2022 Investment Climate Statements: The Bahamas

Policies towards Foreign Direct Investment

The government encourages FDI, particularly in the tourism and financial services sector. The National Investment Policy (NIP) and the Commercial Enterprises Act (CEA) encourage foreign investment in the following sectors of the economy: tourism; international business centers; aircraft and maritime services; marinas; information and data processing; information technology services; light industry manufacturing and assembly; agro-industries; aquaculture; food and beverage processing; banking and other financial services; offshore medical centers and services; e-commerce; arbitration; international arbitrage; computer programming; software design and writing; bioinformatics and analytics; and data storage and warehousing.

After the September 2021 elections, the new administration established the Ministry of Tourism, Investments and Aviation headed by the Deputy Prime Minister. This new ministry is charged with promoting the tourism sector and driving economic development with investments in non-traditional sectors. The new administration stressed its commitment to an investment-friendly environment and touted plans to diversify the economy through targeted investments in non-traditional sectors such as light manufacturing, technology, agriculture and fisheries, extractive industries, and renewable energy. Since taking office, the government has also shown its willingness to engage investors from relatively untapped markets, such as the Middle East.

Operating from the Office of the Prime Minister, the Bahamas Investment Authority (BIA) ( www.bahamas.gov.bs/bia ) administers investment policies, functions as the investment facilitation agency, and assists investors in navigating the sometimes-cumbersome approvals process. All foreign investors must apply for BIA approval. If operating in Grand Bahamas’ free port area, investors must seek approval from Invest Grand Bahama, the investment arm of the Grand Bahama Port Authority (GBPA) – a privately owned organization that oversees the city of Freeport. Newly elected administrations consistently support investment and generally honor agreements made by previous administrations.

The Bahamas reserves the following 15 sectors of the economy for Bahamian investors: wholesale and retail operations (although international investors may engage in the wholesale distribution of any product they produce locally); agencies engaged in import or export; real estate agencies and domestic property management; domestic newspapers and magazine publications; domestic advertising and public relations firms; nightclubs and restaurants except specialty, gourmet, and ethnic restaurants, and those operating in a hotel, resort or tourist attraction; security services; domestic distribution of building supplies; construction companies except for special structures requiring foreign expertise; personal cosmetic or beauty establishments; commercial fishing including both deep water fishing and shallow water fishing of crustaceans, mollusks, fish, and sponges; auto and appliance services; public transportation including boat charters; and domestic gaming. The government does make exceptions, and the Embassy is aware of several cases in which it granted foreign investors full market access.

The government does not give preferential treatment to investors based on nationality, and investors have equal access to incentives, including land grants, tax concessions, and direct marketing and budgetary support. The government provides guidelines for investment through the National Investment Policy (NIP), administered by the BIA, and through the Commercial Enterprises Act (CEA), administered by the Ministry of Economic Affairs. The CEA provides incentives to domestic and foreign investors to establish specific projects, including approval of work permits for senior posts and the expedited issuance of work permits.

The National Economic Council (NEC) must grant special approval for foreign investment projects valued at $10 million or more, those with national security implications, or those that require environmental and economic impact assessments. The NEC is comprised of government ministers, including the Prime Minister in his dual role as the Minister of Finance. The approval process generally requires review by multiple government agencies and a BIA recommendation prior to NEC consideration.

Bureaucratic impediments are not limited to the NEC approvals process. The country continues to lag behind on international metrics related to starting a business, registering property, acquiring construction permits, accessing credit, and resolving property disputes. Significant delays in the approvals process have occurred, including cases where the government failed to respond to investment applications.

To fast-track FDI and mobilize local investments the new administration is establishing the independent agency Bahamas Invest. Bureaucratic delays, functionality, and transparency are expected to improve under this new agency. Investment priorities are likely to include public-private partnerships, tourism, infrastructure, technological upgrades, renewable energy investments, and climate adaptability projects. Bahamas Invest will include a Domestic Investment Board to support Bahamian businesses and an Investment Compliance Unit to ensure international investors comply with government statutes. BIA will serve as the investment promotion arm of Bahamas Invest.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors have the right to establish private enterprises and most companies operate unencumbered once approved. Key considerations for approval include economic impact, job creation, infrastructure development, economic diversification, environmental protection, and corporate social responsibility. With the assistance of a local attorney, investors can create the following types of businesses: sole proprietorship, limited or general partnership, joint stock company, or subsidiary of a foreign company. The most popular all-purpose vehicles for foreign investors are the International Business Company (IBC) and the Limited Duration Company (LDC). Both benefit from income, capital gains, gift, estate, inheritance, and succession tax exemptions. Investors are required to establish a local company and register to operate in The Bahamas.

A Beneficial Ownership Registry established in 2021 requires legal entities (defined as companies incorporated, continued, or registered in The Bahamas) to file beneficial ownership information with the Registrar General within 15 days of identifying any person as a beneficial owner of that legal entity. Investment screening mechanisms assess the creditworthiness of principals, capital investment, land and personnel requirements, financial arrangements, and economic and environmental impacts. It is not clear if national security risks are assessed.

Other Investment Policy Reviews

The Bahamas is the only Western Hemisphere country not in the WTO, and therefore has never benefitted from a WTO trade policy review. None of the OECD, UNCTAD, or the UN Working Group on Business and Human Rights have conducted investment policy reviews.

In April 2020, the government appointed an Economic Recovery Committee (ERC) to recommend policies to addresses the economic impact of the COVID-19 pandemic. The public-private coalition recommended significant changes to the investment landscape. The ERC’s full report can be accessed via https://opm.gov.bs/economic-recovery-committee-executive-summary-report-2020/ .

