Introduction to the Bahamas
Location and history
The Bahamas is an archipelago of 700 islands, cays and large rocks spread over 100,000 square miles of the North Atlantic Ocean east of Florida. The land area is about 5,382 square miles and the population about 300,000. The capital and financial centre, Nassau, is on the island of New Providence. There is a free port on Grand Bahama Island.
The Bahama Islands were discovered by Christopher Columbus in 1492 and first settled by English puritans in 1648. The earliest commercial activity seems to have been pirating and in the late 1600s and early 1700s the islands were home to buccaneers and privateers. Both Sir Francis Drake and Blackbeard had bases there. The principal modern industries are tourism, banking and financial services. The Bahamas remained a British possession until independence in 1973.
Government of the Bahamas
The Bahamas is a parliamentary democracy. It is a member of the Commonwealth and the Head of State is the British monarch who is represented on the islands by the Governor General. The Executive Branch consists of the Prime Minister and Cabinet and the Legislative branch is the Senate and House of Assembly.
Bahamas Taxation
The Bahamas has never imposed direct taxation. There is no income tax, capital gains tax or estate tax. The government obtains its revenue mainly from customs and excise duties, license fees etc. The absence of direct taxation led directly to the growth of the banking and offshore financial services industries. These can be traced to the aftermath of the Second World War when the residents of war-ravaged Europe were looking for a safe haven for their wealth.
Regulation of the Bahamas Financial Services sector
The Bahamas' system of regulation, designed to ensure that institutions operating from this jurisdiction conduct their affairs in accordance with best practices, has its origins in the 1960s with the regulation of banks and trust companies. Today, the Group of Financial Services Regulators (GFSR), comprised of the Central Bank of The Bahamas, the Securities Commission of The Bahamas, the Registrar of Insurance Companies, the Inspector of Financial and Corporate Service Providers and the Compliance Commission, ensures adherence to international regulatory and supervisory standards through a comprehensive and progressive framework.
The rigid, self-regulatory code of conduct of The Association of International Banks and Trust Companies (AIBT) also deters the use of financial operations for criminal activities and upholds the principles of bank secrecy. The other major banking institution is the Bahamas Institute of Bankers.
Financial Service Companies in the Bahamas
The whole financial services industry is well represented in the Bahamas. There are over 400 offshore banks, including some of the world's largest, many of whom have offices in the islands. Individuals looking for an offshore banking account should remember that the Bahamas is not covered by the EU Savings Tax Directive and under no obligation to tax or report savings interest.
There are offshore insurance companies and offshore fund management companies and the Bahamas has numerous offshore company and trust formation and management companies.
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