Understanding Taxes in The Bahamas: What You Need to Know

The Bahamas is renowned for its stunning beaches and sunny climate, but it’s also widely regarded as a tax haven. This combination of tropical beauty and favorable tax policies makes the Bahamas an attractive destination for individuals looking to reduce their tax burden. If you’re considering relocating or working remotely from this Caribbean paradise, here’s a breakdown of the tax system and what you should expect.

An Overview of Taxes in The Bahamas

While the Bahamas is often labeled a tax haven, it’s important to understand what that actually means. The country does not levy a personal income tax, making it an appealing option for high earners and remote workers looking to reduce their tax liabilities. However, this does not mean that the Bahamas has no taxes at all. Instead, the government relies on other forms of taxation to generate revenue, which includes property taxes, import duties, and various fees.

Key Taxes in The Bahamas

Social Security Contributions

Even though there is no personal income tax, residents of the Bahamas still must contribute to social security. Employees contribute 3.9% of their wages, while employers pay 5.9%. Self-employed individuals are responsible for the full 8.8%. The maximum amount that can be paid in social security contributions is capped at $3,077 BSD per month, regardless of income.

Property Tax

One of the few taxes applicable to foreigners in the Bahamas is property tax. The rate varies depending on the property’s value and whether it is owner-occupied or not. For properties valued under $250,000, there is no property tax if the owner resides in the home. Properties valued between $250,001 and $500,000 are taxed at 0.75%, and properties over $500,000 are taxed at 1%, though this is capped at $35,000. Non-owner-occupied properties are taxed at 1% for properties valued under $500,000, and 2% for properties above that threshold.

Foreigners are free to buy property in the Bahamas without restrictions, though a government permit is required for purchases over five acres or for undeveloped land.

Import Duties

The Bahamas imposes high import duties on many goods brought into the country, ranging from 0% to 220%, depending on the product. The average import duty falls between 5% and 35%. For example, clothing is taxed at around 25%, and electrical equipment can face duties as high as 65%. These import taxes, in addition to a 10% value-added tax (VAT), make living expenses in the Bahamas quite high compared to other regions.

Stamp Duties

When purchasing property or transferring large sums of money internationally, foreigners are subject to stamp duties. These can range from 2.5% to 10%, depending on the value of the transaction. For example, the stamp duty on property sales can go as high as 10% for properties valued over $100,000. Additionally, there is a 1% stamp duty on mortgages, typically paid by the borrower. Sending money overseas also incurs a 0.25% stamp duty.

The Bahamas Digital Nomad Visa

In 2020, the Bahamas launched the Bahamas Extended Access Travel Stay (BEATS) program, a digital nomad visa designed for remote workers. This visa allows you to live and work in the Bahamas for up to one year while working for a foreign employer. The BEATS program also accommodates students who wish to study remotely.

The application process is straightforward, with a decision typically provided within five days. There’s a $25 application fee, a $1,000 fee for remote workers, and a $500 fee for each dependent accompanying you. To qualify, applicants must show proof of employment and health insurance, but there is no minimum income requirement.

After one year, the visa can be renewed twice, allowing you to stay in the Bahamas for up to three years. This makes the Bahamas a flexible and attractive option for remote workers looking to experience the Caribbean while continuing their professional activities.

Other Residency Options

For those interested in longer stays, the Bahamas offers various residency options. Foreigners can apply for work permits, annual residency, or even permanent residency. Permanent residents are free to live and work in the Bahamas indefinitely, though they do not have the right to vote.

Conclusion: Taxes and Living in The Bahamas

While the Bahamas offers significant tax advantages, such as no personal income tax and favorable property tax rates, it’s important to consider the full cost of living. The country’s reliance on import duties and other taxes means that the overall cost of living can be quite high, especially when purchasing goods or property.

For those seeking to reduce their tax burden or live as a digital nomad, the Bahamas offers an attractive tax environment. The country’s low taxes and stunning lifestyle make it a viable option for both wealthy individuals and remote workers. However, it’s essential to understand the various taxes that do apply, including property taxes, import duties, and social security contributions, to fully evaluate the cost of living in this tropical paradise.