Bahamas: Personal Taxation

Under the National Insurance Act 1972 as amended, Bahamian employers, employees and the self-employed pay social security contributions.

In a 2005 report, the Social Security Reform Commission, after a 10-month review, recommended sweeping changes to the 30-year-old benefits programme to ensure its sustainability.

The Commission, which was appointed in October 2003, made 13 key recommendations, including increasing the contribution rate from 8.8 percent to 11.8 percent. The first increase would come into effect in January 2011, and there would be an increase by one percent every year until 2014.

Commission Chairman Alfred Stewart explained that since the Fund started in 1975, there has not been an increase in the contribution rate.

It was also recommended that the retirement age be increased from 65 to 67 and that the contribution requirement for retirement pension be increased from 150 weeks (three years) to 500 weeks (10 years).

In addition, the Commission recommended that the ceiling on insurable wages be increased to $500 per week and thereafter adjusted annually in line with the average change in the national wage index over the previous three calendar years. The Commission had recommended that this come into effect in January 2006.

The National Insurance Board has begun to implement the recommendations and from June 1, 2010, raised employee contributions to 3.9% of earnings (3.4% prior to June 1, 2010). Employer contributions increased to 5.9% from 5.4% at the same time. The maximum earnings level was raised from $400 to $500 per week from January 1, 2011; self-employed persons pay 8.8% of earnings to the same maximum.

The contribution ceiling is to rise every two years, with the increase based on the Bahamian Retail Price Index plus 2%.

Furthermore, the contribution requirement for retirement pension was raised from 150 weeks to 500 weeks with the concession that a claimant aged 65 or over, having paid less than 500 contributions but more than 150, will qualify for a one-time grant.

Although all employers and employees pay these contributions, whether or not they are resident, benefits can generally be claimed only by resident Bahamians. Even in Paradise, it seems, there are thorns on the roses. Expatriates returning home to die at 60 after a lifetime of service in the Bahamas may be able to get a refund of contributions, or can elect to receive a pension.

 

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Bahamas Stamp Duties

Stamp duties are payable by individuals in a number of situations in the Bahamas. The most important of these are real estate transactions and overseas remittances of Bahamian currency.

At the time of writingm stamp duty on real estate transactions ranges from 2% on small amounts to 8% on sales over $100,000. It is normally shared between the parties. There is a 1% stamp duty on mortgages paid by the borrower.

Bahamian currency exported from the jurisdiction is stamped at 0.25%.

Bahamas Real Estate Tax

Real estate tax is levied on the following types of land and real property:

Real estate holdings must be declared annually to the Chief Valuation Officer.

At the time of writing, the rates of tax are as follows:

• Owner-occupied property:
  

  Value, $	Rate of tax, %
  Up to 250,000	Nil
  250,001 - 500,000	0.75
  Over 500,000	1.0 (max $35,000)

  
  
• Other property:

  Value, $	Rate of tax, %
  Up to 500,000	1.0
  Over 500,000	2.0
  Unimproved property in New Providence	3.0

An amendment to the Stamp Act which provides for exemption from payment of stamp duty on certain financial transactions involving licensed lending institutions went into effect in 2008.

As of July 1, 2008, application may be made for exemption from stamp duty for any of the following: purchase of a dwelling home; purchase and financing of a dwelling home and mortgage; purchase and financing of a dwelling home combined with other domestic loans and mortgages; purchase of vacant land for the construction of a dwelling home; transfer of a home mortgage; and, transfer of a home mortgage combined with other domestic loans.

The government stated that applications for stamp duty exemption in respect of these transactions must be accompanied by a completed affidavit, a copy of a National Insurance card, the first page, signature page, and back sheet of conveyance, and/or first page, signature page, and back sheet of mortgage.

In New Providence, applications must be made to the Financial Secretary at the Ministry of Finance, or to a Family Island Administrator.

The Ministry reminded applicants that purchase or construction of the home must be in respect of a first time home ownership, and the home must be intended for owner occupancy.

“A dwelling house includes a condominium unit or a duplex, exclusive of any part that is not owner-occupied,” stated the Ministry.

“The property must not be used for commercial purpose," it added.

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