Lennox Paton

Introduction In November of 2024, the Government of The Bahamas enacted the Domestic Minimum Top-Up Tax Act, 2024 (“the DMTT Act”), marking a significant milestone in the country’s ongoing efforts to align its tax system with international standards. The DMTT Act is deemed to have come into force retroactively as of January 1, 2024, applying to fiscal years commencing after December 31, 2023. Rooted in the Organisation for Economic Co-operation and Development’s (“OECD”) Pillar Two framework and the broader Global Anti-Base Erosion (“GloBE”) Rules, this legislation reflects The Bahamas’ strategic commitment to transparency, fairness, and fiscal responsibility. This move is part of an international effort involving over 140 countries working towards implementing a 15% global minimum corporate tax, aimed at addressing longstanding issues of tax avoidance and unfair competition. The Bahamas’ proactive adoption of the DMTT and related amendments underscores its position as a responsible and compliant offshore financial jurisdiction committed to economic sustainability and global cooperation. What is the purpose of the DMTT Act? The primary objective of the DMTT Act is to ensure that large multinational enterprises (“MNEs”) with operations or subsidiaries in The Bahamas pay an effective minimum corporate tax rate of 15% on profits attributable to Bahamian activities. The DMTT Act aims to generate revenue, estimated at $140 million annually, to support government programs and public services. The legislation also aims to prevent large MNEs from shifting profits to jurisdictions with lower tax rates, which would otherwise deprive The Bahamas of potential revenue. Furthermore, it ensures that the country remains compliant with international standards, thus reinforcing its reputation as a reliable and compliant jurisdiction. Which companies are affected by the DMTT? The DMTT Act applies to MNEs with annual consolidated revenues exceeding approximately USD 800 million (€750 million). Eligibility requires having operations or group entities in The Bahamas and being part of an international group with significant global revenues. Entities below this threshold or operating solely within The Bahamas are excluded from the Act’s scope but remain subject to existing domestic tax legislation. An entity is deemed to be located in The Bahamas if it is a tax resident or constitutes a branch or permanent establishment of a non-resident entity operating within The Bahamas. Tax residency is established if the entity is incorporated, organized, or formed under Bahamian law, or if its effective management is in The Bahamas. Entities are considered part of an MNE group if their financial results are reported on a line-by-line basis within the Consolidated Financial Statements (CFS) of the Ultimate Parent Entity (UPE), including 50%-owned joint ventures reported via the equity method. The revenue threshold is calculated as the average of at least two (2) of the four (4) fiscal years immediately preceding the relevant fiscal year. For fiscal year 2025, the group’s revenues in at least two of the fiscal years 2021-2024 must meet or exceed €750 million. What is the significance of the 15% effective tax rate? The 15% minimum effective tax rate is an internationally recognized standard designed to promote fairness and prevent profit shifting. Under the DMTT framework, companies are required to “top up” their tax payments to reach this threshold, ensuring they contribute appropriately where they generate profits. This measure aligns The Bahamas with global standards, fostering economic stability and international trust. How does the DMTT Act relate to the OECD’s global initiatives? The DMTT Act is an integral part of the OECD’s Pillar Two framework, which involves mechanisms like the Income Inclusion Rule (IIR) and the Under Taxed Profits Rule (UTPR). These tools are designed to ensure that large multinationals pay at least 15% tax on their global profits, regardless of where they operate. The Bahamas, as a part of this international movement, adopts a “common approach”, which means it does not necessarily have to implement the rules directly but accepts their outcomes. The legislation aligns national tax policies with these international standards to prevent harmful tax practices. What are the main components of the OECD’s Pillar Two framework? The framework involves two key mechanisms. The Income Inclusion Rule (IIR) requires the ultimate parent company to pay the top-up tax for the entire group, thus ensuring that the group’s effective tax rate in the parent’s jurisdiction is at least 15%. The Backstop mechanism, known as the Under Taxed Profits