The government's economic policy is crafted in the National Economic Council (NEC), headed by the prime minister. Management of day-to-day operations and the guidance of investors are the responsibilities of the BIA. Investments are classified into two categories: business and residential. Business investments include any investment of a business nature, including but not limited to manufacturing or industrial projects. Residential investments include the acquisition of residential properties by foreign nationals.
FOREIGN INVESTMENT RULES
There is no specific law regulating foreign investment in the Bahamas nor any general requirement for national participation in the capital or management of resident trading or other business enterprises. However, while the government encourages foreign investment, it is committed to a "Bahamianization" policy, which restricts foreign investors from engaging in business activities that are in direct competition with Bahamian-owned enterprises. The restrictions are enforced mainly by the requirement that business licenses (licenses to trade) must be obtained in many cases; these licenses will not be issued if the requirements for national participation described below are not complied with.
The following businesses are reserved for enterprises wholly owned by Bahamians:
- Wholesaling activities, up to B$2 million in sales per year
- Retailing activities
- Construction activities, up to B$2 million in sales per year
- Newspaper and magazine publication
- Operation of hotels with twenty-five rooms or fewer
- Public transportation by land, sea, and air within the Bahamas
- Operation of cinemas, theaters, nightclubs, and restaurants (except special gourmet ethnic restaurants)
- Operation of real estate agencies
- Operation of commission agencies engaged in importing or exporting
- Farming up to twenty-five acres (about ten hectares)
- Fishing
- Security services
- Handicrafts
- Operation of a wide range of service establishments
Foreign equity participation is allowed in certain instances, and the following activities are reserved for enterprises with majority Bahamian ownership:
- Wholesaling activities with over B$2 million in sales per year
- Construction activities with over B$2 million in sales per year
- Hotels with 26 to 100 rooms
- International sea and air transportation
- Debt insurance
- Farming 26 to 500 acres (about 11 to 200 hectares)
- Manufacturing primarily for the Bahamian market
- Water and electricity generation and distribution
Majority Bahamian ownership is satisfied if the company conducting the business has 60% or more of its voting shares beneficially owned by Bahamian nationals and is controlled by a board of directors, 60% of whose members are Bahamian nationals.
Apart from this, there are no requirements that management appointments must be in proportion to equity interests.
The Bahamian government is actively attempting to diversify the islands' economy outside the two main traditional industries of tourism and offshore financing. It strongly encourages investment in other activities.
Investors should submit to the BIA a project proposal along with supporting information. The proposal should include the following details: name and address, management and personnel requirements, description of proposal, type of business, principals, proposed location, land or factory space required, environmental impact, investment incentives required, employment projections, financial arrangements, bank references, proposed start-up date, concessions sought, and local representative.
REAL ESTATE ACQUISITION
Under recent legislation, a foreign investor (including a foreign-owned company) planning to buy real estate in the Bahamas must obtain permission from the Investments Board if the area is five or more acres (two or more hectares).
Effective 1 January 1994, however, non-Bahamians may purchase a condominium or other single family residence or vacant property of less than five acres on which to build a single-family dwelling without obtaining a permit. Purchasers will need to register the purchase with the Investments Board so that the government can monitor the extent of foreign ownership of property in the Bahamas. Purchasing property for business purposes or undeveloped land of five or more acres always requires advance approval.
Regulations with respect to applications may be obtained from:
Investments Board P.O. Box N 7147 Nassau, BahamasCosts involved in the acquisition and ownership of property include lawyers' fees (generally not in excess of 2.5% of the price of the property), real property tax (up to 2%), and stamp tax (up to 8%).
Town planning consents and building permits are required for the construction, demolition, or external renovation of all business premises; these must be obtained from the Ministry of Works and Ministry of Health.
LOCATION OF FOREIGN-OWNED ENTERPRISES
Foreign-owned businesses may set up anywhere in the Bahamas, provided that the Investments Board's permission and the requisite licenses to operate have been obtained. Preferential treatment will be given to investors planning to locate in the free trade zones or in islands other than New Providence and Grand Bahama.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
