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.

The Ministry of Tourism, Investments and Aviation, headed by the Deputy Prime Minister, has stressed its commitment to an investment-friendly environment and actively pursued FDI in partnership with the country’s embassies and consulates abroad. The Ministry has promoted investment across the country’s inhabited islands with a renewed focus on reaching less economically developed parts of the archipelago. It also touts 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. The PLP administration has embraced public-private partnerships (PPPs) to raise capital and engaged investors from relatively untapped markets, such as the Middle East and Africa.

Operating from the Office of the Prime Minister, the Bahamas Investment Authority (BIA) administers investment policies, functions as the national investment facilitation agency, and assists investors in navigating the approvals process. All foreign investors must apply for BIA approval. If operating in Freeport on Grand Bahama, investors must seek approval from Invest Grand Bahama , the investment arm of the Grand Bahama Port Authority (GBPA)  – a privately owned organization that oversees development in the city of Freeport. Government 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, and the Deputy Prime Minister as the Minister responsible for investments. 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 lags 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.

In early 2022, the government promoted plans to establish a new, independent agency – Bahamas Invest – to fast-track FDI, mobilize local investments, and improve bureaucratic delays, functionality, and transparency. However, the Embassy is not aware of progress towards establishing Bahamas Invest and it is unclear if these plans remain a priority. BIA continues its oversight of all FDI-related approvals and promotion.

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.

Business Facilitation

Through an e-business portal, companies can apply for or renew their business licenses online from the Department of Inland Revenue . The government claims approvals are normally granted within seven working days, provided all required information and documentation has been submitted correctly. However, the Embassy is aware of instances where domestic and foreign owned companies have waited weeks to receive their approved business licenses. The Department of Inland Revenue attributed most of these delays to extended verification processes.

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 sometimes-lengthy registration process is considered an impediment to the ease of doing business. In 2022, the government introduced new reporting requirements regarding real property taxes for business license applicants. Some applicants contend real property tax information requirements are onerous, difficult to obtain from landlords, and unnecessarily lengthen application timelines.

Outward Investment

The Bahamas government neither promotes nor prohibits its citizens from investing internationally, however, all outward direct investments by residents require prior approval from the Exchange Control Department of the Central Bank of The Bahamas. HYPERLINK “file:///C:/Users/WeschRA/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/VVAZEY33/View%20exchange%20control%20notes%20and%20guidelines”View 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.

During the pandemic, the Central Bank suspended purchases of foreign currency to maintain a fixed, one-to-one exchange rate with the U.S. dollar. However, the Central Bank began reauthorizing these investments in October 2021 after the country’s foreign reserves stabilized.

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  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.

Over the past decade, the government has made several legislative and policy efforts to enhance transparency and accountability and improve the country’s fiscal governance. However, some laws have not been fully implemented, others have been repealed and replaced by incoming administrations following elections, and some platforms are not fully functional or utilized.

In early March 2023, the government passed the Public Finance Management Act, 2023, aimed at improving fiscal governance and enhancing transparency and accountability. This Act repealed and replaced the Public Finance Management Act, 2021, the Fiscal Responsibility Act, 2018, and sections of the Financial Administration and Audit Act.

In March 2023, the government also repealed and replaced the Public Procurement Act, 2021, arguing that the previous legislation produced unintended public policy consequences, most notably biasing the granting of contracts to large vendors. The government contends that the new Public Procurement Act, 2023 allows preferential treatment for targeted groups such as SMEs, women-owned businesses, youth-owned businesses, and businesses operating on less developed islands. Preferences are also available for high-priority areas which diversify the Bahamian economy, such as niche-tourism, renewable energy, light manufacturing, digital assets and fintech, technology, agriculture, fisheries, and extractive industries. The new legislation requires international bidders to register with the Public Procurement Department. International bidders must receive approval to bid on lower value contracts.

The new procurement legislation is supported by an eProcurement and Supplies Registry  System and an eProcurement platform  launched in October 2022 that will serve as a clearing house for $785 million in government contracts budgeted for FY2022/2023. The administration contends the procurement platform will address complaints about transparency in the tendering process, allowing companies to track their bids and inquire about outcomes. The government advised nearly 1,500 national and international vendors registered on the eProcurement platform as of March 2023, approximately 300 contracts have been awarded, and it realized an estimated $2.6 million in savings from the use of the platform since its launch.