Rule (UTPR), applies if the IIR does not fully capture the top-up tax, levying additional taxes based on tangible assets and employment levels in various jurisdictions. Additionally, jurisdictions can implement a Qualified Domestic Minimum Top-up Tax (QDMTT) to meet the minimum rate domestically, reducing the reliance on cross-border mechanisms. Why is The Bahamas adopting this approach? Prime Minister and Minister of Finance, the Honourable Philip Brave Davis, KC indicated during his contribution to the debate on the DMTT Bill, 2024 that the private sector has expressed a preference for paying taxes in The Bahamas rather than through mechanisms like the IIR or UTPR, which could result in tax payments elsewhere. Therefore, the country’s approach seeks to balance international compliance with local economic interests. This ensures that multinationals contribute fairly within The Bahamas’ jurisdiction, supporting national revenue while maintaining a competitive tax environment.  How will the DMTT Act affect local and foreign businesses? Large foreign companies operating in The Bahamas will need to review their tax arrangements to ensure they meet the minimum 15% effective tax rate on profits attributable to Bahamian operations. Domestic companies with smaller revenues or operating exclusively within The Bahamas are unaffected directly but must comply with existing tax laws. How has the DMTT Act affected the treatment of business licence tax payments for liable persons? The amendments to section 38 of the Business Licence Act, 2023, introduced by the DMTT Act, 2024, explicitly include persons subject to tax under the DMTT Act, as exempted from paying the business licence tax, provided the Financial Secretary at the Ministry of Finance (“the Secretary”) is notified of their status. Additionally, the Domestic Minimum Top Up Tax Bill, 2025 proposes to amend section 7 of the DMTT Act to allow businesses that pay business licence taxes to receive a credit against their DMTT liability for that year. This credit is capped at the amount of DMTT payable in the relevant fiscal year, streamlining tax obligations and maintaining consistency between the two legislations. Notably, this legislation has not yet been enforced. Once it comes into effect, it will be deemed to have been operational from January 1, 2024. What are the reporting requirements for entities subject to the DMTT Act? Entities subject to the DMTT are mandated to file the GloBE Information Return (“GIR”) with the Secretary in accordance with Article 8.1 of the OECD’s GloBE Model Rules. These returns must be filed within fifteen (15) months after the end of each fiscal year. During the transition year, the deadline extends to eighteen (18) months. The return must include detailed financial information necessary to determine the group’s effective tax rate, including profits, taxes paid, and relevant jurisdictional data. Has the online registration and filing portal for the Domestic Minimum Top-Up Tax (DMTT) been launched, and what are the government’s plans regarding its development and implementation? As of this date, the online registration portal for the DMTT has not yet been launched or rolled out. The Government of The Bahamas (“the Government”)  is actively engaged in developing a modern digital platform designed to facilitate online registration, filing, and payment of taxes. The targeted full implementation of this platform is scheduled for March 2027. Prime Minister and Minister of Finance, the Honourable Philip Brave Davis, KC indicated in his contribution to the 2025/2026 Budget Debate that, in the upcoming fiscal year, the Government will make “meaningful progress” with the “One Tax Bahamas” initiative, which aims to establish a “simpler, smarter, and more transparent tax system.” The new system, incorporating the DMTT, is projected to be operational by January 2026. The Government is designing a secure, user-friendly digital platform that will include robust data protection and privacy policies, as well as mechanisms to address cybercrime and artificial intelligence issues. The development process involves stakeholder engagement and the adoption of cloud-based solutions to prevent delays. Conclusion The enactment of the DMTT Act demonstrates The Bahamas’ dedication to international cooperation, fair taxation, and economic resilience. By aligning with the OECD’s global minimum tax standards, the country aims to safeguard its fiscal interests, enhance compliance, and uphold its reputation as a leading financial jurisdiction. This legislation ensures that large MNEs operating in The Bahamas contribute their fair share of taxes, supporting national growth and development.

