Nassau, Bahamas – The Ministry of Finance of the Bahamas announced an extension of their economic substance reporting deadline to the end of January. All Bahamian companies (Companies Act, International Business Companies Act) and partnerships (Partnership Act, Partnership Limited Liability Act, Exempted Limited Partnership Act) now have until January 31st, 2021 to submit all declarations.
Entities carrying on relevant activities in the Bahamas must demonstrate economic substance by satisfying a two-pronged test:
- Core income generating activities must take place in the Bahamas and have adequate:
- Amounts of annual operating expenditure
- Levels of qualified full-time employees
- Physical offices
- Levels of board management and control
- The direction and management of the entity must be within the Bahamas, ensuring that:
- An adequate number of meetings of the Board of Directors is conducted in the Bahamas, given the level of decision-making required.
- A quorum of the Board of Directors is physically present in the Bahamas during meetings
- Strategic decisions made at the meetings of the Board of Directors are recorded in minutes
- Records and meeting minutes are kept in the Bahamas
- The Board of Directors has the necessary knowledge and expertise to discharge its duties.
Entities that meet these requirements must submit their report via the government’s online Economic Substance Reporting Portal. Entities that fall outside of these requirements are still obliged to submit a substance report.
There are no further requirements for those entities that have already submitted a declaration. However, entities that fail to comply with the requirement by January 31st, 2021 may incur penalties of up to $150,000.
To learn more about this requirement and how to comply, contact CT Corporation today.