The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribuneemdia.net

GRAND Bahama Shipyard has “sufficient worries” over Value-Added Tax (VAT) and the likely impact it would have on the cost of living for its 700 employees, fearing this will put pressure on the hourly rates it pays its workforce.

“We have sufficient worries about VAT as it relates to the potential increase in the cost of living for those who work at the Shipyard,” its chief executive, Carl Rotkirch, told Tribune Business.

“With the cost of living increases there will be pressure on the hourly rates for our workforce, and that is already something to factor into how the future is looking.”

Mr Rotkirch added: “We understand the discussion about VAT. We just need to ensure that it is done in such a way that it is not harmful to the development of business in the Bahamas.”

During his presentation at last week’s Grand Bahama Business Outlook conference, Mr Rotkirch effectively called for the Grand Bahama Shipyard, and other Bahamas-based boat and ship repair facilities, to be treated as ‘zero rated’ for VAT purposes.

This, he indicated, would ensure they remained price competitive with international rivals, given that the ship repair industry is treated as zero rated by all global VAT regimes.

“We are looking for a zero rating of VAT, as all other ship repairing nations have. If we don’t get that we’re out of business, as simple as that,” Mr Rotkirch told the Business Outlook.

He further explained to Tribune Business: “The situation in the world is that everywhere ship repair is zero rated. It’s considered an export business mostly, and in every other respect shipping is treated as tax-free anyway. The zero rating of this business in the Bahamas is extremely important and I believe it will go that way.”

‘Zero rated’ status would allow the Shipyard to recover VAT paid on all its many, and expensive, inputs but not have to levy the 15 per cent tax on customer bills.

Mr Rotkirch said the 14-year-old Shipyard, which boasts an “unprecedented” safety record, has invested $200 million in its docks and facilities to-date.

“We have an investment programme annually of $5-$10 million in the facility to develop it and expand the possibilities for different kinds of works,” he said.

“We have put in $25 million in training of tradesmen and supervisors over the years since it started.

“We have an apprenticeship training programme which is with BTVI, and we have had eight apprentice graduations. We have as one of our ambitions to increase the Bahamian involvement in supervision and management, and since 2009 we have seen an increase of Bahamians in those positions,” added Mr Rotkirch.

“The yearly [business] growth on average has been 6 per cent. Volumes have almost doubled since 2004. We are giving jobs, direct and indirect, on the island.

“We have 700 people working at the yard, meaning we have 1,900 employed due to the fact that the yard is working on the island. For every Shipyard employee, we give at least three Bahamians an income. We give $12 million to the Government in different kinds of fees.”