Business Facilitation

In 2017, The Bahamas government streamlined the process to start a business with the launch of an e-business portal. The new process allows companies to apply for or renew their business licenses online from the Department of Inland Revenue ( http://inlandrevenue.finance.gov.bs/business-licence/copy-applying-b-l/ ). The government claims approvals are normally granted within seven working days, provided all required information and documentation has been submitted correctly.

Foreign owned companies must provide evidence of BIA approval when applying for business licenses. Foreign companies and most larger businesses, regardless of national affiliation, are not eligible for provisional licenses, expedited renewals, or new business license fee exemptions.

All companies with an annual turnover of $100,000 or more are required to register with the government to receive a Tax Identification Number and a Value Added Tax Certificate. The lengthy registration process is generally viewed as an impediment to the ease of doing business.

Outward Investment

The Bahamas government neither promotes nor prohibits its citizens from investing internationally, however, all outward direct investments by residents require the prior approval of the Exchange Control Department of the Central Bank of The Bahamas ( https://www.centralbankbahamas.com/exchange-control-notes-and-guidelines ). The Central Bank considers the probable impact an investment could have on The Bahamas’ balance of payments, specifically business activities that promote the receipt of foreign currency.

In an effort to maintain adequate foreign reserves during the pandemic, the Central Bank suspended purchases of foreign currency on May 4, 2020 for transactions that could jeopardize the country’s ability to maintain a fixed, one-to-one exchange rate with the U.S. dollar. The Central Bank also suspended investments in U.S.-dollar denominated funds. The Central Bank began reauthorizing these investments on October 1, 2021 after the country’s foreign reserves stabilized.

The Bahamas has no bilateral investment agreements but has signed tax information exchange agreements with 34 countries, including the United States in 2002. The agreement designates The Bahamas as a qualified jurisdiction and provides U.S. companies tax credits for conventions and related corporate expenses. Tax information exchange agreements signed to date can be accessed via https://www.bahamas.gov.bs/wps/portal/public/International%20Agreements .

The Bahamas was the first country in the Caribbean region to sign the Foreign Account Tax Compliance Agreement (FATCA) with the United States. Since September 2015, The Bahamas has implemented a non-reciprocal, inter-governmental agreement (Model 1B) to satisfy the obligations of the agreement. Additionally, in January 2017, the government implemented the OECD-developed Common Reporting Standard (CRS) through the Automatic Exchange of Financial Account Information Act and has activated exchange relationships with 63 partners ( www.taxreporting.finance.gov.bs/ ).

The Bahamas is a signatory to the 2008 Economic Partnership Agreement between the Caribbean Forum (CARIFORUM) and the European Union, and the 2019 Economic Partnership Agreement between CARIFORUM and the United Kingdom. Both agreements provide for the asymmetric liberalization of trade in goods and services between CARIFORUM and the other signatories and include specific commitments on investments and trade-in services. The Bahamas has not yet ratified either trade agreement, but provisionally applies both.

The Bahamas is a member of the Caribbean Community (CARICOM) but does not participate in the single market, single economy, or the customs union. The Bahamas does not have a free trade agreement with the United States but is a signatory to the US-CARICOM Trade and Investment Framework Agreement (2013).

Transparency of the Regulatory System

The Bahamas’ accounting, legal, and regulatory systems are generally consistent with international norms. The Bahamas has no equivalent to the U.S. Federal Register, but the government regularly updates its website ( www.bahamas.gov.bs ) to list draft legislation, bills before parliament, and its legislative agenda. Proposed legislation is available at the Government Publications Office, and public and private sector engagement is usually encouraged. Public consultation on investment proposals is not required by law. The Embassy is unaware of any informal regulatory processes managed by non-governmental organizations (NGOs) or private sector associations that restrict foreign participation in the economy.

Throughout 2021, the government passed legislation to improve the country’s fiscal governance and enhance transparency and accountability. The Public Debt Management Act (2021) enshrines debt management policies into law and improves central government and state-owned enterprise (SOE) debt transparency. The Public Finance Management Act (2021) expands budgetary and fiscal reporting requirements for central government and SOEs. The Statistics Act (2021) transforms the current Department of Statistics into a quasi-independent National Statistics Institute. The Public Procurement Act (2021) brings transparency and accountability to government tenders and contracts. Only the Statistics Act has been fully implemented. In late 2021, the new administration confirmed its intention to amend these laws, as well as the Fiscal Responsibility Act passed in 2018. The Embassy is not aware of a timeline for the proposed amendments, which skeptics argue could stymie the original intent of enacting an ambitious transparency regime.

Although efforts have been made to meet international best practices, The Bahamas’ supreme audit institution, the Office of the Auditor General, has not published a timely government budget audit report for several years. The last publicly available audit covers fiscal year 2018/2019. The U.S. Global Accountability Office is assisting the Office of the Auditor General to identify ways to fulfill its reporting obligations.

The government made key budget documents publicly available, including the executive budget proposal, enacted budget, and end of fiscal year report. The government also submitted a Supplementary Budget following elections in September 2021. Budget documents include estimates of revenue and expenditure (including estimates from prior years), the budget communication (the budget speech), appropriation bills, tax bills, resolutions, and proposed legislative changes. The government also publicizes information on debt obligations, including that of SOEs, during the annual budget submissions to the Parliament. Budget documents are available at www.bahamas.gov.bs  and www.bahamasbudget.gov.bs .

