Taxation, Globalization and Free Trade in the Bahamas

The first offshore Free Trade operations in the Western Hemisphere were established in the Bahamas in 1936 by British and Canadian interests to provide management services for the investments of wealthy clients. These operations eventually became a wholly owned subsidiary of the National Westminster Bank, which was consolidated into the private banking operations of its parent company. Offshore financial centers provide a number of legitimate and important services that can be broadly grouped into 3 categories:

1. Private Investments, in which investments are managed in order to minimize potential tax liabilities and maximize protection granted under statutory confidentiality provisions;
2. Asset protection, in which the use of an international jurisdiction separate from the client’s residence allows for the protection of income and assets from political, fiscal and legal risks; and
3. Estate Planning, in which the administration of assets is done in the most favorable legal and fiscal jurisdiction.

The various types of financial institutions and/or vehicles that can be used for these services include international business corporations (IBCs), insurance companies, mutual funds and hedge funds, and recent years have seen an explosion in the use of all these vehicles.

While still a British colony (independence having being achieved only in 1973), the House of Assembly in 1960 adopted the following resolution to preserve the status of the Bahamas as a tax-free jurisdiction.

By Kevin Burrows

To read this article in it’s entirety, click here.

Photo credit: Elena Kalis via Visual hunt / CC BY-NC-ND