Key Takeaways
- Stamp Duty applies to a defined range of instruments and transactions in the Bahamas, so foreign-owned businesses should check which of their dealings are caught.
- Property conveyances are now handled through VAT rather than Stamp Duty, while leases, share transfers, mortgages and foreign currency conversion remain dutiable.
- Duty is charged on ad valorem or fixed bases, with exemptions and reliefs available under the Second Schedule that non-residents may be able to use.
- Meeting stamping procedures and payment deadlines matters, as non-compliance carries penalties, and recent reforms continue to shape obligations for investors.
Understanding Stamp Duty (Stamp Tax) in The Bahamas: An Introduction
Stamp duty in The Bahamas is a live, operational tax on documents, not a dormant or nil charge. It applies to a defined list of legal instruments, including mortgages, debentures, trust deeds, leases, insurance policies, agreements, and share transfers, and the rate varies with the instrument and the value involved. For a jurisdiction with no tax on company profits, employment income, or capital gains, this document tax matters more than it might elsewhere, because stamp duty and VAT carry much of the transaction-level cost.
The legal foundation sits in the Stamp Act, 2024, administered by the VAT Stamp Unit of the Department of Inland Revenue. This article explains what triggers the charge, how the duty is calculated, which reliefs apply, and how stamping and payment work in practice. It is written for foreign owners, investors, and their advisers weighing a Bahamian structure or holding interests that touch the islands.
The Legal Basis: The Stamp Act and Its 2024 Modernisation
The governing primary legislation is the Stamp Act, 2024, gazetted on 27 June 2024. It replaced the long-standing Chapter 370 Stamp Act, which traced back to 1925, and a Stamp (Amendment) (No. 2) Act, 2025 has followed, a sign of continuing legislative attention.
The Act is built in two parts. Part I deals with preliminary matters such as the short title, commencement, and definitions; Part II covers the imposition of and liability for stamp duty, together with a requirement that financial institutions file reports and submit records.
Two schedules do the heavy lifting. The First Schedule lists the instruments that attract duty in commercial and other transactions, while the Second Schedule sets out the exemptions.
The 2024 restatement also introduced features absent from the old regime. These include a surcharge for stamping after execution, treatment of spoiled stamps, a fixed penalty regime, and an advance stamp duty ruling procedure for parties who want certainty before signing.
This modernisation followed an earlier round of reform. The Real Property Tax (Amendment) Act, 2022, the Stamp (Amendment) Act, 2022, and the Value Added Tax (Amendment) Act, 2022 all took effect on 1 July 2022 and reshaped how property transactions are taxed.
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What Is Dutiable: Instruments and Transactions Caught by Stamp Duty
Duty attaches to instruments of all types. The explicit list runs to deeds of conveyance, mortgages, debentures, trust deeds, leases, insurance policies, agreements, and share transfers.
The reach goes beyond simple, direct transfers. A corporate or trust transaction structured to effect a direct or indirect change in the beneficial ownership of any business is chargeable in the same way as an outright sale of that business.
Mergers fall within the charge as well. Under the International Business Companies Act, where two or more companies combine and land or a business automatically vests in the surviving entity, duty applies in the same amount as if that land or business had been transferred directly.
Instruments executed, or transactions occurring, entirely outside The Bahamas are exempt from stamp duty that would otherwise apply had they occurred within the country. The place of execution is decisive for the charge.
Foreign-currency consideration is converted for duty purposes. Where an instrument carries ad valorem duty on consideration expressed in a foreign currency, the duty is computed on the value of that currency as fixed by law at the time the instrument is executed.
Property Conveyances: How VAT Replaced Stamp Duty on Real Estate Transfers
Real estate transfers no longer attract stamp duty. Every conveyance of real property now draws Value Added Tax, charged on the value of the consideration, and all references to the "transfer of land" have been stripped out of the stamp legislation.
This carries through to business sales. Where a sale of a business includes the transfer of land or a share in a landowning company, that part of the transaction is taxed under the Value Added Tax Act rather than as stamp duty.
The graduated VAT on conveyances is the direct successor to the former real estate stamp tax. Updated rates came into effect on 1 July 2023, and the applicable rate turns on whether title passes to a Bahamian (a citizen or permanent resident with an unconditional right to work, or a wholly Bahamian-owned company) or to a Foreign Person.
Valuation can work against a buyer who underprices. In assessing the property, the VAT Comptroller may look at both the purchase price and an appraisal value and is entitled to adopt the higher of the two.
Cost-sharing follows convention. In a "gross" sale the vendor pays the realtor's commission, half of the VAT, and its own legal fees, while the purchaser covers the other half of the VAT and its own legal costs.
For foreign buyers, a payment deadline carries real consequences. Any permission or approval granted under the Exchange Control Regulations Act or the International Persons Landholding Act for a real property acquisition is conditional on VAT being paid within 18 months of becoming due; missing that window causes the permission to be conclusively deemed rescinded, though it revives automatically once payment is made.
Two further conditions govern stamping. An instrument will not be stamped unless all outstanding real property taxes on the property have been settled, and first-time homeowners exempt from stamp duty are also exempt from VAT on a qualifying conveyance.