International Regulatory Considerations

The Bahamas is not a member of the WTO, so it does not notify the WTO Committee on Technical Barriers to Trade (TBT) of draft technical regulations. As part of WTO accession negotiations relaunched in 2018, The Bahamas announced it is reviewing investment policies with the aim of developing comprehensive, WTO-compliant investment legislation. However, the Embassy is not aware of significant progress in this area in 2021. The Bahamas is not a member of UNCTAD’s international network of transparent investment procedures.

The Bahamas Bureau of Standards and Quality (BBSQ), launched in 2016, governs standards for goods and services, particularly metrology (weights and balances). BBSQ also cooperates with other ministries on quality standards, such as sanitary and phytosanitary standards with the Ministry of Agriculture and Marine Resources and the Bahamas Health and Food Safety Agency (BAHFSA). BBSQ serves as the country’s focal point on trade barrier issues and has received technical support on the development of national standards from the EU and the Caribbean Regional Organization for Standards and Quality (CROSQ). Trade barriers are not a hindrance to trade with the United States, and U.S. products are widely accepted.

Legal System and Judicial Independence

The Bahamas legal system is based on English common law and foreign nationals are afforded full rights in legal proceedings. Contracts are legally enforced through the courts, however, there are some instances where civil disputes get tied up in the court system for years. Throughout 2020 and 2021, a U.S. investor and a government utility company were engaged in a civil dispute concerning the termination of a contract, non-payment for services provided, and ownership of equipment and materials. This case was settled in late 2021 with the local courts awarding the U.S. investor full payment and retention of its equipment.

The judiciary is independent, and allegations of government interference in the judicial process are rare. With the recommendation of the Prime Minister, the Governor General appoints the highest-ranking officials in the judicial system, including the Chief Justice of the Supreme Court, the Attorney General, the Director of Public Prosecutions, and the President of the Court of Appeals. The Bahamas is a member of the Commonwealth of Nations and uses the Privy Council Judicial Committee in London as the final court of appeal for civil and criminal matters.

The Bahamas continues to advance efforts to develop its reputation as a center for international arbitration by drafting legislation, namely the International Commercial Arbitration Bill (2021) which updates the Arbitration Act (2009). The Bill governs domestic arbitration and incorporates key provisions of the Model Law of the United Nations Commission on International Trade Law (UNCITRAL). The legislation has not yet passed. In 2020, The Bahamas also established an Alternative Dispute Resolution unit, and developed a two-year strategic plan to promote this method for settling commercial and other types of disputes.

Judgments by British courts and select Commonwealth countries can be registered and enforced in The Bahamas under the Reciprocal Enforcement of Judgments Act. Court judgments from other countries, including those of the United States, must be litigated in local courts and are subject to local legal requirements. The government is taking steps to modernize the justice system and increase judicial transparency and efficiency. Efforts throughout 2021 included implementation of an Integrated Case Management System, a Court Automated Payment System, Digital Court Reporting and Bail Management Systems, the launch of a Digitization Unit, and the expansion of the Bahamas Judicial Education Institute. The Court Services Bill (2020) has not yet been debated or enacted. This law would give the courts more autonomy and control over their administrative, financial, and operational affairs. There has been little movement on the construction of a new Supreme Court complex.

Laws and Regulations on Foreign Direct Investment

While some public pronouncements have been made on FDI policies, no major laws, regulations, or judicial decisions have been passed since publication of the 2021 Investment Climate Statement. The government has drafted a Foreign Investment Bill purported to codify the existing National Investment Policy, align with international investment best practices, and bring additional transparency, accountability, and predictability to the country’s foreign investment process. The Embassy is not aware of efforts to advance this bill in 2021.

The government committed to establishing Bahamas Invest – a new, autonomous agency to oversee a modern investment regime and fast-track investments. Bahamas Invest remains in the planning stages.

All relevant laws, rules, procedures, and reporting requirements for investors can be found on the website of the Bahamas Investment Authority (BIA) ( www.bahamas.gov.bs/bia ).

Competition and Anti-Trust Laws

The Utilities Regulation and Competition Authority (URCA) regulates and imposes antitrust restrictions in the telecommunications and energy sectors. However, there is no legislation governing competition or anti-trust. A Competition (antitrust) Bill was drafted in 2018 in line with The Bahamas’ CARIFORUM-EU obligations and WTO accession requirements. Initial public consultations were held in August 2018. The Embassy is not aware of efforts to advance the Bill in 2021.

Expropriation and Compensation

Property rights are protected under Article 27 of the country’s constitution, which prohibits the deprivation of property without prompt and adequate compensation. There have been compulsory acquisitions of property for public use, but in all instances, there was satisfactory compensation at fair market value.

The March 2020 Emergency Power (COVID-19) Regulations granted the government authorization to requisition any building, ship, aircraft, or article if it is reasonably required for any statutory purpose for the duration of the emergency. At the conclusion of the requisition, the government was to make prompt and adequate compensation to the owner. The Embassy is not aware of any instance in 2021 where the government invoked this law. The Emergency Power Regulations expired with the cancelation of the state of emergency in October 2021.

Dispute Settlement

ICSID Convention and New York Convention

The Bahamas is a member of both the World Bank’s International Centre for Settlement of Investment Disputes Convention (ICSID) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention. Disputes between companies are generally handled in local courts, but foreign investors can refer cases to the ICSID, and in at least one instance, recourse was sought in a U.S. court in a dispute involving a $4 billion resort development. The Bahamas’ Arbitration Act of 2009 enacted the New York Convention and provides a legal framework.

