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The Bahamas are known as an island of rest, relaxation and luxury vacations. This archipelago of islands is usually not associated as a nation of finance, unlike the nearby Cayman Islands.

However, long after you visit the hundreds of beautiful tropical islands in the area, you will still be wowed by Bahamas offshore banking! Offshore banking is occasionally seen as a derogatory term by some nations who feel that anything offshore is associated with something seedy. However, the practice of international banking is very alive and well and completely legal, provided you are forthright with the tax authorities in your home country.

The capital city of the Bahamas is Nassau and it is one of the largest and most widely known business centers in the nation, along with Freeport on Grand Bahama. The Bahamas is a self-governing country and has its own system of banking privacy laws as well as a no-tax jurisdiction policy. The local government adheres to standard international laws for all offshore tax haven countries.

What are the biggest advantages of offshore banking in the Bahamas?

First and foremost, in this country personal income is tax free and you don't have to worry about most any kind of tax, including capital gains tax, corporate earnings tax, sales tax, estate tax or company dividends tax. You can enjoy these benefits whether you live in the Bahamas, are a corporate and multinational company or have a special trust arrangement.

Of course, one of the best advantages besides free taxation is banking secrecy. This keeps all of your financial information from prying eyes; a freedom that is clearly not available in a country such as America. Wait a minute, what about the IRS? You are correct in assuming that the IRS wants to know about all of your assets and income and if you have money or investments overseas, then they will need to be reported. However, the local law here states that only in the event of a court order from the Supreme Court will any bank privacy agreements be overturned. That gives clients confidence that they will not be hassled by any legal entities, as suspected tax evasion is certainly not going to merit the Supreme Court's attention!

Another advantage of offshore banking is that you can protect your assets. When you hold assets in America you are always at risk of losing them, especially if you are in a profession that is frequently subject to lawsuits. However, some overseas businesspersons have avoided this risk by setting up an international corporation free from creditors and civil judgments. Investors get easy access to international markets when they start an offshore account. As you might know, international markets offer competitive rates on mutual funds returns (due to the lack of taxes) and investment certificates. Estate planning is also far less complex this way, and makes the estate planning process go much more smoothly.

With advantages like these it's no wonder that 50% of the world's wealth is located in offshore institutions. In fact, many companies are starting to get into the business of offshore banking in the Bahamas. It is truly one of the Bahamas' most important and most profitable industries.

For more information on finding a trustworthy bank in the Bahamas and other island territories see Peter Macfarlane's Practical Offshore Banking Guide at QWealthReport.com.