Bahamas Revenue Sees Severe Drop As Fewer IBCs Sign Up

by Amanda Banks, Tax-News.com, London

05 November 2001

A dramatic drop in the number of registered International Business Companies (IBCs) by at least 50 per cent has resulted in a huge reduction in the Bahamas' government revenue and expenditure projections for 2001/2002.

According to a report from The Bahamas Journal the government has forecast that fees from IBC registrations will be down by more than $2 million and annual fees could drop by as much as $5 million compared to last year.

Attorney General and Minister of Justice, Carl Bethel, held a press conference last week to reveal the news and pointed to the country's recent overhauling of its financial service laws in combination with the September 11 terrorist attacks in the US which has severely affected tourist trade on the Islands.

The Minister said that the Bahamas is gradually recovering but the downturn in revenue from the IBCs is a matter for some concern. He explained: 'We think the financial services sector is better off under the present regime than it would have been had we remained on the (financial services) blacklist. In particularly, in view of recent events (September 11), the amount of pressure that is going to be brought on to the less well regulated jurisdiction, I don't think you would want to be in one of those jurisdictions in the coming weeks and months.'

In the 2000/2001 financial year the government received $4,281,000 in IBC registration fees, compared to this year's expected collection of $1,576,000. IBC annual fees earned the government $12,823,000 last year, while this financial year is likely to see figures of around $7 million.

Referring to the government's strict observance of the 'Know Your Customer Rules' which obviated the use of bearer shares to protect the identity of the true owner of a company, Mr Bethel concluded: 'You have to decide in this life sometimes what you want to give and what you want to keep. It is not possible to keep everything. It is not possible for the Bahamas to keep a well regulated, internationally acceptable, diversified and large financial services system... while at the same time seek to hold on to bearer shares.'

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