Investors Guide

Besides ideal climate and lifestyle with many exquisite islands and cays to explore, some of the worlds best beaches there are more reasons why foreign investors love to invest in the Bahamas:

• No taxes on  capital gains, inheritance, withholding, profit remittance, Corporate, Royalties, Personal Income, Dividends, Payroll and Interest Taxes;
• Safe investment climate that has created a demand for up-scale investment properties with positive property returns.
• Modern infrastructure such as roads, ports and airports.
• Close proximity to the US, a common time zone with New York and Toronto
• Highly trained industry professionals and an English speaking workforce 
• Peaceful and stable democracy since 1729

FEES AND TAXES FOR PROPERTY TRANSACTIONS  IN THE BAHAMAS 

Seller Costs: It is customary in the Bahamas for the sales price to be quoted as a gross price. In a gross sale the seller is responsible for the payment of 50% of the government VAT on the conveyance, the agent’s professional fee, and the seller’s legal fees.

Buyer Costs: The buyer is responsible for the payment of 50% of the government VAT on the conveyance and the buyer’s legal fees.

Real Estate Agent’s Commission Paid by the Seller:

• Developed Property (single houses, condos): 6% of the purchase price
• Undeveloped property ( vacant land): 10% of the purchase price
• Commercial property or building: 6% of the purchase price

Legal Fees:

Buyers and Sellers are responsible for their own legal fees. The attorney fees vary, although it is typically a percentage of the value of the real estate. The Bahamas Bar Association suggested scale fee for acting for one side in a transaction is 2.5% plus VAT.

Bahamas Government Tax on Property Conveyances

The Government tax on the conveyance of real property is a graduated tax. The total amount of the tax is calculated as follows:

• Purchases with a value under $100,000.00 are assessed at 2.5% of the consideration.

• Purchases with a value over $100,000.00 are assessed at 10% of the consideration.

The common practice in the Bahamas is for the tax to be paid equally by buyer and seller unless otherwise agreed upon.

Government Value Added Tax (VAT ) 

As of July 1, 2018 the Bahamas Government has imposed a 12% Value Added Tax (VAT) on all real estate related professional services such as commission and legal fees. 

Annual Real Property Tax

On owner-occupied properties:

• First $250,000 – Exempt
• Between $250,000 to $500,000 the tax rate is 3/4 of 1%
• On the portion over $500,000, the tax rate is 1% of the market value of the property.

On vacant land (owned by non-Bahamians):

• First $7,000 of market value , the tax rate is $100
• More than $7,000 the tax rate is 2% of the market value

For commercial and other improved properties:

• First $500,000 of market value, the tax rate is 1% of the market value;
• On the portion over $500,000 the tax rate is 2% of the market value.

Exemptions:

Bahamas property owned by Bahamians and situated in the Family Islands is exempt from a property duty. Bahamas property approved as commercial farm land (by the Ministers of Agriculture, Trade and Industry and Finance) is eligible for property tax exemptions.

Also exempt from property tax:

Unimproved Bahamas property owned by Bahamians (in New Providence or the Family Islands), meaning property without physical additions or alterations, or any works benefiting the land which have not increased the market value thereof by $5,000 or more;

Bahamas property used exclusively for charitable or public service from which no profit is derived.

All property located in Freeport, Grand Bahama.

A 12 % Value Added Tax (VAT) is charged on real estate services, including appraisals, legal work and commissions.  

OWNER-OCCUPIED HOME RENTALS:

Proprietors of owner-occupied rental homes of one or more bedrooms are required to register if they intend to rent their premises to visitors. Owner occupiers must reside in their home for six months or more per year if they wish to retain owner-occupied status. Licenses to rent are available through the local Family Island Administrator’s Office, or the Hotel Licensing Department of the Bahamas Ministry of Tourism and Aviation in Nassau, Bahamas. 

INVESTING AND RESIDENCY

RESIDENCY:

Major international Investors and owners of Residences valued at $750,000 or greater may apply for permanent residency and at $1.5 million or more, owners will receive expediated consideration for permanent residency permits. 

Applicants must be of good character, show evidence of financial support and commit in writing they wish to live permanently in the Bahamas. Wives and dependent children (under 18 years) usually resident in a household may be endorsed on the certificate when the original application is made.  

Annual residency cards are available to homeowners owning Bahamian Real Estate at any price point and can be renewed annually. The annual residency card allows the permit holder and their family to reside in The Bahamas for the duration of the permit.

