BAHAMAS Law and Practice Contributed by: Judith Whitehead KC, Michaela Sumner-Budhi, Sean McWeeney Jr., Charisma Romer-Cartwright and Hubert Edwards, GrahamThompson
This Act incorporates into domestic law the Global Anti-Base Erosion Model Rules established by the OECD/G20 BEPS Project. In effect, in-scope MNE Groups with Constituent Entities in The Bahamas will be liable to pay a corporate tax of 15%, referred to as a domestic minimum top-up tax, as calculated under the GloBE Model Rules. The first filings are expected to occur within 18 months after 31 December 2025. An agreement between the OECD and the United States of America (USA), which became effective in January 2026, resulted in the USA being recognised as a Qualified Side-by-Side (SbS) Regime. The agree - ment provides that MNE Groups headquartered in the USA are not subject to the application of the Income Inclusion Rule (IIR) or Untaxed Profit Rule (UTPR). As a result, where the UPE (ultimate parent entity) of a Group is located in the USA (or other Qualified SbS Regimes), there are two safe harbours, SbS Safe Harbour and UPE Safe Harbour, applicable for fiscal years commencing on or after 1 January 2026. The former eliminates top-up-tax by deeming any excess profits taxable under the IIR or UTPR, which is ordi - narily available outside of the application of the SbS Regime, to be zero. The latter eliminates top-up-tax by deeming any excess profits taxable under appli - cation of the UTPR to be zero. The agreement has no effect on DMTT liability in The Bahamas. QDMTT continues to apply in The Bahamas with the need for a top-up-tax eliminated. QMDTT liability paid in The Bahamas is credited against the MNE Group’s tax liability in the Qualified SbS Regime. The Department of Inland Revenue (DIR) published notification requiring each Bahamas Constituent Enti - ty in an MNE Group, which is in-scope for fiscal years 2024 and 2025, to complete and submit Form DMTT- 24/25 with a deadline of 31 March 2026, and 30 April 2026, respectively. The Common Reporting Standard The Automatic Exchange of Financial Account Infor - mation Act, 2016 was recently amended by the Auto - matic Exchange of Financial Account Information (Amendment) Act, 2026 (the “Amendment Act”). Pursuant to the Amendment Act, all Financial Institu - tions are now required to register as either a Reporting
or Non-Reporting Financial Institution, no later than 90 days after the date on which it became a Financial Institution. An existing Financial Institution, which has not previously registered, is required to register as a Financial Institution no later than 15 June 2026. Moreover, a Non-Reporting Financial Institution is required to notify the Competent Authority when it becomes a Reporting Financial Institution and vice versa, within 30 days of such change. A Financial Institution must also de-register within 90 days from the date on which it ceased to be a Financial Institu - tion. If a Reporting Financial Institution did not maintain any reportable accounts for a reporting period, it must also file a Nil return with the Competent Authority. This change applies to information returns that are to be submitted in respect of the 2025 calendar year. It is of note that pursuant to the Automatic Exchange of Financial Account Information (Order) 2025, certain compliance and enforcement powers and functions were delegated to the Securities Commission of The Bahamas, the Central Bank of the Bahamas, and the Insurance Commission of The Bahamas (the “regu - lators”). The Amendment Act also introduced more stringent penalties for non-compliance (including an administrative fine of up to BSD300,000), and empow - ered the regulators to impose such penalties on their licensees and registrants for non-compliance. The new reporting deadline is 30 June of the year immediately following the calendar year to which the information return relates. This accelerates the prior reporting deadline, which was previously 31 July. The reporting period is 1 May to 30 June of each year. The portal is accessible between 1 October and 31 August in any year. 5.3 Available Tax Credits/Incentives The following is a non-exhaustive list of various pieces of legislation that provide tax concessions to persons who engage in business in The Bahamas. The Hotels Encouragement Act The Hotels Encouragement Act allows duty-free entry within The Bahamas of approved materials for, inter
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