Estimating the Contribution of IBCs to the Economy of The Bahamas
Published: Tuesday July 24th, 2007
During June and July of 2005, the Central Bank surveyed a sample of financial and corporate services providers (FCSPs), banks and investment fund managers to obtain estimates of the direct private sector benefits generated from international business companies' (IBC) activities, based on the fee structure for services provided and the frequency at which these were charged. The survey also sought to ascertain the origin of business as divided between new incorporation, continuation of companies from other jurisdictions and the re-instatement of licensees to the Bahamian Register. Data was also collected on the rate at which companies were dissolved.
This information, along with data from the Registrar of Companies, the statutory fee structure for IBCs and recent Government revenue trends was used to approximate trends in the value of the total direct contribution of IBCs to the economy. The study's findings indicate that the direct benefits from active fee paying IBCs were at least $51 million in 2005. This was reduced from an estimated peak in the low to mid $70 million range in 2000, the year before the full impact of the new IBC legislation was felt. Revenue decline paralleled a sizeable falloff in annual company incorporations, while a lesser portion of the losses was due to a decrease in the number of companies on the Bahamian Register.
Future domestic benefits from the incorporation and management of IBCs are expected to be linked to overall performance trends in the international financial services sector.