BAHAMAS Law and Practice Contributed by: Alistair Chisnall and Erica Paine, Graham Thompson
served to ensure that careful regard is given to the pro - cess and requirements of the P&S Act, to safeguard themselves against the potential risk of opponents to the development later finding a foothold for overturn - ing approvals that may have been hard-sought. The failure to adhere to and observe restrictions on development and designated use may result in fines under the P&S Act. The minister responsible for the environment has certain statutory powers to access and inspect premises to ensure that such matters are complied with, and to investigate non-compliance. This may also result in an action for judicial review or for an injunction against works or activities being brought by private citizens. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets The following entities are predominantly used by investors in The Bahamas to hold title to real estate: • a “Domestic Company” (also often referred to as a “Local Company”) incorporated under the Compa - nies Act, 1992, which is the preferred entity used by Bahamian investors; • a Bahamian IBC incorporated under the Interna - tional Business Company Act, 2000, which is the preferred entity used by non-Bahamian investors; or • a foreign corporation (eg, a US limited liability cor - poration) that is registered as a “Foreign Company” with the Bahamas Companies Registry. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Domestic Company A Domestic Company has limited liability (unless it is formed specifically as an unlimited liability company) and may carry on any business in, or from within, The Bahamas. A Domestic Company will be designated as “resident” for exchange control purposes under the Exchange Control Regulations if it owns land in The Bahamas or carries on business in the domestic economy, or
if the beneficial owner is Bahamian or a work-permit holder or a permanent resident with the right to work. A Domestic Company can only maintain foreign cur - rency accounts with the prior permission of the Cen - tral Bank of The Bahamas. IBC An IBC is a limited liability company that may carry on business in any part of the world and is primarily intended to operate outside The Bahamas. To con - duct business in or from within The Bahamas, an IBC requires certain government regulatory approvals. An IBC is restricted from carrying on business with persons (corporate and individual) resident in The Bahamas, unless they are designated “resident” for exchange control purposes; where that is desired in connection with the intended or pending purchase of real estate, an application for the appropriate designa - tion of a land-owning IBC would customarily be made in the course of the transaction. 5.3 REITs Whilst non-Bahamian REITs are frequently used by non-Bahamian investors, and in fact are some of the owners of the significant commercial developments in The Bahamas, the adoption and use of Bahamian REITs by local investors remains uncommon or infor - mal. Non-Bahamians seeking to invest in a REIT in The Bahamas, or holding Bahamian real estate, are still subject to similar regulatory requirements as may come to bear on direct purchase transactions or acquisitions involving a non-Bahamian (which may include requirements to obtain requisite approv - als from the Bahamas Investment Authority, Central Bank of The Bahamas and Gaming Board). In 2024, the Bahamas government introduced favourable tax provisions for local REITs by providing that acquisi - tion of an interest of no more than 10% of the issued shares in a REIT registered as a fund with the Securi - ties Commission may be zero-rated for VAT purposes. However, this has not yet resulted in any significant growth in demand or use of REITs locally. 5.4 Minimum Capital Requirement The authorised capital of an IBC may be divided into shares of a fixed amount, but IBCs may also have shares of no par value. Common shares, preference
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