ENTRY VISAS:

Visas are not required of citizens of the USA, United Kingdom, or Canada provided their stay does not exceed 3 weeks and that they have a return ticket leaving the Bahamas. Visas are not required of US citizens if stays are less than 8 months. Bahamas Immigration Department permits are needed to reside, work or engage in any business.

SCHOOLS:

There are several private schools within Nassau, the capital of New Providence, 

– from St. Andrew’s, the international school, in the east to Lyford Cay School in the west.

St Andrew’s School, Pre-School thru Grade 12 – Nassau East – https://standrewsbahamas.com/

Lyford Cay School, Pre-School thru Grade 12 – Lyford Cay – https://www.lcis.bs/

Windsor School. Pre-School thru Grade 12 – Old Fort Bay – https://www.windsorschoolbahamas.com/

St. Augustine’s College, Grade 7 thru Grade 12 https://www.facebook.com/sac1945/

Queen’s College, early learning thru grade 12, Village Road https://qchenceforth.com/

Blairwood Academy, Kindergarten thru Grade 12, Village Road – https://www.blairwoodacademy.com/

Kingsway Academy, Kindergarten thru Grade 12, Bernard Road

https://www.facebook.com/kingswayacademyschool/

Xavier School, West Bay Street – http://xavier.cec.edu.bs/

Tambearly School Grade 1 thru Grade 9 – Behind SandyPort    – http://www.tambearly.com/

Children begin their primary education at age 5, then move onto secondary school at age 6 for a period of 5 years. Throughout this timeline, kids attend a 3-year junior high school scourse, followed by a 2-year senior high school course. While education for children between the ages of 5 and 16 are compulsory, the majority of children in the Bahamas attend some type of preschool.

HOSPITALS

Doctor’s Hospital (Private) – Shirley Street

Princess Margaret Hospital (Public) – Shirley Street

Western Medical Plaza (Private) – Blake Road

The Lyford Cay Hospital/Bahamas Heart Institute (Private) – Lyford Cay   

 UTILITY COMPANIES

• Electricity – (BPL) Bahamas Power and Light:
  Tel: 242-302-1000, P.O. Box N 7509

• Phone and Internet – (BTC) Bahamas Telecommunication Corporation
  Tel: 242-302-7000, P.O. Box N 3048
  http://batelco.com/

• Cable TV, Internet & Phone – Cable Bahamas:
  Tel: 242-601-2200 or P.O. Box CB 13050
  https://www.cablebahamas.com/

• Water – (W&S) Water & Sewerage Corporation:
  Tel:242-302-5500, P.O. Box N 3905
  http://www.wsc.com.bs/

• Water (Lyford Cay and Old Fort Bay Areas) – New Providence Water Development Company:
  Tel: 242-362-4177, P.O. Box N 4820
  http://www.npwaterco.com/

This information contained on this page is subject to change and is meant to be used as a guide only. If you are entering into any type of real estate transaction you should have legal representation. KRA Bahamas is not responsible for any errors or omissions in the information contained on this website and the information should not be relied upon without confirmation from your lawyer.

REGULATIONS FOR ACQUIRING A PROPERTY IN THE BAHAMAS

The International Persons Landholding Act, 1993, Amended in 2007 gave non- Bahamian nationals the right to purchase property in the Bahamas. Typical form of ownership is freehold.

No prior government approval is required for Non-Bahamians who wish to acquire an interest in land or a condominium to be used as an owner-occupied property, provided that such land is undeveloped and it is less than two adjoining acres. Such acquisitions are required to be registered in accordance with the International Persons Landholding Act, 1993 Amended in 2007. Application for Certificate of Registration Form I must be filed with the Bahamas Investment Authority (BIA), Office of the Prime Minister. Contact BIA for a complete list of the required documentation.

A Permit to Acquire Property is required by non-Bahamians, as provided under the International Persons Landholding Act, if:

• The property being purchased is greater than two acres.
• The intention is to rent out all or a portion of the property.
• The property being purchased is for commercial development.

Bahamians are also required to apply for a permit where the intended use is not as an owner-occupied property.

Special approvals are required for build a property or making any changes to an existing structure. An approval can be obtained from the Town Planning Board and a building permit issued by the Ministry of Works. A local architect or engineer would be able to assist you with this.

TAX REGIME

In the Bahamas there are no taxes on  capital gains, inheritance, withholding, profit remittance, Corporate, Royalties, Personal Income, Dividends, Payroll and Interest Taxes.

Because there are no taxes on  capital gains investors can repatriate the entire proceeds of sale including any profits provided. Please note, you must register the purchase with the Exchange Control Department of the Central Bank at the time of purchase.