By: Jana Ward, Real Estate Associate, Lennox Paton Publication Date: June 2025 Property Owners no longer have the luxury of neglecting to pay their real property taxes for years on end.  In an effort to collect more tax revenue and to deter property owners from accumulating significant tax arrears, the Department of Inland Revenue (“DIR”) has more recently sought to enforce its remedy of the power of sale under the Real Property Tax Act (“the Act”). The crackdown on delinquent property taxes has intensified, resulting in the listing of several properties for sale and being sold by public auction to the highest bidder. The Power of Sale The Treasurer of the Commonwealth of The Bahamas (“the Treasurer”) is empowered under the Act to exercise its power of sale to recover outstanding real property taxes. A property is at risk for sale once the real property taxes have been in arrears for more than 7 months. Real Property Taxes are due and payable by March 31st of every year.  If the property taxes are not paid by October 31st, the DIR is empowered to list the property for sale on November 1st. Property Owners are incentivized to promptly settle their real property taxes by March 31st each year in order to receive a 10% discount. Properties at Risk The following class of properties are subject to the power of sale: Commercial Property owned by Bahamians and Non-Bahamians; Residential Property owned by Bahamians and Non-Bahamians; Undeveloped Property owned by Non-Bahamians; and Owner-Occupied Property owned by Non-Bahamians. The power of sale is not applicable to all properties in The Bahamas.  Owner-Occupied Property owned by Bahamians is not subject to the power of sale. Sale by Public Auction The sale of property by the Treasurer under its power of sale must be by public auction. The registered owner of the property must receive at least 30 days’ notice of an appointed sale by advertisement in the daily newspapers.  The DIR must also provide the listings and information about the scheduled auction on its website. Sealed Bids must be submitted to the Collections Section of the DIR.  These bids are reviewed and reported to the Chief Valuation Officer and then the highest bidder is notified of the outcome of the auction and they have 30 days from that notification to pay the bid amount to the DIR. If a property receives no bids, it can be re-advertised for sale with the appropriate notices being re-issued. Sale to Highest Bidder Property sold under the power of sale is conveyed to the highest bidder free from encumbrances and mortgages but will remain subject to any and all restrictive covenants, easements, conditions, exceptions, reservations, service charges and uses which may exist at the time of sale. The Purchaser will receive indefeasible title. This means that the conveyance from the Treasurer will be the root of title and the Purchaser will not be required to deduce title beyond this deed in future transactions. For further information please contact Jana Ward at Lennox Paton by telephone at 242-502-5000 or by email at [email protected] .

By: Ramonne Gardiner, Litigation Partner, Lennox Paton Publication Date: May 2025 Insurance Disputes in The Bahamas, policy holder beware. Fires, Hurricanes, Floods and other perils are often unexpected catastrophic events. With global warming projected to generate costlier natural disasters in the future, it becomes vital for policyholders to ensure that they not only have insurance coverage, but that they comply with their contractual terms for their claims to be honored. Additionally, policyholders should always seek legal advice to ensure that their claims are not being wrongfully denied. This article sets out some of the important considerations for a policyholder. Principles of Interpreting Policy Generally, the Court will adopt an objective, business common sense approach in interpreting a policy. In FCA v Arch Insurance[1], the Court held that it should not interpret a policy as a pedantic lawyer, but as an ordinary policyholder who on entering into a contract “is taken to have read through the policy conscientiously in order to understand what cover they were getting." Thus, a policyholder should be mindful to obtain independent legal advice in interpreting a policy and not rely on the interpretation of the Insurer and/or an agent in interpreting a policy. Additionally, if a policy is ambiguous or unclear, the Court may apply the contra proferentum rule which means that a Policy will be construed against the Insurer who drafted the policy in the event of any ambiguity[2]. It is essential that each policyholder pay attention to: Notification clauses; Definitions and Exclusions; and Conditions and Warranties. Notification Clauses An insurance policy typically contains a notification clause which provides a set period of time by which a claim must be reported. As soon as a claim occurs, a policyholder must be mindful to make a claim strictly in accordance with the clear wording of the policy. A policy containing language that a claim should be reported “as soon as possible or practicable,” will be interpreted in accordance with the surrounding facts and circumstances of the claim. However, a requirement of “immediately” and “directly” imposes a more stringent obligation to report the claim.