Does the Bahamas Have Zero Tax on Foreign Income?

by Adam Fayed on September 10, 2026

The Bahamas does not impose personal income tax, so individuals living there generally pay zero Bahamian tax on foreign-source income, including foreign dividends, interest, rental income, pensions, and investment gains.

This zero income tax regime applies regardless of whether the income is earned in the Bahamas or abroad, although other countries may still tax income sourced within their borders.

Key Takeaways

The Bahamas has a 0% personal income tax rate on local and foreign-source income.
Foreign income may still be taxable in the country where it is earned or sourced.
Bahamas residents may still face VAT, property tax, stamp tax, customs duties, and other charges.
Foreign income is not generally subject to personal income tax filing in the Bahamas, but financial accounts may be reportable under CRS or FATCA.

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The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.

How does tax work on foreign income in The Bahamas?

Foreign income is not subject to personal income tax in the Bahamas because the country does not impose personal income tax on individuals.

The Bahamas instead raises revenue through other taxes and charges, including VAT, real property tax, import and customs duties, and business license fees.

For individuals with income generated abroad, the following are generally outside the Bahamian personal income-tax system:

Foreign employment income
Foreign business or professional income
Dividends from overseas companies
Interest from foreign bank accounts and investments
Rental income from foreign property
Capital gains from investments
Foreign pension income

Zero Bahamian income tax does not mean zero tax worldwide.

The country where the income or underlying asset is located may still impose tax.

For example, rental income from property overseas may be taxable in the property's location.

Individuals may also remain subject to tax obligations in another jurisdiction because of their citizenship, tax residence, or other connections.

Individuals running a business from the Bahamas may still need a Business Licence and may have obligations involving turnover-based licence fees, VAT and National Insurance.

Having overseas clients or receiving payments into a foreign bank account does not automatically remove these requirements.

The personal income tax treatment described here also does not determine the tax obligations of a company through which the income is earned.

Do I need to report foreign income in the Bahamas?

The Bahamas does not generally require individuals to file a personal income tax return for foreign income because it has no personal income tax system.

However, financial institutions in the Bahamas can have reporting obligations under international information-exchange regimes such as the Common Reporting Standard (CRS) and FATCA.

Under the CRS, participating financial institutions can collect information about reportable financial accounts and provide it to the relevant tax authority for exchange with other participating jurisdictions.

The Bahamas also has a FATCA agreement with the United States, which provides for the exchange of information on accounts held by certain US persons.

Therefore, zero Bahamian income tax should not be interpreted as zero reporting or disclosure obligations.

What taxes do Bahamas residents still pay?

Residents in the Bahamas may still be subject to VAT, real property tax, stamp duty, National Insurance contributions, and import and customs duties, despite the absence of personal income tax.

The main taxes and mandatory contributions individuals may encounter include:

VAT: The standard VAT rate is currently 10% on taxable supplies, although certain goods and services receive different treatment.

From April 2026, unprepared foods sold in food stores became exempt from VAT.

Real property tax: Property owners may be subject to real property tax based on the property's classification and assessed value.

For owner-occupied property, the first BSD 300,000 is exempt, the next BSD 200,000 is taxed at 0.625%, and any value above BSD 500,000 is taxed at 1%.

Commercial properties and foreign-owned rental properties are taxed at 0.75% on the first BSD 500,000, with higher rates applying to additional value.

Vacant land owned by foreigners is subject to a BSD 100 charge on the first BSD 7,000 of value and 2% on the remaining value.

Stamp duty: Stamp tax continues to apply to certain legal instruments and transactions, while many real-property transactions are now subject to VAT instead.

For instance, mortgages and transfers of mortgages on realty are subject to stamp tax, while conveyances and transfers of real property generally attract VAT at 2.5% for transactions valued at BSD 100,000 or less and 10% when the value exceeds BSD 100,000.

National Insurance contributions: Employees and self-employed individuals may have mandatory National Insurance obligations.

Current rates include 4.65% for employees, 6.65% for employers, and 10.3% for self-employed individuals, subject to the applicable earnings ceiling.

Import and customs duties:

Imported goods can be subject to customs duties based on their tariff classification under the Bahamas’ customs legislation.

The applicable rate varies by type of goods and is calculated on the goods’ cost, insurance, and freight (CIF) value.

Importers may also have to pay VAT and other applicable charges on imported goods.

The standard VAT rate is currently 10%, and VAT on imports is calculated on the relevant customs value together with applicable customs duties and certain other charges.

Does retirement count as taxable income?

The Bahamas does not impose personal income tax on individuals, so retirement income is generally not subject to Bahamian personal income tax simply because it is received by someone living in the country.

This can include foreign pension income and other retirement distributions.

This can be particularly relevant for retirees who have accumulated pension assets in another country before relocating to the Bahamas.

However, the tax treatment of the pension in its source country remains a separate issue.

This is especially important for US citizens because the United States generally taxes citizens on worldwide income even when they live abroad.

Bahamas vs other zero foreign income tax countries

Like the Cayman Islands, Bermuda, the UAE, and Monaco, the Bahamas has no personal income tax, but its broader tax system and treatment of residents differ from those of other zero income tax jurisdictions.

Jurisdiction	Personal income tax	Key difference for individuals
Bahamas	0%	10% VAT, real property tax, stamp tax and customs duties
Cayman Islands	0%	No income, capital gains, inheritance, gift or property taxes; stamp duty on real estate is generally 7.5%, rising to 10% for property valued at CI$2 million or more from 2026
Bermuda	0%	Payroll tax applies to employment/self-employment income, plus land tax
UAE	0% generally	5% VAT; corporate tax can apply to individuals conducting business activities
Monaco	0% for most residents	French nationals are subject to the Franco-Monegasque tax arrangement

Conclusion

The Bahamas can reduce the personal income tax burden for expats and investors who successfully end tax residence elsewhere, although taxes on overseas income may continue in its source country. US citizens generally remain taxable on worldwide income after moving.

Before relocating, compare the tax that would actually disappear with the costs of housing, property transactions, everyday spending and any business obligations in the Bahamas.

Review each income source separately, especially pensions, rental income and company earnings, to estimate how much of the potential saving you would retain.

FAQs

Do I have to pay US taxes if I live in the Bahamas?

Yes, if you are a US citizen, living in the Bahamas does not generally end your US federal tax obligations.

The US generally taxes citizens on worldwide income, although exclusions, credits, and other provisions may reduce the tax owed in particular circumstances.

Is the Bahamas a tax haven?

The Bahamas is commonly described as a tax haven because it has no personal income, capital gains, gift, inheritance, estate, or wealth taxes.

However, it participates in international tax information exchange frameworks, so its zero tax regime does not mean that financial assets are hidden from foreign tax authorities.

Does the Bahamas have a tax treaty with the US?

No, the Bahamas does not have a comprehensive US income tax treaty; instead, the two countries have a Tax Information Exchange Agreement (TIEA).

The TIEA facilitates the exchange of information for tax administration and enforcement but does not provide the same tax-rate reductions or exemptions as a comprehensive income tax treaty.

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