Investor-State Dispute Settlement

Order 66 of the Rules of the Bahamian Supreme Court provides rules for arbitration proceedings. The 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards entered into force for The Bahamas on March 20, 2007. This convention provides for the enforcement of agreements for commercial disputes. Under the convention, courts of a contracting state can enforce such an agreement by referring the parties to arbitration. There are no restrictions on foreign investors negotiating arbitration provisions in private agreements.

The Bahamas is a signatory to Economic Partnership Agreements between CARIFORUM and the European Union (2008) and CARIFORUM and the United Kingdom (2019). Both agreements include dispute settlement provisions and procedures. The Bahamas has not yet ratified either of the trade agreements, but provisionally applies both.

Investment disputes in The Bahamas that directly involve the government are rare, and there is no history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

The Bahamas is a member of the World Bank’s Multilateral Investment Guarantee Agency which insures investors against currency transfer restrictions, expropriation, war and civil disturbances, and breach of contract by member countries. Local courts enforce and recognize foreign arbitral awards, and foreign investors are provided national treatment. The Embassy is not aware of any cases involving state owned enterprises that resulted in litigation.

Bankruptcy Regulations

Company liquidations, voluntary or involuntary, proceed according to the Companies Act. Liquidations are routinely published in newspapers in accordance with legislation. Creditors of bankrupt debtors and liquidated companies participate in the distribution of the bankrupt debtor’s or liquidated company’s assets according to the statute. U.S. investors should be aware that there is no equivalent to Chapter 11 bankruptcy law provisions to protect assets located in The Bahamas.

The Credit Reporting Act was passed in February 2018 to improve credit reporting systems and better assess borrowers’ risk. The Central Bank confirmed Italian-based CRIF S.P.A. launched The Bahamas’ first credit bureau in April 2021, but it is not yet fully functional. Bahamian commercial banks and personal lenders will be required to share their clients’ credit history with CRIF. CRIF will provide lenders access to credit reports. The Central Bank identified 45 entities as credit information providers as of October 2021.

Investment Incentives

Tax relief is by far the most compelling and significant investment incentive in The Bahamas. The government does not impose taxes on income, estates, or inheritances. Other incentives for investment include waivers on import duties, property tax abatement, and, in some cases, land grants or extended leases for private development at below-market rates. Certain incentives are negotiated directly with the Bahamas Investment Authority (BIA) and require the approval of the National Economic Council (NEC).

Other investment incentives are outlined in concessionary legislation such as the Hotels Encouragement Act, the Bahamas Vacation Plan and Timeshare Act, the Agricultural Manufacturers Act, the Family Islands Development Encouragement Act, the Industries Encouragement Act, the Tariff Act, the International Persons Landholding Act, the City of Nassau Revitalization Act, the Hawksbill Creek Agreement, Grand Bahama Act, and the Commercial Enterprises Act. BIA either administers the legislation or acts as the intermediary between the foreign investor and relevant government ministry or agency. Further information on investment incentives is available at http://www.bahamas.gov.bs .

Foreign Trade Zones/Free Ports/Trade Facilitation

The city of Freeport is a 233-square-mile Free Trade Zone on the island of Grand Bahama. The Hawksbill Creek Agreement (1955) between the Bahamas government and the Grand Bahama Port Authority guarantees the “special economic zone” until 2054. Businesses operating in Freeport must obtain a license from the Grand Bahama Port Authority, but are exempt from most taxes (including property, excise, import, and business taxes). The government has made efforts to regulate business activities and extract tax revenues from the free zone, but most have been litigated to the Port’s benefit.

In the aftermath of Hurricane Dorian in September 2019, the islands of Abaco and Grand Bahama were both declared Special Economic Recovery Zones (SERZ), which allowed residents and businesses to benefit from wide-ranging tax exemptions and incentives. In December 2021, the government extended most of the tax concessions to December 2022, including the tax-free sale of fuel and importation of building materials and household goods, continuing tax concessions on replacement vehicles, and a value-added tax (VAT) discount on the sale of real estate valued up to $500,000.

Performance and Data Localization Requirements

The Bahamas maintains few formal performance requirements for investments. During the approvals process, an investor provides proof of adequate and legitimate sources of funding and, depending on the type of investment, produces economic and environmental impact assessments. The government negotiates requirements on a project-by-project basis, and, in the case of large developments, offers a Heads of Agreement between the government and the investor. These agreements include government obligations to the investor. There is no official mandate to hire local personnel, though many Heads of Agreement stipulate a percentage of workers must be Bahamian.

The government encourages commercial enterprises to source from local producers and transfer skills to the local labor market. This engagement is a part of the negotiations with the government during the approval phase, and it is common for an investor to gain concessions where they can benefit local businesses, create jobs, or support the transfer of skills and technology.

In January 2022, the government announced a policy that required investors, including large resorts, wholesalers, and retailers to purchase at least forty percent of agricultural and marine products from local producers. This policy is not supported by legislation, and the Embassy understands it is negotiated directly with investors.

The government negotiates and sometimes facilitates work permits for key employees as part of the investment approvals process, usually under the Commercial Enterprises Act (CEA). For non-essential services, the government requires investors to document efforts to recruit local Bahamians as part of their applications for work permits, but the law does not stipulate an exact percentage. Buyers of second homes can apply for permanent residency (not citizenship) and benefit from expedited approval for home purchases that exceed $500,000. The government generates revenue by collecting fees for work permits. Depending on the category, work permits range from $1,000 to $15,000 annually. Fees can be assessed and paid at www.immigration.gov.bs .

Real Property

Despite the high number of second-home owners in The Bahamas, local and international investors describe the process of registering property as difficult. The time to complete the registration process is lengthy, and there has been limited progress on establishing digital land registries or time limits for procedures. Successive governments have committed to creating a digital land registry to improve market transparency, facilitate the ease of doing business, and ensure households and businesses have secure titles.

