Bahamas Payroll Information – Deel Global Payroll

Updated on: 2025/08/04 14:03 (UTC)

Overview

The Bahamas, which officially is known as the Commonwealth of The Bahamas, is an island country with more than 700 islands, cays, and islets north of Cuba and Hispaniola, and southeast of the U.S. state of Florida.

The Bahamas consists of 31 first-order administrative divisions known as districts. The 31 districts of The Bahamas are Acklins Islands, Berry Islands, Bimini, Black Point, Cat Island, Central Abaco, Central Andros, Central Eleuthera, City of Freeport, Crooked Island and Long Cay, East Grand Bahama, Exuma, Grand Cay, Harbour Island, Hope Town, Inagua, Long Island, Mangrove Cay, Mayaguana, Moore’s Island, North Abaco, North Andros, North Eleuthera, Ragged Island, Rum Cay, San Salvador, South Abaco, South Andros, South Eleuthera, Spanish Wells, and West Grand Bahama.

The Bahamas’ currency is the Bahamian dollar.

Employers in The Bahamas must withhold social taxes from all employees and make additional social tax payments every month. The Bahamas does not levy income taxes. Employers must also uphold the Labor Law as it adheres to required compensation and benefits provisions.

Foreign workers in The Bahamas generally must adhere to the same tax and labor laws as citizens of The Bahamas.

Bahamian citizens working in the United States are covered by U.S. tax law with possible work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

CURRENCY DETAILS

The currency of The Bahamas is the Bahamian dollar (BSD$), also known as The Bahamas dollar. The internationally recognized three-letter currency code for the Bahamian dollar is BSD, which also is one of the currency’s commonly used currency symbols. The plural form of Bahamian dollar is Bahamian dollars.

When an amount of Bahamian dollars is written using the currency symbol BSD$ or its variant BSD $ to distinguish Bahamian dollars from other dollar currencies, and when Bahamian documents use the general dollar currency symbol $ to refer to Bahamian dollars, the symbol precedes the numerical value with no space between the numerical value and symbol. Another variant of the symbol BSD$ is a rare split symbol for a currency, with part of the symbol used before a numerical value and part of the symbol used after the numerical value. This split currency symbol consists of the general dollar currency symbol $ preceding the numerical value with no space between the numerical value and general dollar currency symbol $, and the acronym BSD following the numerical value with a space between the numerical value and the acronym BSD.

When an amount of Bahamian dollars is written using the currency symbol B$ or one of its variants ($B, BS$, and $BS) to distinguish Bahamian dollars from other dollar currencies, the symbol precedes the numerical value with no space between the numerical value and symbol. Although the currency symbol B$ is used more often than the currency symbol BSD$ for the Bahamian dollar in international contexts, use of the currency symbol BSD$ instead of the currency symbol B$ distinguishes amounts of Bahamian dollars from amounts of Brunei’s dollar currency, for which the currency symbol B$ also is the primary currency symbol used for the currency in international contexts. The currency symbol B$ also is used for the dollar currencies of Bahrain, Barbados, and Bermuda, although unlike the dollar currencies of The Bahamas and Brunei the currency symbol B$ is not the primary currency symbol used for those currencies in international contexts.

When an amount of Bahamian dollars is written using the currency symbol BSD, the symbol follows the numerical value with a space between the numerical value and symbol.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a Bahamian dollar is referred to as a cent, with the plural form of cents.

TAXES

The Bahamas does not levy income taxes, but requires employers and employees to contribute social tax amounts to the National Insurance program. The Bahamas’ fiscal year runs from July 1 to June 30.

Income Taxes

The Bahamas does not assess tax on income from employment.

Social Taxes

Employers in The Bahamas must contribute to National Insurance, which is administered by the National Insurance Board (NIB). Contributions pay for sickness, invalidity, maternity, retirement, death, workers’ compensation, and unemployment benefits.

Coverage: Employers must withhold National Insurance contributions and make additional contributions for all workers, regardless of nationality, legal status, or length of service.

Rates and Thresholds: Employers must contribute 5.9 percent of payroll to National Insurance, while employees must contribute 3.9 percent of their salary.

