time and the transitional rule in section 1.2 affects timing for fiscal years before 2025. In-scope groups should budget for DMTT registration, GloBE Information Return preparation, jurisdictional blended effective-tax-rate computation across all Bahamian constituent entities, and coordination with the group's global Pillar Two compliance function. All Bahamian entities, whether or not in scope of the DMTT, should maintain Business Licence renewal, VAT registration and filing where applicable, real property tax payment, economic substance compliance for relevant activities, beneficial ownership register filings, and National Insurance Board remittances for any Bahamian employees.