The government does not publish statistics regarding the percent of land without clear title. Unoccupied property cannot revert to other owners, such as squatters. This leads to a high incidence of unoccupied, derelict, and partially constructed residences. The commercial district of downtown Nassau suffers from a high incidence of abandoned buildings. Successive governments have promised but failed to address the situation.

Land ownership in The Bahamas is founded on English law and can include crown land, commonage land, and generational land. The investor’s secured interest in mobile and immobile property is recognized and enforced by law. Mortgages in real property and legal rights in personal property are recorded with the Registrar General of The Bahamas.

The Embassy has received reports of problems obtaining clear title to property, often delaying real estate transaction closings. This can be due to the seller having no legal right to convey or because separate claims to ownership arose after a purchase was made.

Intellectual Property Rights

In 2019, the government took steps to strengthen Intellectual Property Rights (IPR) in response to pressure from the business community and as part of its protracted WTO accession process. These regulations cover patents, trademarks, copyrights, integrated circuits, false trade descriptions, new plant varieties, and geographic indicators. The government anticipates the new regulations will bring The Bahamas into compliance with the terms of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. The Embassy is not aware of new IP-related laws or regulations introduced in 2021. The Bahamas is a member of the World Intellectual Property Organization (WIPO) but has not ratified the WIPO Internet treaties. The Bahamas is also a signatory to the following intellectual property conventions and agreements.

Berne Convention for the Protection of Literary and Artistic Works

Paris Convention for the Protection of Industrial Property

Universal Copyright Convention (UCC)

Convention establishing the World Intellectual Property Organization (WIPO)

Convention on the means of prohibiting and preventing the illicit import, export, and transfer of ownership of cultural property

The Bahamas has not recently been listed as a country of concern in the U.S. Trade Representative’s (USTR) Special 301 Report and is not included in USTR’s 2020 Review of Notorious Markets for Counterfeiting and Piracy.

The Bahamas’ intellectual property registry is maintained by the Department of the Registrar General ( https://www.bahamas.gov.bs/rgd ), and enforcement is coordinated by the Royal Bahamas Police Force with support from Bahamas Customs. The Copyright Royalty Tribunal, established under the Copyright Act, is responsible for royalty-related activities, such as collecting and distributing royalties.

U.S. companies should be aware that intellectual property is primarily a private right, and the U.S. government cannot enforce rights for private individuals in The Bahamas. It is the responsibility of the rights’ holders to register, protect, and enforce their rights where relevant, and retain counsel and advisors where necessary. Companies may wish to seek advice from local attorneys or IP consultants who are experts in Bahamian law.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The government encourages free capital markets, and the Central Bank supports this through its regulatory functions. The Bahamas is an Article VIII member of the IMF and has agreed not to restrict currency transactions, such as payments for imports. The Bahamas Securities Commission regulates the activities of investment funds, securities, and capital markets ( www.scb.gov.bs ). The Bahamas International Stock Exchange (BISX), established in 1999, excludes foreign investors and is regulated by the Securities Commission of The Bahamas.

There are no legal limitations on foreigners’ access to the domestic credit market, and commercial banks make credit available at market rates. The government encourages Bahamian-foreign joint ventures, which are eligible for financing through both commercial banks and the Bahamas Development Bank ( http://www.bahamasdevelopmentbank.com/ ).

The government does not prohibit its citizens from investing internationally. However, all outward direct investments by residents, including foreign portfolio investments, require the prior approval of the Exchange Control Department of the Central Bank of The Bahamas ( https://www.centralbankbahamas.com/exchange-control-notes-and-guidelines ). Applications are assessed by their probable impact on The Bahamas’ balance of payments.

In an effort to maintain adequate foreign reserves during the economic crisis brought on by the pandemic, the Central Bank suspended purchases of foreign currency on May 4, 2020 for specific transactions that could drain reserves and jeopardize the country’s ability to maintain a fixed, one-to-one exchange rate with the U.S. dollar. The Central Bank also suspended Bahamian investments in U.S.-dollar denominated investment. The Central Bank resumed access to these facilities on October 1, 2021 as the country’s foreign reserves stabilized.

Money and Banking System

The financial sector of The Bahamas is highly developed and consists of savings banks, trust companies, offshore banks, insurance companies, private pension funds, cooperative societies, credit unions, commercial banks, a development bank, a publicly controlled pension fund, a housing corporation, and the state-owned Bank of The Bahamas. These institutions provide a wide array of services via several types of financial intermediaries. The financial sector is regulated by the Central Bank of The Bahamas, the Securities Commission, the Insurance Commission, the Inspector of Financial and Corporate Service Providers, the Gaming Board, and the Compliance Commission.

In the domestic banking sector, four of the eight commercial banks are subsidiaries of Canadian banks, three are locally owned, and one is a branch of Citibank, a U.S.-based institution which has operated for more than fifty years providing corporate and investment banking services in the country. Continued reorganization by Canadian banks, including closure of several brick-and-mortar branches, has severely limited banking services on some of the less populated islands.

All domestic commercial banks have correspondent banking relationships, and the Embassy is not aware of any of these relationships being in jeopardy. According to the Central Bank’s December 2021 Quarterly Economic Review, the private sector delinquency or non-performing rate on commercial bank loans increased to 9.6 percent at the end of 2021 from a pre-pandemic level of 8.0 percent. The Central Bank believes this rate will stabilize and begin to decline before the end of 2022.