[3] In the English Court of Appeal decision of Jacobs v Coster & Avon Insurance[4], the relevant notification clause stated: “If any event gives or is likely to give rise to a claim, the Insured (or his representative) must: report the details immediately to the Company and send a written claim within thirty days…” In that case, an accident occurred at the Insured’s business. There was no evidence at the time that the Insured was at fault. Several months later, the injured party’s lawyers informed the insured of potential litigation. As a result, the insured notified his Insurer. The Insurer denied coverage on the basis that the notification clause was breached. The Court of Appeal, however, held that the notification obligation had to be applied objectively taking into account the Insured’s knowledge. It found no evidence that the Insured knew a potential claim would arise until the victim’s lawyers made contact. Waiver Critically, even in circumstances where an Insurer has a legitimate basis to not honor a claim, there are circumstances where Insurers have still been liable under a Policy because they have waived liability by their words, actions or conduct. A waiver can occur where the Insurer has knowledge of the facts had a reasonable opportunity to make up their mind regarding the denying the claim and expressly, or by inference, waives breaches of the Policy[5]. A waiver can occur even if the insurer has reserved his rights.[6] Conclusion It is critical that a policyholder seeks legal advice whenever they are faced with a policy dispute. The author of this article has settled and litigated numerous policy disputes including personal injury, property and construction claims.   For further information please contact Ramonne Gardiner at Lennox Paton by telephone at 242-502-5000 or by email at [email protected] . [1] See FCA v Arch Insurance [2021] UKSC 1. [2] See Taberna Europe CDO II plc v Selskabet AF1 (formerly Roskilde Bank A/S) [2017] 2 WLR 803 and Nobahar- Cookson v The Hut Group Ltd [2016 EWCA 128. [3] See Contract Volume 22 (2019) clause 292. [4] See [1999] EWCA Civ 647. [5] See Colinvanx's Law of Insurance at page 117. [6] See Wilken and Villiers the Law of Waiver, Variation and Estoppel.

By Chelon Carr-Newbold February 2025 Most of the sought-after luxury residential communities in New Providence (Nassau) and the Family Islands have condo-hotel rental programs which are managed by the Developer or Resort Manager. These rental programs are established by the Developer so that property owners may choose to make their residences available for rental to guests of the resort. Enrollment in the rental program is optional and not mandatory. However, there will be tax implications if a property owner chooses not to place their residence in the rental program.   Tax Benefits of Enrollment in the Rental Program It is customary for a Developer to receive certain tax concessions, exemptions, benefits or other incentives from the Bahamian Government under the Hotels Encouragement Act for the importation of materials and supplies used in the construction of residential property in the resort community. Some of these tax benefits are passed on to the property owners. For example, real property taxes are waived as long as an owner places their residence in the rental program. If a property owner wishes to place their residence in the rental program, the residence must be available for rent in the resort’s reservation system for not less than 9 months each year for a minimum period of 20 years and, in return, the residence will be exempt from the payment of real property taxes for the 20-year period. In the event that the residence is sold within the 20-year period, the future owner would also have to commit to staying in the rental program for the remainder of the 20-year period.   