Entity Setup
Entity Setup in the Bahamas & Global Minimum Tax: Aligning Structures with the Domestic Minimum Top-Up Tax
With the Bahamas introducing a Domestic Minimum Top-Up Tax (DMTT), choosing the right entity structure and understanding income thresholds is now critical for multinational entities.
By NomadicTax Research Team • 5-8 min read • August 13, 2026
## 1. What is the Bahamas’ Domestic Minimum Top-Up Tax (DMTT)?
The **Bahamas** introduced a **15% effective tax rate** for large multinational enterprise groups under **OECD’s Pillar Two framework** — this is called the **Domestic Minimum Top-Up Tax**, which became part of the FY 2025/26 budget, effective Jan 1, 2024. ([bahamasbudget.gov.bs](https://bahamasbudget.gov.bs/?utm_source=openai))
## 2. Choosing an entity type & structuring for DMTT exposure
| Scenario | DMTT Applies? | Tips |
|---|---|---|
| MNE with > €750 million global revenue and entity in Bahamas with profits above local effective rate | Yes | Need to calculate top-up payments; integrate local bookkeeping for group profits. |
| Smaller company below cutoff | No | Leverage local zero income tax, but adhere to compliance to avoid triggering audits. |
## 3. Incorporation steps & ongoing compliance
1. Register via **One Tax Bahamas** for business licence, VAT, and property taxes. ([onetaxbahamas.gov.bs](https://onetaxbahamas.gov.bs/?utm_source=openai))
2. Ensure annual financial statements are prepared according to international standards.
3. For MNEs, ensure group-wide profit allocation data, advance rulings, economic substance, and transfer pricing documentation are maintained.
4. Keep asset ownership, capital management, and board meetings conducted in Bahamas (or as legally required) for substance.
## 4. Practical examples
- A tech company headquartered in Europe that opens a sales & support office in Nassau: First assess whether it’s part of a group meeting the Pillar Two revenue tests. If so, the Bahamas entity may need to pay top-up tax equalizing local ETR to 15%.
- A family investment holding company with passive income and no global group exposure: likely no DMTT, but must monitor revenue & status as regulations evolve.
## 5. Actionable checklist
- Audit your global revenue figures: do you pass the Pillar Two test? If yes, engage with Bahamian tax authorities early.
- Ensure substance: location of invoices, meetings, decision-making.
- Use One Tax Bahamas system early to register and automate compliance tasks. ([onetaxbahamas.gov.bs](https://onetaxbahamas.gov.bs/?utm_source=openai))
- Budget for possible top-up tax liability and the cost of compliance.
**Why this matters**: Many saw the Bahamas as completely tax-free for corporates; DMTT changes that for large multinationals. Structuring smartly now avoids unpleasant surprises.