FINANCING AND BANKING

Major international banks have a significant presence in The Bahamas, including HSBC, Credit Suisse, Pictet Bank & Trust, UBS, SG Hambros, Cititrust, Ansbacher, JP Morgan, Royal Bank of Canada, Scotiatrust and CITCO. Most of them offer BSD$ and US$ mortgages to finance a property  purchase in The Bahamas.

The Bahamas Financial Services Board (BFSB) represents an innovative commitment by the financial services industry and the government of The Bahamas to promote a greater awareness of The Bahamas’ strengths as an international financial centre. BFSB, a private-sector-led body, and its member firms enjoy a strong partnership with The Bahamas government. This partnership is focused on ensuring that the country’s regulatory and business environment is suitable for both clients and the international stature of The Bahamas as a member of the community of nations.

INVESTMENT INCENTIVES

The attractiveness of a low-tax environment and a stable currency are enhanced by a series of investment incentives that provide relief from customs duties on approved raw materials, equipment and building supplies, as well as allowing exemptions from real property taxes for up to 20 years.

The following incentives are open to any qualifying individual or firm:

The Hotels Encouragement Act — Provides duty free entry of approved construction materials, furnishings and fixtures for hotel development as well as provides for exemption/concession from real property tax for the first twenty years of operation of a hotel/resort.  

Hotels with as few as four guest rooms on a Family Island and those with a minimum of ten rooms in New Providence qualify for concessions under the Hotels Encouragement Act.

The act has been amended to also include shops and restaurants, which have a touristic component, and entertainment facilities.

The Industries Encouragement Act — Provides duty-free concessions for the importation of machinery, raw materials and building supplies for manufacturing entities in addition to exemption from Real Property Tax for a 15 year period.

Duty free concessions for applicants is valid for the first five years of operation.  Thereafter, applicants would be required to pay a reduced rate of duty (10%) on all approved materials and equipment imported.

The Bahamas Vacation Plan and Time Sharing Act — Provides duty-free concessions for building supplies for the construction of timeshare facilities.

The Free Trade Zones Act — Designates areas within The Bahamas as free industrial and commercial zones.

The Hawksbill Creek Agreement Act — Allows the Port Area that is the free trade zone of Freeport, Grand Bahama, freedom from all taxes until 2015 and from excise taxes, stamp duties and most customs duties until 2054.

The Tariff Act — Allows for customs duty exemption on specified raw materials, supplies and equipment for Agriculture, Floriculture, Horticulture, Fisheries, Forestry, Cottage and Light Industries, and Commercial Printing.

The Export Manufacturing Industries, Encouragement Act,  The Agricultural Manufactories Act, The Spirits and Beer Manufacture Act —  Investment incentives under these acts include exemption from the payment of customs duties on building materials, equipment and approved raw materials and real property taxes for periods  up to 20 years.

The City Of Nassau Revitalization Act — Provides incentives and duty concessions in connection with the restoration, repair and upgrade of buildings, commercial and residential, in the City of Nassau.

The Family Island Development Encouragement Act — Provides duty concessions on the importation of building materials, equipment and supplies for commercial and/or residential developments on specified Family Islands.

NATIONAL INVESTMENT POLICY

The Government of The Bahamas is committed to developing a fair, investment-friendly climate and foster the economic growth and development of The Bahamas where the ideals of transparency, fair play and equality of treatment are paramount.

With the National Investment Policy the Government is focused on providing:

• A politically stable environment conducive to private investment;
• A legal environment based on a long tradition of parliamentary democracy, the rule of constitutional and statute laws and where security of life and personal property are guaranteed;
• A stable macroeconomic environment bolstered by a prudent fiscal policy, a stable exchange rate, flexible exchange control rules and free trade;
• An environment in which freedom from Capital Gains, Inheritance, Withholding, Profit Remittance, Corporate, Royalties, Sales, Personal Income, Dividends, Payroll and Interest taxes is ensured;
• Essential public services, an adequately equipped police constabulary, modern health and education facilities;
• Dependable public utilities; and
• Essential modern public infrastructure such as roads, ports and airports.

POPULAR COMMUNITIES

Some of the most sought after areas in the Bahamas at the moment are gated residential communities in New Providence and Paradise Island, such as: Lyford Cay, Old Fort, Sandyport, Ocean Club Estates, Nautica, Port New Providence. Popular residential communities in the family islands include: Harbour Island, Eleuthera; Hope Town, Abaco; and George Town, Exuma and The Exuma chain of islands.

FREQUENTLY ASKED VAT QUESTIONS:

(Courtesy of Bahamas Real Estate Association) 

Are there provisions for us if we register to re-coup the VAT paid on things such as goods and services that we pay for in our business such as gas, auto repairs, paper, ink, desk fees etc.?