The official political opposition and some members of civil society contend the PLP administration disregarded key provisions of the previous procurement legislation, such as providing full reports to Parliament on contracts awarded and allowing for an appeals process.

The Bahamas’ supreme audit institution, the Office of the Auditor General (OAG), has demonstrated significant progress in addressing its audit reporting backlog by completing three national audits of government accounts in 2021 and 2022. The last publicly available audit covers FY2019/2020, however the OAG plans to publish the FY2020/2021 audit in Q1 2023. The OAG is working with international partners, including the U.S. Global Accountability Office and the Inter-American Development Bank (IDB) to fulfill its reporting obligations and to implement best practices in its financial auditing practices and processes.

The government continues to make key budget documents publicly available, including the executive budget proposal, enacted budget, and end of fiscal year report. 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 on the government’s websites .

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 2022. 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.

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 establishing an Alternative Dispute Resolution Unit and updating relevant legislation, namely the International Commercial Arbitration Act (2021) and the Arbitration Act (2009). Amendments to these laws, introduced in March 2023, aim to attract international investors by granting them access to a more efficient resolution process outside the court system. The government advises the amendments will also provide alternative resolutions for trust and commercial disputes in the financial and maritime industries. Amendments to the legislation are in the consultative phase. Current laws incorporate key provisions of the Model Law of the United Nations Commission on International Trade Law (UNCITRAL).

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 continues to modernize the justice system and increase judicial transparency and efficiency. Efforts since 2022 included relaunching the digital court reporting system, drafting legislative amendments to expand the jurisdiction of the Magistrate’s Court and facilitate remote trials under the Evidence Act. Discussions continue regarding establishing a Juvenile Court, Family Court, Sexual Offences Court, and Commercial Court to give focused attention to these sensitive matters and allow other matters in the courts to advance with greater efficiency.

The Court Services Bill drafted in 2020 has not 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, the Embassy is not aware of major laws, regulations, or judicial decisions passed since publication of the 2022 Investment Climate Statement. FDI is encouraged through industry-specific legislation and a compendium of legislative incentives and concessions exist for doing business in The Bahamas. The Bahamas Investment Authority (BIA)  regulates and facilitates FDI based on the country’s National Investment Policy.

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 2022.

In 2022, the government committed to establishing Bahamas Invest – a new, autonomous agency to oversee a modern investment regime and fast-track investments. However, the Embassy is not aware of recent progress towards establishing Bahamas Invest and it is unclear if these plans remain a priority. 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 general legislation governing competition or anti-trust issues. A Competition (antitrust) Bill was drafted in 2018 in line with The Bahamas’ CARIFORUM-EU obligations and WTO accession requirements to address anti-competitive conduct, merger control, and elements of consumer protection. Initial public consultations were held in August 2018. The Embassy is not aware of efforts to advance the Bill in 2022.

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 Embassy is not aware of any instance in 2022 where the government acquired private property for public use.

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. A $2.25 billion fraud and breach of contract case is scheduled for trial in August 2024.

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 extrajudicial action against foreign investors is uncommon. However, in late 2022 the Securities Commission of the Bahamas suspended the license of the local subsidiary of a U.S. investor and began liquidation proceedings against the company. Liquidators, appointed by The Bahamas’ Supreme Court, also sought recourse in a U.S. court to seize $4.5 billion in company assets on behalf of customers and creditors. This case is ongoing.

International Commercial Arbitration and Foreign Courts

In 2020, The Bahamas established an Alternative Dispute Resolution Unit within the Ministry of Economic Affairs, responsible for international commercial arbitration and other alternative dispute resolution processes such as mediation and adjudication. The Unit is also responsible for developing relevant laws and promoting alternative dispute resolution.

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 Bahamas’ first credit bureau, CRIF Information Services Bahamas, Ltd., is a licensee of the Central Bank of The Bahamas and launched in April 2021. However, CRIF is not yet fully operational. 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 March 2023.

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), are included in respective Heads of Agreements (HoAs) and require the approval of the National Economic Council.

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 on BIA’s website .

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.

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 and projects committing to hiring Bahamians receive favorable consideration.

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 initiative is in line with the CARICOM objective to reduce extra-regional food imports by 25 percent by 2025. 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. View Bahamas Department of Immigration permit fees .

