BAHAMAS Law and Practice Contributed by: Sean Moree KC, Vanessa Smith and Erin Hill, McKinney, Bancroft & Hughes
Vacant land and property located on any island in The Bahamas other than New Providence, which is owned by a Bahamian citizen, is exempt from real property tax. Such an exemption does not apply where the land is owned by a non-citizen of The Bahamas. 1.5 Stability of Tax Laws While the VAT, stamp duty and real property tax legis - lation are regularly amended, there should be no fear of tax uncertainty as it is important for clients to have an up-to-date understanding of those tax regimes when making tax and estate planning decisions. 1.6 Transparency and Increased Global Reporting In December 2018, The Bahamas enacted the Remov - al of Preferential Exemptions Act to abolish certain tax exemptions that were only available to non-resident entities. The Bahamas has legislation in place that requires the reporting of certain bank account information pursu - ant to the US Financial Account Tax Compliance Act and the OECD’s Common Reporting Standard. 2. Succession 2.1 Cultural Considerations in Succession Planning In The Bahamas, there are many family-owned and operated businesses that involve individuals from multiple generations of the family. This ensures that the source of the family’s wealth is maintained and that there is a transition of knowledge from one gen - eration to the next. 2.2 International Planning Where succession planning in The Bahamas involves assets, businesses and/or family members located in various jurisdictions, it is of paramount importance for the legal advisers in the relevant jurisdictions to work together to understand the various tax laws and their potential impact on the proposed succession plan. A successful succession planning process should involve full disclosure by the client to the advisers of the assets, individuals, entities, etc, involved.
Options that may minimise or insulate family members from the application of tax laws in the jurisdiction of another family member include the settling of multiple trusts or the creation of foundations. 2.3 Forced Heirship Laws There are no forced heirship laws in The Bahamas. 2.4 Marital Property In The Bahamas, all property acquired during the mar - riage is deemed to be matrimonial property. However, the courts will be guided by certain legislation and other factors when determining whether both par - ties derive the same interest in matrimonial property. These factors include: • the income, earning capacity, property and other financial resources that each of the parties to the marriage has or is likely to have in the foreseeable future; • the financial needs, obligations and responsibilities that each of the parties to the marriage has or is likely to have in the foreseeable future; • the standard of living enjoyed by the family before the breakdown of the marriage; • the age of each party to the marriage and the dura - tion of the marriage; • any physical or mental disability of either of the parties to the marriage; and • the contribution made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family. There is no strict formula when considering the inter - est each party enjoys in matrimonial property, given the multiplicity of factors to be considered. It may be possible for one spouse to transfer matrimo - nial property without the consent of the other spouse, particularly where the property is a chattel or is owned solely in the name of one spouse. 2.5 Transfer of Property Generally, the transfer of real property in The Bahamas will attract VAT at a rate of 10%. Certain transfers of real property that qualify as an inter vivos gift attract VAT at a rate of 0%.
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