If you are a VAT Registrant, then yes in regards to the VAT paid on certain expenses in your business. These will be deemed VAT Input Credits and are to be deducted out of the VAT that you bill your clients/customers.

If I rent my apartment is this considered commercial property with VAT payable on sales price?

Under the VAT Act, any income property is deemed a “commercial property”. However, if the rental period is in excess of 45 days then no VAT is to be charged on the rent as the intended use is a rental of a “dwelling”.

There is no VAT on the Commercial sales price as of the new amendment issued by the Ministry of Finance which was issued on Nov 16, 2014. However, VAT will still be applied to the legal fees and real estate fees.

Also see Section 10 of the VAT Regulations.

If I rent my vacation home by the week when I am not using it, is this considered commercial property with VAT payable on sales price?

Under the VAT Act, any income property is deemed a “commercial property”. However, if the rental period is in excess of 45 days then no VAT is to be charged on the rent as the intended use is a rental of a “dwelling”.

There is no VAT on the Commercial sales price as of the new amendment issued by the Ministry of Finance which was issued on Nov 16, 2014. However, VAT will still be applied to the legal fees and real estate fees.

Also see Section 10 of the VAT Regulations.

If I rent a home I own and use it as an investment property, is this considered commercial property with VAT payable on sales price?

Under the VAT Act, any income property is deemed a “commercial property”. However, if the rental period is in excess of 45 days then no VAT is to be charged on the rent as the intended use is a rental of a “dwelling”.

There is no VAT on the Commercial sales price as of the new amendment issued by the Ministry of Finance which was issued on Nov 16, 2014. However, VAT will still be applied to the legal fees and real estate fees.

Also see Section 10 of the VAT Regulations.

If a company owns multiple units and wants to sell them as individual units is this considered a commercial or residential sale?

The sale of each property is looked at based on its “use” or “intended use” to determine VAT liability. If the units are sold as a residential unit, then VAT is paid on the professional fees only.

Will VAT have to be paid on commercial sales in addition to Stamp Tax ?

No Vat on Commercial Sales – However Vat will be on the real estate fees and legal fees.

My commission is paid by the attorney will the VAT be paid by the attorney as well? Will I have to file that in my records?

The real estate company will have to provide a VAT invoice to get paid the VAT at the completion of the sale. And yes you will have to keep a record.

If the agent pays his own NIB and they make over 100k, do they have to pay Vat on their commissions earned?

If the “agent” is an employee of the real estate company then there is no further VAT liability when the agent is paid.

Is VAT only paid on residential rentals under 45 days?

Realtors need to change their terminology on VAT paid versus VAT billed. On the actual rental (i.e. Lease Agreement) residential rentals under 45 days are VAT liable whereas rentals over 45 days are not. If a leasing fee is due to a real estate company for securing the rental and provided the real estate company is a VAT Registrant then there is VAT charged on the leasing fee

.

The Broker collects the commission from the sale then pays VAT. Does the agent then have to pay VAT?

The real estate company will have to provide a VAT invoice to get paid its commission and the VAT at the completion of the sale. If the “agent” is an employee of the real estate company then there is no further VAT liability when the agent is paid.

My understanding is the broker would pay the net amount of VAT. The VAT from commission less the VAT from the agent. Then in turn the agent would have to pay the VAT from his/her commission if they are over $ 100,000.00 in earnings.

Realtors are not to pay VAT out of their commission because as a VAT Registrant they are obligated by law to charge VAT on their services, receive payment and pay it over to the VAT Office.

Is the total VAT from the commission paid by the broker for his part of the commission then the agent (for his part of the commission)?

The real estate company will have to provide a VAT invoice to get paid its commission and the VAT at the completion of the sale.

Who invoices the ‘Buyer’ the agent upon closing or the Attorneys?

The real estate company will have to provide a VAT invoice to get paid its commission and the VAT at the completion of the sale. Whoever pays the commission, is responsible for the Vat.

Is there VAT on vacant land sales?

There is no VAT on any type of vacant land but there is VAT on the professional services rendered in the sale of vacant land.

What is the situation with the stamp Tax/duty?

Stamp duty/tax remains the same after VAT is implemented until further notice.

My company rents homes on a weekly basis, we currently add and pay 10% government room tax, will we have to pay this along with the 12% VAT?

No, the room tax will be eliminated when VAT starts.

Have questions about investing in the Bahamas? Please CONTACT US

***Bahamas Investors Magazine Investor’s Guide for 2019