For more than 80 years, the Bahamas has successfully attracted foreign direct investment and offered competitive wealth management services to clients from around the world. One of the key reasons for the archipelago’s success is its position as an internationally recognised centre for the provision of financial services. In fact, while the country is small in size, it has consistently proven itself to be strong in terms of products and services.
This strength has been challenged in recent years by the global consolidation of technological advancement, the region’s relative economic weakness, increased competition from other financial centres (both onshore and offshore) and regulatory pressures. To counter these issues, the Bahamian Government has begun laying the foundations for its financial services strategic outlook up until 2025. This strategy has a clear aim to cement the country as a location of choice for specialist international financial services and seeks to build on a number of the Bahamas’ strengths, including its local HR talent, well-regulated environment, technological development, product and service innovation, established infrastructure, excellent client services and friendly investment policies.
The Bahamas must articulate its legitimacy as a well-resourced, compliant financial centre that is focused on lawful international business
Current trends are pointing towards a more technology-driven financial sector that is increasingly knowledge-focused. As such, the Bahamas must be prepared to adapt its product and service offerings to these changes, while also leveraging its existing strengths to seize the opportunities being created by new and emerging developments.
Offshore, but above board
The Bahamian Government believes that fostering a continued alliance between the public and private sectors, while collaborating with both domestic and international regulators, is critical to growing the islands’ financial services industry and preserving the jobs of its citizens.
In the past, the word ‘offshore’ has conjured up negative images of financial centres. Unfortunately, the word still casts a shadow over the continuing success and tremendous growth of legitimate private banking and wealth management businesses in well-regulated jurisdictions like the Bahamas. The government, therefore, believes the Bahamas must articulate its legitimacy as a responsible, well-resourced and compliant financial centre that is focused on lawful international business – in other words, a centre that is committed to the highest possible standards of service delivery, transparency and cooperation.
As such, the Bahamian Government is dedicated to maintaining the integrity of the country’s financial services sector and ensuring full transparency in line with its international obligations – all while balancing clients’ need for safety and confidentiality. To this end, the Bahamas has been proactive in the global fight to increase tax transparency, complying with international regulatory initiatives that help tackle tax avoidance and evasion, combat money laundering and prevent terrorist financing.
The Bahamas will not allow its financial services sector to be compromised and remains committed to ensuring that it is a transparent, clean and compliant jurisdiction. It has already demonstrated this commitment through its swift response to the new international regulatory initiatives developed by the OECD, EU and Financial Action Task Force, allocating substantial human and monetary resources to ensure the necessary legislation and policies have been implemented.
A piece of paradise
Having recognised the importance of adopting a modern, progressive and development-focused immigration framework, the Bahamas’ Ministry of Financial Services has developed a tax residency programme that can serve as a gateway to more permanent residence for high-net-worth individuals. This programme grants successful applicants the right to reside in the Bahamas for a period of up to three years and bestows upon them a certificate of tax residence.
To maintain access to these benefits, however, investors must make the Bahamas their home (or main) residence, living in the country for at least 90 days and declaring they will spend less than 183 days in any other single country. If they fail to abide by these rules, a ‘substantial presence test’ will be conducted to ascertain whether their benefits should be withdrawn.
The ministry also recognises that the issue of residency is hugely important given global developments in tax transparency. With this in mind, the concept of residency – and, specifically, tax residency – in the Bahamas has been carefully defined. This has helped the country’s financial services sector remain progressive, while also keeping up to date with a changing global landscape.
As always, a fine balancing act must be struck. The Bahamas will continue to abide by the highest regulatory standards – both domestic and international – while delivering new products and services that maintain the archipelago as one of the world’s most respected providers of financial services.