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. In 2022, the government reinvigorated its Real Property Tax Modernization Project aimed at significantly updating its real property register, upgrading the property assessment process, improving real property tax collection, and setting the foundation for improved collection, enforcement, administration, and transparency in land ownership. The government continues to engage a U.S. company to assist with the project.

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. Nassau’s commercial district suffers from a high incidence of abandoned buildings. In February 2023, the government issued demolition orders for nine derelict buildings in the downtown area and announced plans to draft legislation to support management of downtown Nassau.

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 geographical indications. 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 2022. 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 2022 Review of Notorious Markets for Counterfeiting and Piracy.

The Bahamas’ intellectual property registry is maintained by the Department of the Registrar General , 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 .

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. 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 .

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 . Applications are assessed by their probable impact on The Bahamas’ balance of payments.

During the pandemic, the Central Bank suspended purchases of foreign currency to maintain a fixed, one-to-one exchange rate with the U.S. dollar. However, the Central Bank began reauthorizing these investments in October 2021 after 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 2022 economic development report, the private sector delinquency or non-performing rate on commercial bank loans decreased to 4.9 percent, from a pre-pandemic level of 8.0 percent. The Central Bank projects further stabilization before the end of 2023.

As part of its response to the continued loss of brick-and-mortar banks, the Central Bank introduced 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 March 2023, the Central Bank estimated $330,000 in digital currency is in circulation, just over 100,000 mobile phone-based wallets used the Sand Dollar, and 1,500 local businesses have access to merchant services through Central Bank licensed payment services providers. While Sand Dollar circulation increased in 2022, spending in Sand Dollars and other tokens remains low compared to the size of the domestic payments system.

Some speculate the negative, global attention generated by the 2022 collapse of some large cryptocurrency companies made it harder to convince the Bahamian public to embrace the Sand Dollar. To incentivize usage, in April 2023, the bank announced the targeted giveaway of $1 million in Sand Dollars to early adopters during 2023 and 2024.

The Central 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. Access additional information on the Sand Dollar .

Foreign Exchange and Remittances

Foreign Exchange

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 but confirms that the country has no plans to abandon controls on foreign exchange. 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

In October 2022, the administration introduced a National Investments Fund Bill, to repeal the Sovereign Wealth Fund Act of 2016. The Bill provides a regulatory framework for public-private partnerships and is intended to maximize economic benefits from the country’s natural assets. The Bill promotes economic development in infrastructure, food security, renewable energy, and development on smaller islands.

The National Investment Funds Bill is also expected 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.

Privatization Program

The government has not taken definitive steps to privatize SOEs. It has shown a preference for public-private partnerships (PPPs) to attract FDI and to promote economic development in strategic sectors. Foreign investors can participate in privatization programs and PPP offerings.

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. In February 2023, the government signed an agreement with a Bahamian and UK joint venture to redevelop the Grand Bahama International Airport. Under a PPP, the consortium will design, build, finance, upgrade and maintain a new airport for the country’s second largest city. In March 2023, the government launched a PPP tender to engage qualified private sector entities to design, redevelop, and maintain government-owned airports on fourteen smaller islands.

Climate Issues

The Ministry of the Environment is developing a national climate change strategy. The country continues to suffer the effects of climate change with rising sea levels, coastal degradation, and more intense storms. In 2016, The Bahamas ratified the Paris Agreement and established its Nationally Determined Contribution (NDC) which 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 COP27 and is a leading international voice for climate change action, including climate financing for mitigation and adaptation efforts and natural disaster response. The Prime Minister contends The Bahamas suffered $4.2 billion in damage and losses from hurricanes since 2015. In 2022, The Bahamas began surveying its seagrass and mangrove resources to establish a blue carbon credit program that will finance renewable energy adoption. The administration aims to make its carbon credits available for trade by the end of 2023. A U.S. firm received a license to establish a blue carbon credit exchange in the country in early 2023.

The government encourages private sector action to support the country’s goal of 30 percent renewable energy usage by 2030; transition from diesel to liquified natural gas (LNG) on its most populated island of New Providence; and the introduce renewal energy microgrids on less developed islands. The country increasingly includes environmental or green growth considerations, such as resource efficiency, pollution abatement, or climate resilience in its public procurement policies and specific Requests for Proposals (RFPs) and Expressions of Interests (EOIs). U.S. firms express significant interest in these initiatives.

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)c

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