Effective since July 1, 2020, the maximum computable salary for the calculation of National Insurance contributions is BSD$710 per week or BSD$3,077 per month. Effective from July 1, 2018 to June 30, 2020, the maximum computable salary for the calculation of National Insurance contributions was BSD$670 per week, or BSD$2,903 per month. Effective from July 1, 2016, to June 30, 2018, the maximum computable salary for the calculation of National Insurance contributions was BSD$650 per week, or BSD$2,817 per month.

Registration: Employers must register with the NIB by filing Form R.1. Employees are required to register themselves.

Taxable Amounts: The tax is levied on wages, which generally includes basic pay, tips, and gratuities. Bonuses, overtime, and severance payments generally are not considered income for the purposes of calculating social tax liability. Employers must calculate taxes for employees paid on a commission basis, by assessing it on the average weekly or monthly wage the worker made in the prior year for the period concerned.

Returns and Remittance: Employers must make payments by the 15th of every month following the month in which wages were earned. Employers must include a C-10 Form along with all contributions.

RecordKeeping: Employers must retain all data for a minimum of seven years.

Penalties: Interest is assessed to payments made on or after the 1st of the month after contributions were due.

Other Taxes

The Bahamas’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.

State/Jurisdiction Taxes

Taxes on employment income are not assessed by any of The Bahamas’s districts or local jurisdictions.

COMPENSATION AND BENEFITS

Employers in The Bahamas must adhere to regulations regarding minimum wage rates, overtime, hours of work, holidays, leave, wage payment, and termination pay. Workers’ compensation and retirement plans are covered under social taxes.

The Employment Act of 2001 is the main labor law in The Bahamas. It is regularly amended and its implementation is overseen by the Ministry of Labor and National Insurance.

Minimum Wage

Effective since Aug. 15, 2015, the minimum wage in The Bahamas is BSD$5.25 per hour, BSD$42 per day and BSD$210 per week.

Overtime

Overtime work generally is considered any work performed in excess of the standard amounts of eight hours in a day or 40 hours in a week. Overtime work generally must be remunerated at 1.5 times normal wages. Employers must remunerate work done a Sunday or a public holiday at double the normal rate.

Hours of Work

The standard workday is eight hours and the standard workweek is 40 hours in a week. These restrictions do not apply to supervisory or managerial positions. Employers must provide employees with 12 consecutive hours of rest between shifts and must provide employees with a weekly rest period of at least 48 hours. Employers must also provide employees an hour long break for a meal.

Holidays

The public holidays specified in the Public Holidays Act are:

Jan. 1: New Year’s Day
Jan. 10: Majority Rule Day
Good Friday
Easter Monday
The Monday after Whitsunday: Whit Monday
The First Friday in June: Labor Day
July 10: Independence Day
The First Monday in August: Emancipation Day
Oct. 12: National Heroes Day
Dec. 25: Christmas Day
Dec. 26: Boxing Day

Leave

Employers must provide all employees with two weeks of paid annual leave after employees complete a year of work. The leave provision must be paid based on length of service. Employees who have worked more than six months but less than a year and receive annual leave, must be paid for at least one week of leave. Employees who have worked at least a year but less than seven years must be compensated with two weeks basic pay upon taking leave. Employees who have worked at least seven years must be compensated with three weeks basic pay upon taking leave. Vacation pay must be paid at least one day before the commencement of the employee’s leave.

Sick leave: Employers must provide all employees who have been working for at least six months with one week of paid sick leave per year.

Maternity leave: Employers must provide pregnant employees with 12 weeks of paid maternity leave for all employees who have worked at least one year. Employers must pay those on maternity leave 33.33 percent of their normal pay, as long as it is an employee’s first time on maternity leave in the last three years. Otherwise, the leave is unpaid by the employers. In all cases, employees also receive maternity payments from social security. Employers must grant unpaid leave of at least additional six weeks for a pregnancy-related illness.

Family leave: Employers must provide all employees who have worked at least six months with unpaid leave for one week following the birth of a child or the death or illness of a child, spouse, or parent.

