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The Bahamas - Taxation
The Bahamas is often considered to be a tax haven and is home to many wealthy people who would otherwise be paying large amounts of tax in their home country. The country also has a number of banks which offer offshore accounts and savings, which are traditionally used by those hoping to pay less tax on them.
These deductions are 3.4% of earnings and are then topped up by the employer with a further 5.4%. Those who are self employed have to pay the full amount themselves. For expats it may be possible to get a refund of contributions when they retire but only if they return to their home country and this will also depend on how long they have been working in the country.
Stamp duty is a tax that may be payable in a number of circumstances. Most individuals will find that they will need to pay stamp duty on real estate purchases and if they need to send large amounts of currency abroad. The lowest rate of stamp duty is 2%, but the highest is 8% on property transactions over $100,000. These fees are normally divided between the buyer and the seller. A 1% charge is applied to mortgages and paid by the borrower. Charges for sending money abroad are calculated at 0.25%.
Real estate tax is applied to different categories of property. These include developed land on New Providence Island, developed land on other islands but only if they are owned by expats and undeveloped land on New Providence Island that is owned by expats. Every year any property holdings has to be declared to the country’s Chief Valuation Officer and different taxation rates apply. If the owner is living in the property themselves then there is no tax to pay on properties worth up to $250,000. From that amount to $500,000 there is a taxation rate of 0.75% and anything over that is taxed at 1%, to a maximum charge of $35,000.
Properties that do not have the owner in residence are charged at different rates. A property valued at up to $500,000 is taxed at 1% and over this is taxed at 2%. A rate of 3% is applied to unimproved properties but only on New Providence Island.
There are no capital gains taxes or inheritance taxes in the Bahamas, but many goods that are imported into the country have high duties on them. These taxes vary depending upon the type of goods they are applied to, but there is around 25% applied to clothing, and up to 65% applied to electrical equipment. This is not a sales tax or VAT but these charges mean that the customer pays a higher price. There are also no wealth taxes and no taxes are payable on share dividends and interest.
The Bahamas has a number of tax treaties in place which allows the country to share information on those earning money there with other countries. Non-residents may find that they are liable for taxes in their home country on the money that they earn in the Bahamas. The regulations for paying taxes on money earned in the Bahamas will vary from country to country and it is a good idea to find out what your tax status would be before moving there. Tax treaties already in place are mainly for Nordic countries and several European countries are due to be added. Those who have a source of income from another country will find that they may have to pay taxes in that country even if they are living full-time in the Bahamas.
Declaration of earnings does not have to be done in the Bahamas and there are no tax returns to be completed. There is no tax year as such and further information can be obtained from the website of the Ministry of Finance.
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