Small Business Tax in Bahamas

The Bahamas is one of the few jurisdictions worldwide that imposes neither a corporate income tax nor a personal income tax. For small-business owners, that headline is accurate but incomplete: several indirect and regulatory levies apply, and understanding them is essential before trading in the country. A fuller picture of the tax landscape is available on The Bahamas country overview.

Do small businesses pay income tax in The Bahamas?

No. The Bahamas has no corporate income tax and no personal income tax. Business profits are not assessed at the entity level, and owners do not file an annual income return with the Department of Inland Revenue (DIR). This distinguishes The Bahamas from neighbouring Caribbean jurisdictions that operate conventional income-tax regimes. Revenue for public services is instead raised through consumption taxes (VAT), licensing fees, import duties, and other indirect levies described below. [^dir-about]

What is the Business Licence fee, and who pays it?

Every person or entity carrying on business in The Bahamas must hold a valid Business Licence issued by the Department of Inland Revenue. The annual fee is calculated on gross turnover from the preceding year. The current statutory rate schedule is as follows: [^bl-faqs]

The government has extended an exemption from Business Licence fees for all businesses with annual turnover of BSD 250,000 or less. [^mof-bl] That relief does not extend to proprietary-trading businesses, which remain liable regardless of turnover. Businesses with turnover above BSD 250,000 but at or below BSD 500,000 pay 0.50% of their full turnover. Late payment attracts a 10% penalty plus interest at 5% per annum on amounts overdue by more than 30 days.

When must a small business register for VAT?

Value Added Tax (VAT) applies at a standard rate of 10% on most goods and services supplied in or imported into The Bahamas. [^dir-vat] A business whose annual taxable turnover reaches BSD 100,000 within any 12-month period must apply for VAT registration within 14 days of crossing that threshold. Below that level, registration is voluntary.

Once registered, a business charges VAT on its outputs and claims credit for VAT paid on inputs, remitting the net difference to DIR. A reduced rate of 5% applies to certain essential items including basic foods, medications, and hygiene products (effective September 2025). The de-registration threshold sits at BSD 80,000 per annum for administrative purposes. Businesses that import goods pay VAT at the border regardless of their registration status. [^higgs-2025]

What payroll contributions apply to employers?

The National Insurance Board (NIB) administers the Bahamas social-security system. Employers must register with NIB and remit contributions monthly by the 15th of the following month. Under rates reviewed by PwC in February 2026, the employer share is 6.65% of insurable earnings per employee, and the employee share is 4.65%, for a combined rate of 11.3%. [^pwc-nib] Contributions are capped at the insurable wage ceiling of BSD 810 per week (effective July 2024). An adjustment to the ceiling is scheduled for July 2026; the rates themselves are not changing at that date.

Self-employed individuals contribute 10.3% of insurable earnings on their own behalf and must register directly with NIB. NIB coverage provides pension, disability, sickness, maternity, and unemployment benefits.

Does real property tax apply to business premises?

Owners of commercial premises in The Bahamas pay annual Real Property Tax administered by DIR. [^dir-rpt] The rate structure for commercial property is tiered on assessed market value:

• First BSD 500,000 of value: 0.75%
• BSD 500,001 to BSD 2,000,000 of value: 1.00%
• Value above BSD 2,000,000: 1.50%

Annual returns are due by 31 March; a 10% discount applies to payments made in full by that date. Businesses that lease rather than own their premises do not pay real property tax directly, though the cost is typically reflected in the lease rate.

What does the new 15% domestic minimum top-up tax mean for small businesses?

Nothing, in practice. The Bahamas enacted the Domestic Minimum Top-Up Tax Act on 29 November 2024, implementing the OECD Pillar Two framework. [^dmtt] This measure imposes a 15% minimum effective tax on the Bahamian profits of large multinational enterprise (MNE) groups with global revenues of EUR 750 million or more in at least two of the four preceding fiscal years. It is explicitly directed at cross-border groups, not at domestic businesses. A business that operates only within The Bahamas is outside the scope of the Act entirely, regardless of its size or profitability.

Registration for the domestic minimum top-up tax began in early 2026 through the DIR's One Tax Bahamas portal. No action is required from ordinary small businesses. [^kpmg-dmtt]

How does a small business register and stay compliant?

A new business in The Bahamas follows a sequence of registrations before trading. First, the legal entity is formed with the Registrar General (sole proprietorships trade informally but must still obtain a Business Licence). Second, the operator applies for a Business Licence through DIR's online portal at vat.revenue.gov.bs, providing proof of business premises, physical-planning approvals, and an NIB letter of good standing. Third, the employer registers with NIB to obtain a contribution account. Fourth, if projected turnover will reach BSD 100,000, early voluntary VAT registration avoids an administration gap after crossing the threshold.

Ongoing compliance obligations include: renewing the Business Licence annually before 31 January; filing VAT returns on the cycle assigned by DIR (monthly or quarterly depending on size); remitting NIB contributions by the 15th of each month; and paying real property tax by 31 March. Businesses importing goods must clear customs and pay applicable duties and VAT at the point of entry. Penalties for late payment or non-registration accumulate quickly, particularly under VAT, where assessed penalties can equal the underlying liability.

Given the interaction between licensing, payroll, and indirect tax obligations, small-business owners in The Bahamas are encouraged to engage a qualified tax professional before commencing operations and at each annual renewal cycle.