The Tribune

• Marina chief optimistic any ‘kinks’ sorted before ‘high season’

• Says summer 2022’s performance ‘spot on’ with pre-COVID

• Fuel price stabilisation to aid ‘positive’ winter going into 2023

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Association of Bahamas Marinas (ABM) president yesterday voiced optimism that any “kinks” with VAT’s imposition on yacht charter fees will be resolved before “high season” after a summer that was “spot on” with pre-COVID volumes.

Joe Dargavage, who is also managing partner of Harbour Island’s Romora Bay Resort & Marina, told Tribune Business there was “plenty of time” to work through the 10 percent levy’s implementation and send “a very positive message out to the worldwide yacht charter community” ahead of the peak season’s mid-December start.

Disclosing that the ABM was working with the relevant government ministries and agencies, as well as the private sector, to ensure the process went smoothly, he said: “We continue to work with the charter industry as we all better understand the roll-out of the VAT tax. 

“That continues to be a work in progress, but the ABM, the Ministry of Tourism and Ministry of Finance, as we work through the roll-out we hope by the time we get into the high charter season all the kinks will be worked out of the process and everybody will have a much better understanding of the VAT tax.”

The Government’s plan to levy 10 percent VAT on yacht charter fees, unveiled in the Budget and implemented via the Boat Registration (Yacht) (Amendment) Rules 2022, sparked controversy when they were first publicly disclosed. Some marina operators voiced fears that it would drive yacht charter business away from The Bahamas as it effectively represented ‘double taxation’.

Given that the Port Department already received a 4 percent levy on the same yacht charter contract, these operators argued that the effective tax rate was more than tripling via a 350 percent increase in percentage terms from 4 percent to 14 percent.

However, the move was applauded by Bahamian-owned water tour and excursion operators who said their foreign rivals had enjoyed an unfair competitive advantage for years due to an uneven taxation playing field where locals paid more than foreigners.

And the Government retorted that the foreign yacht charter industry had for years “enjoyed a windfall at The Bahamas’ expense” by using this country’s marine environment and natural resources to earn millions of dollars without paying its fair share to the Public Treasury. It added that many yacht charter operators had previously failed to pay the Port Department’s 4 percent levy, but this sector will now have to register with the Government to pay VAT.

Mr Dargavage’s comments and tone yesterday indicate that the VAT controversy has died down, and that all parties are moving beyond this and looking to the future. The ABM chief said the 2022 summer boating and yachting season, which climaxes with this weekend’s US Labour Day holiday, had “played out as good or better than hoped” and will provide the launchpad for a strong winter heading into 2023.

“It was an excellent, excellent summer season,” Mr Dargavage told Tribune Business. “The last two years have just been so positive for boating and yachting that it’s really going to springboard into the busy fall and winter season 2022 that we should see.

“Numbers for the summer were not quite what they were in 2021, but that does not mean they were not good. 2021 was such an anomaly coming out of COVID that you cannot really use it as a comparison. A better comparison would be pre-COVID, 2018 and 2019, and in that sense we’re right on pace with where we want be in boating and yachting.

“Comparatively speaking, the summer months came close to hitting where we thought it would hit when we first started looking at 2022. The summer season played out as good or better than hoped.”

Confirming that occupancies and business volumes for Bahamian marinas over summer 2022 were “very close” to pre-COVID, Mr Dargavage said Harbour Island - where he is based - was “extremely close if not spot on to where we were pre-COVID. Looking ahead to the fall and winter season it’s looking very positive.

“All signs are that the economy is on course to allow the continuation of growth in the boating and yachting industry,” he added. “Fuel prices are stabilising and starting to come down a little bit, and all these factors should play into us having a very positive fall and winter season.”

Mr Dargavage said the spike in global fuel prices, and their peak levels, had not been sustained for long enough to have a long-lasting impact on The Bahamas’ boating traffic. “I think that the fuel prices only affected the general sense of the boating industry but, quite frankly, for those coming to The Bahamas I think it caught itself quickly enough that we didn’t have any long-term negative impact,” he explained.

“If all things we have no control over stay constant at where they are now - the financial world, fuel prices keep coming down, the weather and peak of hurricane season over the next 45 days - we should have a very good 2023. Over last year and this, the tourism product in The Bahamas is very strong right now, and we’re very proud in the marina sector that boating and yachting make up a large portion of that very strong tourism improvement in The Bahamas.”

The ABM chief voiced confidence that the industry’s contribution to tourism will continue to grow, and said it was planning to drive increased business to The Bahamas by participating in key European and US boat shows. Besides the Monaco Yacht Show in the last week of September, an ABM and Ministry of Tourism team will also be present at the Fort Lauderdale Boat Show in October.

One aim will be to promote The Bahamas Charter Yacht Show, to be held in Nassau in February 2023. “Boat shows are hugely important,” Mr Dargavage said. “We are going to the market. A lot of people come together in one city and one location. It allows us to talk to a lot of people at one time. You can’t beat that as an excellent marketing platform.”