VAT on Rental Income If a residence is placed in the rental program, all rental income is subject to the payment of VAT at the rate of 10%. It is the responsibility of the Resort Manager to register and account for the collection and remittance of VAT to the Department of Inland Revenue on the owner’s behalf for all rental income. Condo-Hotel Tax In lieu of real property taxes, the residence will be subject to a condo-hotel tax (“CHT”) each year as long as it remains in the rental program. The current tax rate for residential property is 0.625%. There is a minimum threshold for CHT which must be met each year which is 75% of the residential property tax rate. CHT has a maximum cap of $150,000 per annum. By way of example, the CHT calculation is demonstrated below: If the residence has an assessed value of $3,000,000, then the minimum CHT threshold will be $14,063 per annum (75% x 0.625% x $3,000,000). If the residence has an assessed value of $35,000,000, CHT will be capped at $150,000 per annum (75% x 0.625% x $35,000,000 = $164,063). All VAT generated from the rental income will be offset against the CHT threshold. For example, if the VAT generated is $15,000 per annum and if the CHT threshold is $17,000 per annum, then the difference of $2,000 will be payable in CHT for the tax year. Conversely, if the VAT generated exceeds the CHT threshold, then no CHT will be payable. In the event that CHT is payable, it is the responsibility of the Resort Manager to register and account for the collection and remittance of CHT to the Department of Inland Revenue on the owner’s behalf.   Tax Implications of Removal from the Rental Program If a property owner wishes to remove their residence from the rental program before expiration of the 20-year period, they will be responsible for the payment to the Developer of any tax concessions that would have been otherwise due and payable to the Bahamian Government for the importation of materials and supplies used in the construction of the residence. In turn, these costs must then be paid by the Developer to the Bahamian Government in order to satisfy their obligations for the tax concessions granted.   Download the full PDF article here: Tax Benefits of Condo-hotel Rental Programs in The Bahamas For further information please contact Chelon Carr-Newbold at Lennox Paton by telephone at 242-502-5034 or by email at [email protected].

By: Shonté Beneby Originally posted: Mar. 11, 2025 Update posted: April 2, 2025   This guidance is intended for individuals seeking to apply for Economic Permanent Residency after purchasing a home in The Bahamas. It is not intended as guidance for other types of investments where Economic Permanent Residency may be granted.  What is Economic Permanent Residency (EPR)? An EPR grants foreign nationals the right to reside permanently in The Bahamas. Foreign nationals who purchase real estate in The Bahamas with a minimum value of $1,000,000 are eligible to apply for EPR. This status is typically granted subject to the condition that the EPR holder will not be permitted to work in The Bahamas. If granted, EPR remains in force for the lifetime of the EPR holder unless it is revoked subject to the following requirements: the EPR holder must maintain ownership of the residence for a minimum of 10 years; and the EPR holder must file a declaration every 10 years confirming that in all material aspects, there has been no change in the EPR holder’s information since the application for EPR was filed.   Requirements to Apply Prior to submission of the application, the purchase of the residence must be completed as proof of ownership is required. If the residence is being constructed, proof that construction has been completed is required before the applicant will be eligible to apply. To be eligible, the applicant must satisfy the following requirements: must be not less than 18 years of age must be a person of good character must express an intention to reside permanently in The Bahamas for a cumulative period of not less than 90 days per year. The applicant will be subject to a thorough vetting process by the Department of Immigration. Typically, the application takes a minimum of 6 months – 18 months to process and the applicant will be required to visit the Department of Immigration for an interview, which is usually scheduled within 2-3 months after the application is submitted. If granted, the government fee is $20,000.00 and an additional fee of $300.00 per person for the endorsement of the EPR holder’s wife and any dependents.   Endorsement of Wife and Dependents The EPR holder’s wife and/or any dependent child (under the age of 18) may be endorsed on the residency certificate. An endorsement in favour of a dependent will be valid until he/she ceases to be a dependent. Upon the death of the EPR holder, an endorsement in favour of a surviving spouse and any dependents will remain valid subject to the determination of an application for their legal status within 3 months of the EPR holder’s death. If the EPR holder is a woman, she is not currently permitted under Bahamian law to apply for her husband to be endorsed on the residency certificate.   Right to Work The purchase of a residence is not typically sufficient to enable a person to be eligible for the right to work in The Bahamas. However, work status may be granted for other forms of economic or qualifying investments for a foreign national who wishes to engage in a business venture in The Bahamas.     For further information please contact Shonté Beneby at Lennox Paton by telephone at 242-502-5000 or by email at [email protected].    