The Central Bank responded to the loss of brick-and-mortar banks by introducing the “Sand Dollar” in December 2019, the first central bank-backed digital currency in the world. The introduction of the new digital currency provides individuals with efficient access to financial services. Its launch has facilitated the financial inclusion of unbanked and underbanked residents. To date, nine firms (including clearing banks, money transfer services, credit unions and payment service providers) have successfully completed a cybersecurity assessment and been authorized to distribute Sand Dollars within their proprietary mobile wallets.

In February 2021, the Central Bank collaborated with Mastercard and Island Pay (a local digital payment platform) to launch Sand Dollar prepaid cards allowing the option to instantly convert the digital currency to traditional Bahamian dollars and pay for goods and services anywhere Mastercard is accepted. As of December 2021, the Central Bank estimated 20,000 individuals utilized Sand Dollars and approximately $300,000 of the digital currency is in circulation. The bank has prioritized interoperability with the automated clearing house, so there can be direct linkages between Sand Dollar wallets and local deposit accounts. When this interoperability exercise is complete, additional businesses are expected to accept Sand Dollar as payments.

Although Sand Dollar accounts and transactions are theoretically subject to the same stringent anti-money laundering and Know Your Customer (KYC) safeguards as traditional commercial banks, the Embassy continues to work with the Central Bank to ensure there is capacity to enforce safeguards and account audit capabilities. Additional information on the Sand Dollar can be accessed via www.sanddollar.bs/ .

Foreign Exchange and Remittances

Foreign Exchange Policies

The Bahamas maintains a fixed exchange rate policy that pegs the Bahamian dollar one-to-one with the U.S. dollar. The legal bases for the policy are the Exchange Control Act of 1974 and Exchange Control Regulations Act. The controls ensure adequate foreign exchange flows are always available to support the fixed parity of the Bahamian dollar against the U.S. dollar. The peg removes issues of rate conversions and allows for unified pricing of goods and services for tourists and residents. To maintain this structure, individuals and businesses resident in The Bahamas are subject to restrictions on foreign exchange transactions, including currency purchases, payments, and investments. Similarly, Bahamians cannot make payments or investments in foreign currencies without Central Bank approval.

Exchange controls are not an impediment to foreign investment in the country. The government requires all non-resident investors in The Bahamas to register with the Central Bank, and the government allows non-resident investors who finance their projects from foreign currency transferred into The Bahamas to convert and repatriate profits and capital gains freely. They do this with minimal bureaucratic formalities and without limitations on the flow of funds.

In the administration of exchange controls, the Central Bank does not withhold or delay approval for legitimate foreign exchange purchases for currency transactions and, in the interest of facilitating international trade, it delegates this authority to major commercial banks and selected trust companies. International and local commercial banks, which are registered by the Central Bank as “authorized dealers,” may administer and conduct foreign currency transactions with residents of The Bahamas. Similarly, private banks and trust companies which are designated as “authorized agents” are permitted to act as depositories for foreign securities of residents and to conduct securities transactions for non-resident companies under their management.

The Central Bank directly approves foreign exchange transactions that fall outside of the delegated authority, including loans, dividends, issues and transfer of shares, travel facilities, and investment currency. The government has continued gradual liberalization of exchange controls over the years. The most recent measures, implemented in October 2019, applied to residential property transactions (both purchases and sales) involving non-residents. The Central Bank delegated authority to commercial banks (authorized dealers) to sell foreign currency for repatriation of residential real estate proceeds on evidence that the beneficial owner of the sold property is non-resident.

Remittance Policies

There are no restrictions on investment remittances. Foreign investors who receive a Central Bank designation as a non-resident may open foreign currency-denominated bank accounts and repatriate those funds freely. In addition, with Central Bank approval, a foreign investor may open an account denominated in Bahamian currency to pay local expenses. Increased authority has been delegated to commercial banks and money transfer businesses.

The Bahamas is one of 25 member countries that make up the Caribbean Financial Action Task Force (CFATF) to address money laundering. The organization’s most recent peer review evaluation and follow-up reports can be found at ( https://www.cfatf-gafic.org/index.php/member-countries/the-bahamas ).

Sovereign Wealth Funds

The Bahamian government passed omnibus legislation to manage the oil and gas sector in 2017 but has not yet promulgated supporting regulations. The legislation calls for the creation of a sovereign wealth fund which has yet to be completed. Discussions of a possible sovereign wealth fund were reignited when the Isle of Man-registered Bahamas Petroleum Company began exploratory oil drilling in Bahamas waters. The company confirmed in February 2021 that its exploratory drilling did not produce commercially viable quantities of oil and exited the market.

Nonetheless, the recently elected administration committed to present legislation to support a Sovereign Wealth Fund in early 2022 to monetize the concessionary access to Crown Land and Seabed leases already provided to foreign investors. Future Crown Land investments and royalty payments from exports of the country’s natural resources (such as salt, sand, rock, and aragonite) are also likely to contribute to the fund.

State-owned enterprises are active in the utilities and services sectors of the economy. A list of the 25 SOEs is available on www.bahamas.gov.bs . Key SOEs include Bahamasair Holdings Ltd. (the national airline), Public Hospitals Authority, Civil Aviation Authority, Nassau Airport Development Authority, University of The Bahamas, Health Insurance Authority, Bank of The Bahamas, Bahamas Power and Light (BPL), Water and Sewerage Corporation (WSC), Broadcasting Corporation of The Bahamas (ZNS), Nassau Flight Services, and the Hotel Corporation of The Bahamas.

