Economic Substance/Beneficial Owner Update
It has been a busy period of transformation in The Bahamas with the enactment of the (a) Commercial Entities (Substance Requirements) Act 2018, (b) the Register of Beneficial Act (“ROBO”), 2018 and the (c) Investment Funds Act, 2019 among others. These laws are focused on tax residency of key commercial businesses, appropriate, secure and controlled access to beneficial owner information to enable valid law enforcement enquiries and good governance of the securities markets.
Arising from these laws, there are steps to be taken by every entity and registered agent.
In regards to the Substance Requirements legislation and as we have shared with you over the past months, every entity must classify itself ahead of annual mandatory filing as one of the four:
- a company in scope of the key commercial business sectors such as investment management, leasing and banking,
- falling within the above category but having a tax residence other than The Bahamas
- a company with the sole purpose of ownership of a company meeting the first category and
- a company that either does not fall within any of the forgoing categories or is owned by a Bahamian resident.
A first step to undertaking this filing, a unique Entity Identification Number (“EIN”) must be secured by each entity. This EIN also may be utilized in completing tax reporting forms, such as W-8 BenE, as a unique ID.
To facilitate the process, we have on a no-charge basis secured an EIN for our clients. Should clients prefer that we undertake the annual filing, we would be pleased to undertake the same for a nominal fee of $250.
For the implementation of ROBO, a BDO designed secure series of mini-cloud sites captures all beneficial ownership data unless the entity:
- is or is owned by a regulated person, including a regulated trustee of a trust,
- regulated as an investment fund
- listed on a recognized stock exchange
We fulfill this obligation without any increase in fees.
An overview of the Investment Funds Act is available in our website here.
If there are further questions, please send an email to: [email protected].