By: Takeio Frazer Published: July 2025 Introduction In an age where data is currency, safeguarding personal information is no longer optional  it is a national imperative. The Caribbean has seen a wave of modern privacy legislation, with countries like Barbados and Jamaica taking bold steps to implement comprehensive data protection laws. In contrast, The Bahamas, once a pioneer in this area with the Data Protection (Privacy of Personal Information) Act, 2003 (“DPA”), now lags behind. The Bahamas: A Pioneering but Outdated Framework The Bahamian DPA came into force on April 2nd, 2007, and was one of the first regional laws addressing personal data privacy. It applies broadly to both public and private sector entities, establishing a regulatory framework under the Data Protection Commissioner. It outlines several key features: Section 2 Definition of Personal Data: Covers identifiable data and “sensitive personal data” including health, religious beliefs, and criminal records. Section 8 Data Subject Rights: Individuals have the right to access personal data held about them. Section 6 Data Controller Obligations: Controllers must collect data lawfully, keep it accurate, retain it only as needed, and ensure adequate security. Oversight: The Commissioner monitors compliance and maintains a public register of data controllers. While progressive at the time, the DPA lacks critical modern features. It contains no right to erasure or data portability, no breach notification requirements, and does not mandate Data Protection Officers (DPOs). Enforcement has also been hampered by under-resourcing and limited regulatory powers.   Barbados: Comprehensive and GDPR-Aligned Barbados enacted the Data Protection Act, 2019, which came into effect in March of 2021. It is explicitly modeled on the European Union’s General Data Protection Regulation (GDPR), arguably the gold standard in privacy law. Key features include: Section 12: Right to Erasure: Data subjects can request deletion of personal data where it's no longer necessary or consent is withdrawn. Section 15: Data Portability: Individuals may receive their data in machine-readable format and transmit it to another controller. Section 18: Automated Processing Oversight: Individuals can object to decisions made solely by algorithms. Sections 22 and 23: Cross-Border Transfers: Transfers to third countries require “adequate” protection or contractual safeguards. This legislative architecture positions Barbados as a regional leader, ensuring strong individual rights and signaling to international partners a commitment to responsible data stewardship.   Jamaica: Balancing Privacy and Innovation Jamaica’s Data Protection Act, 2020, in force since the 1st of December 2023, represents a balanced approach. Like the GDPR, it includes extra-territorial reach and robust individual rights. The law is administered by an independent Information Commissioner, with clear enforcement powers. Key features include: Section 13: Right to Rectification and Processing Objection: Individuals can correct data or object to its use. Section 21: Mandatory Breach Notification: Breaches must be reported within 72 hours. International Scope: Applies to foreign processors handling Jamaican data. Jamaica’s law aims to encourage innovation while protecting data subjects, recognizing privacy as a core feature of a digital society.   The Case for Reform in The Bahamas The Bahamian framework, while historically significant, is now outdated. With limited enforcement powers, narrow rights, and no alignment with current international standards, the DPA is ill-suited for a modern data economy. Suggested Reforms: Modern Rights: Add erasure, portability, and breach notification provisions. Enforcement: Expand the powers and resources of the Data Protection Commissioner. AI Regulation: Address algorithmic decision-making and require human oversight. International Compatibility: Ensure cross-border adequacy for trade and digital services.   Conclusion Data protection is no longer a niche regulatory issue it is a core component of national digital governance. While The Bahamas was a Caribbean pioneer in 2003, the time is ripe for a legislative overhaul. By looking to neighbors like Barbados and Jamaica, The Bahamas can craft a modern, resilient data privacy law that serves its citizens and supports a thriving digital economy. A revised legal framework should incorporate GDPR-style protections, robust enforcement mechanisms, and technological neutrality to ensure The Bahamas remains competitive in a data driven world   For further information please contact Takeio Frazer at Lennox Paton by telephone at 242-502-5000 or by email at [email protected] .   References  The General Data Protection Regulation (“GDPR”). The Data Protection (Privacy of Personal Information) Act, 2003 The Data Protection Act, 2019 (Barbados) The Data Protection Act, 2020 (Jamaica)