by Dr Peter Maynard, President of The Bahamas Bar Association
Different scenarios may be offered for the international business climate in the new millennium: on the one hand, globalisation and at the same time increased economic union in Europe, free trade areas in the Americas, free movement of labour and the end of harmful tax competition;[1] on the other hand, increasing taxed, greater government regulation and interference, Balkanisation, regional instability and hot wars. Whatever your concept of the new millennium, it is highly likely that The Bahamas will play a key role in your wise investment planning.
Advantages
With one of the longest and continuous histories of political and economic stability in the world, conveniently accessible and located only 45 minutes from the United States, with extraordinary natural beauty and very healthy and agreeable weather year round, The Bahamas has an extremely high standard of living and creature comfort depending on tourism and international finance, with its dollar conveniently maintained exactly pegged on par with the US dollar. It obtained complete independence from Britain in 1973 but it remains a member of the Commonwealth of Nations with the Queen as titular head of state, represented by the Bahamian Governor General. Its parliamentary form of democratic government is closely modelled on the British system. The constitution provides for an elected legislative assembly and an appointed senate, with the first elected General Assembly having met on 29 September, 1729.
Recognised as a confidential, ‘no tax’ jurisdiction, The Bahamas has no direct taxation, i.e. no income tax, wealth tax, estate tax, inheritance tax, capital gains tax or corporation tax. As a result there are no tax treaties with any other country. Revenue is raised primarily by means of customs duties, property tax, stamp duties on certain financial transactions, and modest flat-rate annual company fees.
Continuity, stability and the above advantages are further buttressed by the Bahamian high court, called the Supreme Court, and a Court of Appeal with the right of final appeal to the Privy council in England, as well as a legal system which is based on the common law, English rules of equity and Bahamian statutes, which have been completely revamped over the past decade to place The Bahamas at the cutting edge of international financial centres in the new millennium.
Retain a Lawyer
The literate and skilled English-speaking workforce is an excellent source of employees for your business. Moreover, with all of the world’s major banks among the over 400 banks and financial institutions (more than 200 of the licensees maintaining a physical presence with permanent staff and accommodation), all of the major accounting firms, and with the electronic communications revolution now an intrinsic part of the business culture, your business service needs of every description can be met in an efficient manner.
With more than 540 lawyers on the rolls (with the majority of them in active practice) in a population of about 275,000, The Bahamas has one of the highest lawyer to population ratios. Lawyers are readily available in excellent, sometimes multilingual, small boutique firms or larger firs, all with an emphasis on quality, and personalised service, and trained and experienced in virtually every aspect of commercial law.
Many investors have found it in their best interest to retain a Bahamian lawyer as a starting point. Why? To save money without sacrificing quality of service, of course. He or she is your person on the spot. That can be of considerable value when you are constantly on the move or you live hundreds or thousands of miles away. Not only can he guide you in your investment decisions, but he can also assist you in the selection of other financial services. Amid the self-serving publicity of the various institutions, such a disinterested and impartial view of their performance is invaluable, if you do not already have a preference. The other private institutions or government agencies themselves will also, sooner or later, refer you to a lawyer in connection with the purchase of a home, the drafting of a trust, the incorporation of a company, or an application to a government department. Better sooner. If not, you will later find that it would have made better sense to have started with a lawyer in the first place.
Liberal Investment Policy
Under a liberal investment policy, The Bahamas government encourages an investor-friendly environment. In order to cut the red tape and to facilitate coordination among the relevant government agencies, your Bahamian lawyer will probably be in touch with The Bahamas Investment Authority (BIA). For major investments, the BIA submits project proposals for approval to the National Economic Council (NEC) which consists of major government ministers. More recently, the Financial Services Board (FSB) was created as a joint venture between the private sector and government to promote Bahamian financial services.
An impressive phalanx of statutes and their associated regulations and policies has been implemented since 1989. They have launched the highly successful international business company (IBC), resisted forced heirship claims, otherwise helped to establish asset protection trusts (APTs), made APTs creditor proof after two years, modernised regular Bahamian companies, facilitated the establishment of mutual funds and exempted limited partnerships, formed the securities board and the stock exchange, imposed criminal penalties for money laundering, and set in place a new innovative, comprehensive code governing trustees.[2] All of this was added to an already well-established international financial centre, offering a spectrum of products and services, ranging from international ship registration and captive insurance to confidential offshore banking and corporate service.
Doing business in the Bahamas should be very much your aim for the new millennium. Whatever your investment plans or requirements, you will find there an investor-friendly environment with state-of-the-art financial products and every useful professional legal service.
[1] An oxymoron developed by the Organisation for Economic Cooperation and Development (OECD) in its report ‘Harmful Tax Competition’ 1998. The report discourages the spread of preferential tax regimes and tax havens, and apparently encourages an end to comparative advantage and freedom of choice. For a thoughtful rebuttal, see Mason Gaffney, ‘International Tax Competition: Harmful or Beneficial?’ University of California (Riverside).
[2] The International Business Companies Act of 1989, the Trusts (Choice of Governing Law) Act of 1989 and the Fraudulent Dispositions Act of 1991. Then, the Companies Act of 1992, the Perpetuities Act of 1995, the Mutual Funds Act of 1995, the Exempted Limited Partnerships Act of 1995, the Securities Board Act of 1995, the Limitation Act of 1995, the Money Laundering (Proceeds of Crime) Act of 1996, the new Securities Industry Act, and the Trustee Act 1998.