Wage Payment

Employers must make salary payments at least once a month in Bahamian dollars. Wage payments must be made on working days in the form of cash, a check, or a deposit in the employee’s bank account.

Bonuses and Special Benefits

The Bahamas does not mandate employers to provide bonus payments to employees.

Termination Pay

Employers must provide employees with the following amounts of notice and severance pay before terminating an employment contract:

employed at least six months, but less than one year: one week’s notice and one week’s salary,
employed at least one year: two weeks’ notice and two weeks’ basic pay for each year of service up to a total of 24 weeks pay,
employed in a supervisory or managerial position: one month’s notice and one month’s basic pay for each year of service up to a total of 48 weeks’ pay.

Employers must make payments for all unused annual leave earned the year in which the employee is terminated upon termination. Notice must be given orally or in writing and employers may provide employers with compensation for the notice time in lieu of the notice itself.

Employees terminating an employment contract must provide two weeks’ notice if they have been employed at least one year and less than two. Employees employed at least two years must provide four weeks’ notice.

Both parties may terminate the employment contract with severance pay or notice if there is a fundamental breach of contract.

Employers dismissing employees due to redundancy have the following different notice and severance payment requirements:

For those employed one year or more: two weeks’ notice, and two weeks’ pay per year of service up to 24 weeks’ pay;
for those employed in a supervisory or managerial position: one month’s notice, and one month’s basic pay for each year up to 48 weeks’ pay.

Workers’ Compensation

Employers in The Bahamas cover workers’ compensation under social taxes.

Recordkeeping

Employers must keep a register of all wage payments for at least three years. This doesn’t apply to domestic workers.

FOREIGN WORKERS

Foreign workers are entitled to the same rights as Bahamian citizens and generally are covered by the same tax and workplace laws.

Visas: All foreign workers who wish to live and work in The Bahamas must receive a work permit. To apply, foreign workers must apply with the Department of Immigration. Applications must include a letter from the foreign worker’s employer stating the reasons for the application, the position in which they will work and how long they will be working. The Bahamas offers short-term work permits, valid for up to 90 days, and long-term work permits valid for up five years.

Taxes: All foreign workers are liable to social taxes in the same manner as Bahamian citizens, but are not liable to any other taxes, as The Bahamas has no other direct taxes.

Wages/Payments: Employers must make salary payments at least once a month in Bahamian dollars. Wage payments must be made on working days in the form of cash, a check or a deposit in the employee’s bank account.

WORKING IN THE UNITED STATES

Foreign workers from The Bahamas must meet general visa requirements and be certified to be employed in the United States. General visa requirements for the U.S. are included in the separate

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, Bahamian citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they work under specific visa types that exempt earnings from taxes.

State and local taxation of Bahamian workers also can apply.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income TaxesGenerally, nonresidents in the U.S. who are from the Bahamas and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from the Bahamas and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: The Bahamas and the U.S. do not have a tax treaty.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: The Bahamas and the U.S. have not entered into a social tax totalization agreement.

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

The Bahamas does not levy any direct income taxes and has no double taxation agreements with any country. It has tax information exchange agreements with some countries.

RESOURCES

All resources in English unless otherwise noted.

General

U.S. State Department: U.S. Relations With The Bahamas

CIA World Factbook: The Bahamas

Currency Details

International Organization for Standardization: Currency Codes - ISO 4217

Unicode Consortium: Currency Symbols

United Nations: United Nations Terminology Database: The Bahamas

Taxes

The National Insurance Board of the Bahamas

Compensation and Benefits

Department of Labor

Employment Act of 2001

Employment (Amendment) Act, 2012

Employment (Amendment) Act, 2017

Foreign Workers

Ministry of Foreign Affairs and Immigration

Working in the United States

U.S. Internal Revenue Service:

IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
IRS Publication 15, Circular E, Employer’s Tax Guide
IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
IRS Publication 519, U.S. Tax Guide for Aliens
IRS Publication 901, U.S. Tax Treaties

U.S. Labor Department, Foreign Labor Certification

Hiring Foreign Workers

U.S. Tax Treaties Summaries