Intertrust N : The Bahamas is becoming a new hotspot for offshore investing

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The Bahamas' commitment to international tax transparency rules has made the jurisdiction more appealing for offshore investing and private wealth administration

More investors are considering setting up offshore companies in the Bahamas. The Caribbean country's compliance with international tax standards is turning it into a hotspot for offshore and private wealth investing.

Why choose offshore investing?

Offshore companies are firms that are registered, established or incorporated outside of the country of residence and can provide a wide range of benefits. Privacy, asset protection and reduced tax liability are some of the advantages of offshore investing.

Many high net worth individuals utilize offshore trusts for estate planning because these structures help secure their assets for the future while enabling them to retain control on their wealth.

The Cayman Islands, Bahamas and the British Virgin Islands are some of the leading financial centers in the Caribbean that have developed as popular jurisdictions for offshore investing and private wealth administration.

However, the use of offshore companies has come under increased scrutiny in recent years. Regulators across the world have been trying to introduce legislation to reduce tax loopholes, ringfencing and money laundering by entities located in offshore jurisdictions.

The European Commission recently stepped up global efforts for a global minimum corporate tax by proposing a minimum effective tax rate of 15% for large groups operating in the European Union (EU).

Why offshore investing in the Bahamas?

On 7 January 2022, the Commission removed the Bahamas from the EU's anti-money laundering watchlist of jurisdictions.

The move reflected the Bahamas' engagement with the international community in recent years to meet international criteria on tax governance and cooperation on tax matters.

In March 2020, the EU removed the Bahamas from its list of uncooperative jurisdictions for global tax initiatives. At the end of December 2020, the global financial watchdog Financial Action Task Force (FATF) removed the country from its anti-money laundering and terrorism financing watchlist.

In December 2021, the Bahamas became compliant with 18 recommendations and largely compliant with 20 recommendations of the Caribbean Financial Action Task Force (CFATF). The country said it would continue to work with the CFATF to remedy any possible outstanding matters.

Previously, the Bahamas was not viewed as a go-to jurisdiction for offshore and private wealth investing. Most investors preferred its neighbors - notably the Cayman Islands and the British Virgin Islands, which was particularly popular due to its lower fees for their offshore business. However, the removal of the Bahamas from these watchlists means that the country has increased its appeal as a location for offshore investing and private wealth administration. Despite a slightly higher fee structure, more investors are now considering the Bahamas as a location in which to set up their business than before.

Investing in the Bahamas: an economy on the mend

Since achieving independence from the UK in 1973, the Bahamas has grown into an attractive location for international investors thanks to its well-developed services sector, business-friendly regulations and stable political environment.

The country also offers a solid macroeconomic environment, with the local currency, the Bahamian dollar, pegged one-to-one to the US dollar.

To cope with the economic fallout from the Covid-19 pandemic, the Bahamas
received emergency funds from the International Monetary Fund (IMF) in 2020.

Despite the spread of the virus, the domestic economy was able to maintain its measured pace of recovery, according to the Central Bank of the Bahamas. The key tourism industry has continued to revive thanks to an increased number of air passengers and a modest rise in sea traffic.

How Intertrust Group can help in the Bahamas

• Many law firms and clients have been making enquiries with Intertrust Group about setting up structures in the Bahamas.
• Intertrust Group's Bahamas office has been operating for around 30 years. We have a highly experienced and stable team that can offer a more personalized wealth planning service.
• We can set up companies and act as directors, ensuring that annual meetings are held correctly.
• We are able to help clients with Know Your Customer (KYC) and anti-money laundering, as well as the production of annual financial statements.
• We can assist in setting up trusts and can act as trustees where needed.
• Intertrust Group is a publicly listed company with 70 years' experience in providing world-class trust and corporate services to clients around the world.