The Tribune

By ANNELIA NIXON

TRIBUNE Business Reporter

anixon@tribunemedia.net

THE BAHAMAS has more than triple the number of corporate income taxpayers it initially forecast, a Cabinet minister revealed yesterday, as the Government moves to attract more wealthy individuals to domicile in this nation.

Jerome Fitzgerald, minister of economic affairs, said the planned tax residency certificate is designed to generate extra business and revenues by attracting high net investors and their families to make The Bahamas their primary residence. This, in turn, will draw the family offices that manage their affairs to relocate here, with the hope they may establish or invest in other Bahamas-based businesses.

The minister said the Government does not yet know how much additional business the Bahamas Tax Residency Certificate could generate, but believes the potential is significant as wealthy individuals increasingly have greater flexibility over where they pay taxes.

“We know there’s added potential. We don’t know exactly what is,” Mr Fitzgerald said, pointing to the experience with the Bahamas’ domestic minimum top-up tax regime (DMTT), where the Government discovered it had more than three times’ as many taxpayers as initially anticipated.

“We thought we had maybe 10. We came to find out we had, you know, well over 30,” he said of the 15 percent corporate income tax that will be levied on these companies’ profits.

The proposed tax residency regime would verify that holders who spend at least 90 days in The Bahamas annually use this nation as their primary tax residence and are paying taxes here.

Mr Fitzgerald said some permanent residents have already approached the Government about the possibility, citing their desire to contribute to the Bahamian economy rather than pay taxes in another jurisdiction where they may also reside during the year.

“We find that residents and persons who have business in The Bahamas have a real connection with The Bahamas, and they prefer to pay taxes here to help to benefit the people of The Bahamas,” he added.

The initiative is being developed against the backdrop of increasingly mobile global wealth, with Mr Fitzgerald saying high net worth individuals are now considering where they should pay taxes as international tax rules evolve. The Government’s objective, he said, is to capture additional revenue without increasing the tax burden on Bahamians.

“So, again, we’re just trying to do as much as we can to get as much revenue as we can, so we don’t have to raise taxes on the Bahamian people,” Mr Fitzgerald said. “For five, six years now, we have not raised taxes on the Bahamian people, and we don’t intend to.”

The legislation required to establish the Tax Residency Certificate has already been drafted and is now undergoing consultation. Mr Fitzgerald said the Government expects to bring it to Parliament before the end of the year.

A key legislative requirement will be the ability to track when individuals leave The Bahamas, since departures are not currently recorded through passport stamping in the same manner as arrivals.

The tax residency initiative is being paired with the development of the Bahamas Invest Concierge Unit, a dedicated office intended to provide a more streamlined service to wealthy investors and family offices relocating their wealth and operations to The Bahamas. Mr Fitzgerald said the Government is seeking an individual to head the unit, with the service expected to be operational by year-end.

The concierge service is intended to extend the ‘red carpet’ approach associated with Bahamian tourism into the financial services sector, particularly for high net worth individuals establishing a presence in the country.

“What we call the Bahamas Invest Concierge is looking to kind of have an office where we can process quickly high net worth individuals who come and invest in the country,” Mr Fitzgerald said.

He added that the Government is also seeing increased interest from family offices, which are private structures used by wealthy families to manage their investments and wealth, with those operations potentially bringing not only capital but family members and employees to The Bahamas.

“A lot of family offices, which means people are bringing and managing their family wealth from The Bahamas, and with that, they’re bringing their family in,” he said. “They’re bringing all the people who support their business and so forth.”

The Government therefore wants to ensure that investors entering The Bahamas to domicile receive a level of service comparable to the hospitality extended to international visitors through the tourism industry.

Mr Fitzgerald said the initiatives form part of a broader effort to strengthen The Bahamas’ financial services sector and create opportunities for Bahamian professionals.

“The Bahamas has, within the region, the top service providers, professionals in this country, and that’s recognised in Brazil and in other jurisdictions as well,” he said.