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Stamp Duty on Leases of Realty and Marina Slips
Short leases carry a clear rate. A lease of realty with a term of less than five years attracts stamp duty at 2.5% of the annual rent reserved.
Marina slips sit alongside realty for these purposes. Assignments, transfers, leases, subleases, or licences of a marina slip, as well as assignments or transfers of personalty or realty, are charged at 2.5% of value where the consideration is below USD 100,000.
Above that threshold the rate climbs sharply.
| Consideration | Rate |
|---|---|
| Less than USD 100,000 | 2.5% of value |
| More than USD 100,000 | 10% of value |
For leases running five years or longer, no specific rate is confirmed in the available public sources under the 2024 Act. The sub-five-year rate of 2.5% is the figure consistently confirmed, and the longer-term position should be checked against the First Schedule before signing.
Stamp Duty on Share Transfers, Mortgages, and Other Commercial Instruments
Share transfers, mortgages, debentures, and trust deeds are named expressly as dutiable instruments. The precise fixed amounts for share transfers and commercial agreements live in the First Schedule of the Stamp Act, 2024, which holds the full rate table and should be consulted for any specific instrument.
Refinancing of a dwelling house receives particular treatment. The Act treats a "transfer of a mortgage" as including the case where a mortgage with one licensed lender is discharged and a new mortgage created with a different licensed lender over the same property.
In that refinancing, no duty falls on the satisfaction of the old mortgage or the creation of the replacement. Duty arises only where the new lender advances further sums, and then only on those additional amounts.
Outbound money movements carry their own charges. The Bahamas levies no withholding taxes, but a 1.5% stamp duty applies to all funds remitted or transferred out of the country, and a 5% charge applies to dividend remittances at or above BSD 500,000 that are converted into foreign currency before leaving. The Act also addresses duty on certain dividends-in-specie.
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Stamp Duty on Foreign Currency Conversion
Two distinct charges apply to money leaving the country, and they should not be confused. A general 1.5% stamp duty falls on all funds remitted or transferred out of The Bahamas, regardless of who receives them or why.
A separate 5% charge targets related-party dividends. Where annual funds exceeding BSD 500,000 are converted into foreign currency and remitted to a related party as dividends, the 5% duty applies to the amount sent abroad.
These two charges operate independently under the Act. For a foreign parent extracting profits from a Bahamian subsidiary, both can be relevant, and the combined effect on a remittance plan deserves modelling before funds move.
Currency conversion for ad valorem instruments follows a set rule. Where consideration is expressed in a foreign currency, the duty is calculated on the value of that currency as fixed by law at the moment of execution.
Rates and How Duty Is Calculated (Ad Valorem and Fixed Duties)
Duty divides into two families: ad valorem charges keyed to value, and fixed or nominal charges keyed to the instrument type. The rates differ widely across categories, so identifying the correct head of charge matters before any figure is applied.
The ad valorem rates a foreign investor meets most often are these:
- Transfers of personalty or realty and marina-slip instruments: 2.5% below USD 100,000, rising to 10% above it
- Leases of realty under five years: 2.5% of the annual rent reserved
- Dividend remittances converted to foreign currency at BSD 500,000 or more: 5% of the amount converted and transferred
- General outbound remittances: 1.5% of all funds remitted or transferred out
The Act sets out specific methods for harder cases. A "Mode of Calculating Ad Valorem Duty in Certain Cases" provision governs particular situations, and stock and securities carry their own calculation methodology.
Fixed duties are paid at nominal amounts, and postage stamps may be used only for those nominal charges. The individual monetary figures for each fixed-duty category are listed in the First Schedule rather than reproduced here, so the schedule is the source to consult for a precise amount.
Exemptions Under the Second Schedule and Other Reliefs
Relief is concentrated in the Second Schedule and a handful of named categories. Affidavits are exempt, save for an affidavit of loss relating to a conveyance on which neither stamp duty nor VAT was ever paid, and any agreement not listed in the First Schedule escapes the charge.
Intra-group transfers receive significant relief. Where real property moves between companies in which the same person beneficially owns at least 95% of the shares of both, the instrument is exempt, and VAT applies only to the extent of any genuine change in beneficial ownership; conveyances by way of assent and deeds of assent are likewise exempt.
Corrective and confirmatory documents are generally outside the charge. Deeds of rectification, confirmatory conveyances, affidavits of loss, declarations of trust, and deeds of variation are exempt where duty was paid on the initial conveyance and the parties are unchanged, apart from correcting a clerical error.
A geographic exemption is worth noting for any investor considering Grand Bahama.
The City of Freeport on Grand Bahama is exempt from stamp duties, and most customs and excise duties, until 2054 under the Hawksbill Creek Agreement, which has been written into legislation.
Two further reliefs ease common situations. First-time homeowners are exempt from both stamp duty and VAT on a qualifying conveyance, and where several instruments are executed as collateral for a single loan, duty falls on only one security instrument, provided the whole loan is secured by it and all documents are submitted together for stamping. Transactions occurring entirely outside the country also remain outside the charge.
