19/07/23

CARIBBEAN: Bahamas to tax international businesses on foreign earnings

As published on: royalgazette.com, Wednesday 19 July, 2023.

Bahamas will start taxing international businesses incorporated there on foreign income from the first day of 2024, bowing to international pressure to collect more in taxes.

The levy is modest, at $2,500 on the first $1 million of foreign revenue of international business companies and 0.25 per cent on foreign revenue in excess of that, to a maximum fee of $100,000.

Business representatives in the country have told the local press that this could be the first step towards a full-fledged corporate income tax, though they say that could take a number of years.

Low and no-tax jurisdictions have been put under pressure by the European Union, the Organisation for Economic Co-operation and Development and the G20, as well as by individual countries, to increase rates. Special treatment for international businesses in particular has been a target by international institutions and governments.

Bahamas has moved on and off the EU list of non-cooperative jurisdictions, last being placed on it in October 2022. The country has agreed to end the practice of preferential treatment for international businesses to meet the demands of global bodies and foreign governments.

The new tax regime was included in the Business Licence Bill 2023, which repeals the Business Licence Act 2010. Details were discussed in a presentation by the Bahamas Financial Services Board.

Sales of goods locally, exports, sales to residents or people in Bahamas at the time of the sale and professional services will be considered local income and taxed locally, according to the presentation.

Foreign businesses in Bahamas are evaluating the implications of the new charge, with some with no EU exposure wondering if they should consider other jurisdictions, according to local reports.

Bermuda is not on the EU list of non-cooperative jurisdictions. It co-operates with the EU and has no pending commitments in terms of taxation.

Tags

Bahamas Caribbean Business Tax International Business