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Offshore Trusts Report: Bahamas

Legal Framework and Formation Rules and Fees

Bahamian trust law is based on English common law, and the Bahamian Trustee Act 1893. In the last 15 or so years the Bahamas have extended and adapted their trust laws, most recently with a new Trustee Act 1998, to accommodate a wider market, which is not necessarily interested so much just in tax avoidance, but also in the efficient management of wealth in a more general sense.

Legislative amendments to allow for the formation of Private Trust Companies were put forward in May 2007.

Other legislation includes The Trust (Choice of Governing Law) Act 1989 and the Fraudulent Dispositions Act 1991. The Trustee Act 1998 repeals the Trustee Act 1983 and the Variation of Trusts Act 1983.

The Trust (Choice of Governing Law) Act 1989 gives protection to Bahamian trusts and their settlors in civil law countries against forced inheritance claims. The Act makes Bahamian law the proper law of a trust if the deed so declares, and makes the trust immune to foreign judgements.

The Fraudulent Dispositions Act 1991 establishes a two-year limitation period for creditors' attacks on asset protection trusts; the attacker has to prove fraud against the settlor.

Trusts (other than those holding Bahamian real estate) with non-resident beneficiaries are exempt from all taxes, including stamp duty on transfers into trust. Under the 1998 Act, new trusts need to be stamped with a $50 Bahamas revenue stamp (at the time of writing), which can be bought for cash and does not involve any disclosures.

The Trustee Act 1998 is an important piece of legislation which updates Bahamian trust law on many fronts. Some of the more important provisions are as follows:

  • A settlor can retain a wide range of powers without falling foul of 'sham' trust legislation;

  • Trustees are given wide statutory investment and management powers unless the trust deed negates them;

  • Trustees' indemnities are recited in the statute;

  • A wide range of trust purposes are encompassed, including accumulation trusts;

  • The role of Protector is recognised;

  • There are extensive disclosure provisions;

  • Exemption from all taxes and from stamp duty (an initial stamp is required on all trust deeds, however);

  • Exemption from registration except where an interest in Bahamian property is to be protected;

  • Exemption from exchange control regulations for non-resident beneficiaries.

The Act was to have included legislation covering purpose trusts; this was enacted separately as the Purpose Trust Act, 2004.

"There are many estate planning exercises and other commercial transactions that can legitimately and properly take advantage of this kind of structure," observed Alfred Sears, the then Attorney General. These uses include:

  • The holding of shares of a private company, which is expressly authorised by the Act. In this structure, the settlor and members of his family and his advisors may be appointed directors of the private trust company and thereby assume some responsibility for the management of the trust. This is often useful when the assets of the trust are of an unusual nature.

  • A trust which has both philanthropic and charitable purposes.

  • Asset purchase or financing transactions to provide security for an entity which finances the purchase or to keep the asset and corresponding liability from appearing on the purchaser’s balance sheet.

  • Separating voting from economic control.

  • Temporary avoidance of controlled foreign corporation rules.

  • Debt Subordination to provide ranking of priority among creditors.

  • Discretionary trusts to perpetuate a particular corporate governance philiosphy.

   

The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

New Zealand

New Zealand: Legal Framework and Formation Rules and Fees
New Zealand: Review of the Law of Trusts
New Zealand: Taxation of Trusts

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees

 


Bahamas News

Cayman Islands Named Leading Specialized IFC
Friday 8/9/2017
The Cayman Islands has again been named the world's number one specialized financial center by the Banker magazine, part of the Financial Times Group.

Bahamas Launches Online Portal For Incorporation Filings
Thursday 7/1/2016
The Bahamas has launched a new electronic platform that enables users to reserve company names, incorporate in the Bahamas, order or file company documents, search company details, and pay annual fees.

Bahamas Seeking To Upskill Financial Services Workforce
Wednesday 23/9/2015
he Bahamas Minister for Financial Services has emphasized the importance of the financial services industry for the territory, urging the industry to build on the expertise of local personnel.

Bahamas FM Comments On Financial Services
Wednesday 26/2/2014
The Bahamas aims to actively engage with changes in the international financial services landscape brought about by the Global Forum on Transparency and Exchange of Information for Tax Purposes and other international bodies, Minister of Financial Services Ryan Pinder said.

Bahamas FM Encourages Entrepreneurship In Compliance
Thursday 17/10/2013
The Minister of Financial Services in the Bahamas, Ryan Pinder, said recently that there is growing opportunity in the territory for entrepreneurs to specialize in compliance as proposed international mandates have created a growing need in this area.

Bahamas Makes Statement On FATCA
Thursday 15/8/2013
In his contribution to the House of Assembly, on August 12, 2013, Minister of Financial Services Ryan Pinder said that the Bahamas Government has agreed that the country will achieve compliance under the United States Foreign Accounts Tax Compliance Act by negotiating and entering into a Model 1 Intergovernmental Agreement with the United States Department of the Treasury.

AML Standards Highest In Offshore Territories
Thursday 27/9/2012
A new study from the Centre for Governance and Public Policy at Griffith University, Australia, has confirmed that a number of offshore territories have substantially stronger safeguards in place to prevent the use of shell companies for anti-money laundering and terrorism financing purposes than many advanced onshore nations such as the United Kingdom and the United States.

Bahamas Touts Fund Sector Innovations In Brazil
Wednesday 26/9/2012
A financial services industry delegation from the Bahamas has held two events to drum up business from Brazil by promoting the island's unique offerings in the funds and private wealth management sectors.

OECD Publishes Seven Country Reviews On Tax Transparency
Thursday 28/4/2011
The Organisation for Economic Cooperation and Development has published two new reports in its assessments of countries’ frameworks for facilitating the tackling of tax evasion through tax information exchange.

Judge Defends Bahamas
Monday 23/8/2010
A Supreme Court judge in the Bahamas has in a recent judgement spoke out against the labeling of tax minimization arrangements in the Bahamas as ‘fraudulent activities’, underscoring that in English and international tax laws tax avoidance by way of tax-efficient planning through the use of tax neutral jurisdictions remains legal.