BAHAMAS Law and Practice Contributed by: Alistair Chisnall and Erica Paine, Graham Thompson
value may be determined by an appraisal from a pro - fessional valuer, or is taken as the assessed value for real property tax purposes, if higher. The rate of VAT payable on the sale and purchase of land depends upon whether the conveyance is made to a Bahamian or a foreign person. Conveyances to a Bahamian indi - vidual or a permanent resident with the right to work in The Bahamas are calculated on a sliding scale of 2.5% for transactions valued at less than BSD100,000 up to 10% for transactions over BSD1 million. In the case of a foreign person, company or other entity, all transactions are charged at 10%. It is customary for a buyer and seller to agree in a typi - cal sale and purchase transaction to share the pay - ment of the applicable tax equally, but this is a busi - ness decision for the parties and not required by law. The transfer of shares of a land-owning company (or its parent) similarly attracts VAT and, under the Value Added Tax (Supply of Real Property) (General) Rules, 2023, any real property owned by a land-owning com - pany is deemed to be transferred in the same propor - tion of value as the interest transferred/acquired in the land-owning company. There are certain exempt (or rather, “zero-rated″”) transfers of real estate, or transfers that may be eli- gible for partial exemptions. These include certain voluntary intra-family transfers, corporate intra-group transfers, purchases and mortgages by first-time homeowners, and transfers of residential mortgages between licensed institutions. In the case of financing transactions (including pur - chase or construction financing), under the VAT Act a debenture or mortgage that secures a monetary obligation also attracts VAT at a rate of 1% of the monetary obligation secured. 2.11 Legal Restrictions on Foreign Investors While foreign direct investment in targeted sectors of the economy is generally encouraged in The Baha - mas and successive government administrations have supported and facilitated it, such investment is also regulated, and foreign investors and purchasers must obtain government approvals that differ in nature and process, depending (in the case of real estate-relat -
ed investments) on the type of purchaser, the land to be acquired and the intended development or use planned for the land. The Bahamas Investment Authority (BIA) and the National Economic Council (NEC) Applications for requisite approvals are submitted to the BIA, a government department based in the office of the prime minister. Applications for approval of major investment or development projects are con - sidered by the NEC, a non-statutory committee within the BIA that is comprised of the prime minister, mem - bers of the cabinet of The Bahamas government and other senior policy advisers. Once an application is approved by the NEC/BIA, all other approvals required from other departments and agencies will follow (sub - ject to compliance with the further necessary steps and procedures). The International Persons Landholding Act (IPL Act) International Persons Landholding Permit In the case of land transactions (other than one-off purchases of residences or vacation homes), a for - eign purchaser must obtain an “International Persons Landholding Permit” in respect of the land they intend to acquire, in accordance with the IPL Act. The appli - cation is made to a government department called the Investments Board. Where a permit is required under the IPL Act, it must be obtained as a condition for closing on the purchase transaction; in the absence of obtaining it, a buyer’s conveyance would be deemed null and void in law. Certificate of Registration Where a foreigner is purchasing real estate for single- family residential use only (whether for long-term use or for periodic use as a vacation home), under the IPL Act the purchaser does not have to obtain a permit as a condition for completion and may simply reg - ister their purchase of the land following the closing of the transaction and the payment of the tax on the transaction. The purchaser is issued a “Certificate of Registration” in such instances. One-time fee payment In either case, the permit or certificate obtained by the foreign purchaser is attached to their title deed when it
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