In April 2019, the government announced plans to introduce a State-Owned Enterprises Bill to impose proper corporate governance and address the risk inefficient SOEs pose to the government’s financial health. The Embassy is unaware of efforts to advance this Bill in 2021. However, a suite of legislation passed in March 2021 aimed at improving the country’s fiscal governance may also improve the performance and accountability of SOEs.

Within the past decade, no SOE has returned profits or paid dividends, although SOEs account for significant government expenditure with approximately $419 million budgeted for fiscal year 2021-2022. The government has maintained SOE reforms are integral to its fiscal consolidation plans and confirmed commitments to reduce subsidies by $100 million annually over the next four years. The savings from SOE reform are expected to assist with meeting additional debt servicing obligations.

The government has permitted foreign investment in sectors where SOEs operate and has approved licenses to private suppliers of electrical and water and sewerage services. These licenses have been issued for private real estate developments or where there is limited government capacity to provide services. The city of Freeport on the island of Grand Bahama has its own licensing authority and maintains monopolies for the provision of electricity, water, and sanitation services.

Privatization Program

The government has not taken definitive steps to privatize SOEs but has proposed public-private partnerships as the preferred model going forward. Foreign investors are allowed to participate in privatization programs. The government divested 49 percent of the Bahamas Telecommunication Company in 2011 to U.S.-based Cable & Wireless Communications. The government also issued a second license for cellular services and retained 51 percent equity in the new company, Cable Bahamas/Aliv. In February 2019, the government entered a 25-year, $250 million lease agreement with UK-based Global Ports Holdings to redevelop the Nassau Cruise Port. In May 2021, the company announced it successfully raised over $130 million through its private bond offering.

Local and foreign companies operating in The Bahamas have progressively become more committed to the tenets of responsible business conduct (RBC). Local and foreign companies have led RBC-related initiatives, including educational programs directed at capacity building for specific industries, the maintenance of public spaces, financial and technical assistance to charitable organizations, and commitments to sustainability and environmental responsibility.

There have been no high-profile or controversial instances of corporate violations of human or labor rights, but civil society remains active in bringing attention to social issues. The Bahamas has strong trade unions, and labor laws prohibit discrimination in employment based on race, creed, sex, marital status, political opinion, age, HIV status, or disability.

The Bahamas does not adhere to the OECD Guidelines for Multinational Enterprise.

Additional Resources 

Department of State

Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/);

Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/);

Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/)

U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises (https://www.state.gov/u-s-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises/)

Xinjiang Supply Chain Business Advisory ( https://www.state.gov/xinjiang-supply-chain-business-advisory/)

Department of the Treasury

OFAC Recent Actions ( https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions ).

Department of Labor

Findings on the Worst forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings  );

List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods );

Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab ) and;

Comply Chain ( https://www.dol.gov/ilab/complychain/ ).

Climate Issues

The country is already suffering the effects of climate change with rising water levels and more intense storms, including hurricane Dorian in 2019, from which the islands of Grand Bahama and Abaco are still recovering. In 2016, The Bahamas ratified the Paris Agreement and established its Nationally Determined Contribution (NDC). The NDC commits the Bahamas to reducing greenhouse gas emissions by 30% by 2030, conditional upon international support. The government remains dedicated to meeting this goal. The Prime Minister led a large delegation to COP26 and has prioritized climate change action. The Ministry of the Environment is developing a national climate change strategy.

The Embassy is not aware of any regulatory incentives to achieve policy outcomes or specific public procurement policies that include environmental or green growth considerations, such as resource efficiency, pollution abatement, or climate resilience.

The government’s laws to combat corruption by public officials have been inconsistently applied. The law provides criminal penalties for corruption, and the government generally implemented the law effectively when applied. However, there was limited enforcement of conflicts of interest related to government contracts and isolated reports of officials engaging in corrupt practices, including accepting small-scale “bribes of convenience.” The political system is plagued by reports of corruption, including allegations directing contracts to political supporters and providing favorable treatment to wealthy or politically connected individuals. In The Bahamas, bribery of a government official is a criminal act carrying a fine of up to $10,000, a prison term of up to four years, or both.

The current administration has accused the former administration of inappropriate spending and misappropriation of millions of dollars, particularly during the state of emergency issued due to the COVID-19 pandemic. The Emergency Power (COVID-19) Regulations, passed in March 2020, granted widespread powers to the government during the state of the emergency. For example, the legislation allowed the government to bypass normal spending rules and procurement processes, although it did require the government to present Parliament with reports of contracts and pandemic-related funding within six weeks of the expiration of the state of emergency. Despite the state of emergency expiring and being extended several times throughout 2020 and 2021, the former administration failed to report. The Emergency Power Regulations expired for the final time without extension in October 2021.

The new administration has called into question several contracts awarded to companies and individuals by the former administration under the Emergency Power Regulations and has ordered forensic audits of government ministries and agencies. Initial findings suggest significant misappropriation of funds. The former administration admitted it failed to report but denies allegations of corruption. The new administration also accused the former administration of $821 million in undisclosed liabilities and unfunded obligations identified in the former administration’s pre-election report. The former administration denies these allegations, explaining the reporting irregularities were due to differences in accounting methodologies.

As of April 2022, no criminal charges have been filed against members of the former government for these corruption allegations. The current government pledged any decision to prosecute would be supported by independently collected and verified evidence.

The Public Disclosure Act requires senior public officials, including senators and members of Parliament, to declare their assets, income, and liabilities annually. For the 2021 deadline, the government gave extensions to all who were late to comply. The government did not publish a summary of the individual declarations, and there was no independent verification of the information submitted. The campaign finance system remains largely unregulated with few safeguards against quid pro quo donations, creating a vulnerability to corruption and foreign influence.

