|Posted on April 7, 2013 at 2:25 PM|
One of the most prosperous countries in the West Indies, The Bahamas relies on tourism to generate most of its economic activity. Tourism as an industry not only accounts for over 60 percent of the Bahamian GDP, but provides jobs for more than half the country's workforce. After tourism, the next most important economic sector is financial services, accounting for some 15 percent of GDP.
Cruise ships in Nassau Harbour
The government has adopted incentives to encourage foreign financial business, and further banking and finance reforms are in progress. The government plans to merge the regulatory functions of key financial institutions, including the Central Bank of The Bahamas (CBB) and the Securities and Exchange Commission. The Central Bank administers restrictions and controls on capital and money market instruments. The Bahamas International Securities Exchange currently consists of 19 listed public companies. Reflecting the relative soundness of the banking system (mostly populated by Canadian banks), the impact of the global financial crisis on the financial sector has been limited.
Graphical depiction of the Bahamas' product exports in 28 color-coded categories.
The economy has a very competitive tax regime. The government derives its revenue from import tariffs, license fees, property and stamp taxes, but there is no income tax, corporate tax, capital gains tax, value-added tax (VAT), or wealth tax. Payroll taxes fund social insurance benefits and amount to 3.9% paid by the employee and 5.9% paid by the employer. In 2010, overall tax revenue as a percentage of GDP was 17.2%. Authorities are trying to increase tax compliance and collection in the wake of the global crisis. Inflation has been moderate, averaging 3.7 percent between 2006 and 2008.