International Trust Legislation - Bahamas
Bahamian law is largely based on English common law, and various supporting acts that govern trust formation have also passed into legislation. Rather than a tax evasion destination, the Bahamas has moved to shed its off-the-radar image of late, instead opting for a more comprehensive money management basket of goods — as opposed to people avoiding tax by investing or setting up a trust there. Today, trust and investment management fees are transparent and competitive, as the Commonwealth tries to shed any illicit implications and stand tall as a fintech and money management hub or destination in its own right.
Trusts are capably established and serviced in the Bahamas, with the following points to keep in mind:
• There is definite protection for Bahamian trusts — no foreign country has legitimacy with any civil claims. Thus, immune to foreign judgments and managed according to global standards, Bahamian trusts have become a little more polished over the last 10 years or so.
• Similarly, creditors face a two-year withholding period, and they need to prove fraudulent activity before any action is taken against resident trusts.
• Trusts without local real estate assets which have non-resident beneficiaries are wonderfully exempt from all taxes, including the ubiquitous stamp duty so typical elsewhere on money deposited in trust. The mandatory $50 revenue stamp can be a cash purchase devoid of disclosure of any kind, too.
• A great amount of control is enabled in Bahamian trusts, where trustees enjoy extensive statutory investment and management power, thus making any kind of local obligation or interference a non-issue.
A wide range of trusts are allowed under Bahamian legislation, including accumulation trusts. Exchange control regulations do not apply to non-resident beneficiaries, and a proactive and extremely sleek local fraternity of trust managers has emerged over the years, with the foundational offer always asset protection.
Although the global offshore financial services industry has taken blows recently from Foreign Account Tax Compliance Act (FATCA), Base Erosion and Profit Shifting (BEPS), and the Common Reporting Standards (CRS) protocol, the Bahamas must be said to have come through it all with the least egg on its face. While the loss of bank secrecy’s hedge was an upsetting component of shifting global legislation and cooperation, it has not translated into much in the Bahamas, and an asset protection trust still performs its obligatory and desired duties admirably. EG