Payment, Stamping Procedures, and Penalties for Non-Compliance
The procedural load is light, but timing is firm. Duty becomes payable within six months of the closing of a transaction that attracts it, and there are no procedural obligations unique to stamp duty beyond ordinary stamping.
Registration depends on payment. The Registrar General will not record an instrument until the duty has been paid to the Comptroller and the Comptroller has confirmed that the instrument has been stamped.
Real property instruments carry extra requirements from 1 October 2022. Each must state the real property tax assessment number for every property involved, be presented to the VAT Department within the prescribed time, and will not be stamped while any real property tax on the property remains outstanding.
Late stamping is penalised. The Act imposes a surcharge for stamping after execution, runs a fixed penalty regime alongside it, and offers an advance stamp duty ruling procedure for parties seeking certainty in advance.
There are consequences for non-payment on regulated transactions. If stamp duty on an instrument or transaction governed by exchange control stays unpaid for six months after it falls due, the relevant permission, permit, or approval is deemed rescinded.
Enforcement powers are substantial. The Comptroller can impose a lien on assets, pursue distress proceedings, exercise powers of entry and seizure, and require security from a taxpayer, while offences such as misappropriation of stamp duty are tried by summary proceedings. Refunds are available under a dedicated provision, and appeals lie to the Tax Appeal Commission. The full reform context is set out by Higgs & Johnson.
Outlook: Recent Reforms and What They Mean for Companies and Investors
The 2024 restatement marks a decisive break from a regime rooted in 1925. By replacing the old Chapter 370 Act and following it with a 2025 amendment, the government has signalled that this area is under active development rather than left to settle.
The structural headline is the removal of land transfers from stamp duty altogether. Property conveyances now run through VAT, which changes the compliance chain for any real estate-linked deal and shifts where a buyer's costs land.
Anti-avoidance has tightened. Financial institutions now face reporting and record-submission duties, and indirect ownership-change transactions, including corporate and trust restructurings that move beneficial ownership of a business, are brought into charge as though a direct transfer had taken place.
Certainty has improved for complex deals. The advance stamp duty ruling mechanism lets parties confirm the duty position before execution, which is useful where a restructuring or merger could be read more than one way.
For a foreign-owned entity, the wider picture is straightforward. With no corporate income tax, no capital gains tax, and no general withholding tax, stamp duty and VAT carry the principal transaction-level cost, and the Freeport exemption to 2054 remains a genuine variable in choosing where to base activity. The PwC summary gives a useful cross-check on these heads of charge.
Conclusion
For a foreign-owned business, the practical weight of stamp duty in the Bahamas falls not on property deals, which now sit under a different regime, but on the commercial instruments that most active companies generate routinely: leases, share transfers, mortgages, and foreign currency conversions. The exemptions exist, but they are not automatic, and the penalties for missing stamping deadlines are real.
The one thing worth acting on next is a transaction-by-transaction review of existing and planned instruments against what is currently dutiable, because the recent reforms mean that assumptions carried over from earlier structures may no longer hold.
How Expanship Can Help Your Business in The Bahamas
Expanship supports foreign owners in identifying which instruments attract stamp duty, calculating the correct ad valorem or fixed charge, meeting the six-month payment window, and using the advance ruling procedure where a transaction is complex. The same team handles the broader requirements of running a Bahamian entity, so stamp duty sits inside a single compliance plan rather than being managed in isolation.
- Company formation and structuring for foreign-owned entities
- Registered agent and registered office services
- Tax registration and filing, including VAT and stamp matters
- Ongoing compliance management and statutory deadlines
- Accounting and bookkeeping support
- Introductions to banking partners
To discuss your transaction or set up an entity, contact Expanship Bahamas for a tailored review.
Frequently Asked Questions
Yes. Stamp duty is a live, operational tax under the Stamp Act, 2024, applying to mortgages, debentures, trust deeds, leases, insurance policies, agreements, share transfers, and other named instruments. It is not a nil or symbolic charge, and it functions as the country's substitute for a separate transfer tax.
No, not as stamp duty. Property conveyances now attract Value Added Tax on the value of the consideration, with updated rates effective 1 July 2023 and a charge that depends on whether the buyer is a Bahamian or a Foreign Person. The applicable rate and the buyer's status should be confirmed before closing.
A 1.5% stamp duty applies to all funds remitted or transferred out of The Bahamas. A separate 5% charge applies to dividends of BSD 500,000 or more that are converted into foreign currency and sent to a related party, and the two charges operate independently.
They can be. Where real property moves between companies in which the same person beneficially owns at least 95% of the shares of both, the instrument is exempt, and VAT is due only to the extent of any actual change in beneficial ownership. Corrective and confirmatory documents are also generally exempt where duty was paid originally and the parties are unchanged.
Duty falls due within six months of the closing of a chargeable transaction. An instrument cannot be recorded with the Registrar General until the Comptroller confirms it has been stamped, and late stamping triggers a surcharge and a fixed penalty.
Yes. The City of Freeport on Grand Bahama remains exempt from stamp duties, and most customs and excise duties, until 2054 under the Hawksbill Creek Agreement, which has been incorporated into legislation. This makes the location a relevant factor when deciding where to base activity.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