In September 2021, the government enacted the Public Procurement Act (2021), which overhauls the administration of government contracts to improve transparency and accountability. Senior government officials have called for the legislation to be amended to reflect government capabilities and strengthened with new regulations. Though functional, most agencies with large procurement budgets do not utilize the existing e-procurement portal or registry. Senior Officials purport that the existing e-procurement portal requires modernization to improve functionality.

According to Transparency International’s 2021 Corruption Perceptions Index, The Bahamas ranked 30 out of 180 countries with a score of 64 out of 100. There are no specific protections for NGOs involved in investigating corruption. U.S firms have identified corruption as an obstacle to FDI and have reported perceived corruption in government procurement and in the FDI approvals process.

The government does not, as a matter of government policy, encourage or facilitate illicit drug production or distribution, nor is it involved in laundering the proceeds of the sale of illicit drugs.  No charges of drug-related corruption were filed against government officials in 2021.

The Bahamas ratified major international corruption instruments, including the Inter-American Convention against Corruption in 2000, and has been a party to the Mechanism for Follow-Up on the Implementation of the Inter-American Convention against Corruption (MESICIC) since 2001. The Bahamas is not party to the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Government agency or agencies responsible for combating corruption:

Royal Bahamas Police Force
Anti- Corruption Unit
P.O. Box N-458
(242) 322-4444
Email: info@rbpf.bs 

Watchdog organizations:

Citizens for a Better Bahamas
Transparency International (Bahamas Chapter)
(242) 322-4195
Website: www.abetterbahamas.org 
Email: info@abetterbahamas.org 

Organization for Responsible Governance (ORG)
Bay Street Business Center, Bethell Estates
East Bay Street (at Deveaux St.)
Website: www.orgbahamas.com 
Phone: 1-242-828-4459
Email:  info@orgbahamas.com 

The Bahamas has no history of politically motivated violence and, barring a few incidents leading up to general elections in 2021, the political process is violence-free and transparent. The 2021 incidents were minor and included damage to political party installations and billboards, social media harassment, and altercations between political party supporters.

The labor force is considered well-educated by international literacy and numeracy standards, and both skilled and unskilled labor is readily available. Although a formal Labor Force Survey has not been completed since December 2019 when the unemployment rate was 10.7 percent, government and international agencies estimate the 2021 unemployment rate at 20 to 25 percent due to the pandemic. The National Statistical Institute expects to complete the next Labor Force Survey in May 2022.

Under normal conditions, wage rates are lower than in the United States but higher than most countries in the region. The minimum wage is $5.25 per hour ($210 per week), although the government is considering increasing the wage to $6.25 per hour ($250 per week). There are significant numbers of documented and undocumented foreign workers. There are 40,000 registered work permit holders in The Bahamas, and the majority are designated as unskilled or semi-skilled. This group is comprised primarily of Haitian nationals.

The Bahamian government has granted special permission to several construction projects to bring in foreign workers. These concessions were negotiated as part of the Heads of Agreement for specific, large-scale investments. In most other cases, the employment of foreigners requires applying for individual work permits. Bahamian labor law governs all workers, both foreign and domestic.

The Fair Labor Standards Act (FLSA) requires at least one 24-hour rest period per week, paid annual vacations, and employer contributions to National Insurance (Social Security). The Act also requires overtime pay (time and a half) for working more than 40 hours a week or on public holidays. A 1988 law provides for maternity leave and the right to re-employment after childbirth. The Minimum Labor Standards Act, the Employment Act, Health and Safety at Work Act, Industrial Tribunal and Trade Disputes Act, and the Trade Union and Labor Relations Act were passed in 2001 and early 2002. Foreign workers also have the right to social security benefits after five consecutive years of contributions.

Bahamian law grants labor unions the right to free assembly and association and to bargain collectively. The unions and associations exercise these rights extensively, particularly in state-owned industries. The Industrial Relations Act governs the right to strike, which requires a simple majority of union members to vote in its favor. The Ministry of Labor oversees strike votes and manages overall industrial relations. Industrial unrest occurred throughout 2021 due to the effects of the pandemic and longstanding issues such as outstanding industrial agreements and delayed promotions. Demonstrations were organized by the Bahamas Public Services Union, the Union of Public Officers, the Nurses Union, the Doctors Union, the Consultant Physicians Staff Association, the Bahamas Educators and Managerial Union, Customs, Immigration and Allied Workers Union, the Union of Tertiary Educators, and the Union of Teachers.

In 2016, the government amended legislation to require employers to inform the Minister of Labor in instances where more than ten people were being laid off.

The Bahamas ratified most International Labor Organization (ILO) Conventions and domestic law recognizes international labor rights. The Department of Labor’s Inspection Section has been strengthened to investigate occupational safety and health issues, including both on request and random inspections. The country is committed to eliminating the worst forms of child labor, and the Ministry of Labor has periodically inspected grocery stores and other establishments where child labor in commonplace to ensure the enforcement of laws governing child labor.

The Bahamas is a member of the Multilateral Investment Guarantee Agency of the World Bank (MIGA), which insures investors against currency transfer restrictions, expropriation, war, civil disturbances, and breach of contract by member countries. Because the World Bank designates The Bahamas as a high-income country, it generally does not qualify for development assistance.

Table 3: Sources and Destination of FDI
Data not available.

Political-Economic Section
U.S. Embassy Nassau
New Providence, The Bahamas
P.O. Box N-8197
Telephone: (242) 322-1181
Email: NassauCommercialDL@state.gov