The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian marinas yesterday warned it was vital the country develop “a unified voice” over the imposition of VAT on yacht charter fees amid suggestions that it has resulted in several boating destinations becoming “a ghost town”.

Marques Williams, the Association of Bahamas Marinas (ABM) president, told Tribune Business the industry is working with the Government on the “messaging” surrounding the 10 percent levy’s imposition as Dr Duane Sands, the Free National Movement (FNM) chairman, asserted that the increase had been “a disaster” and resulted “in a crash in market share” for this nation.

The ABM chief, while indicating that the “ghost town” description of Bahamian marinas may be a slight exaggeration, did confirm that members are “seeing a decrease in many areas”. While warning against jumping to conclusions, given that The Bahamas’ winter boating season typically does not start until end-October, he conceded that yachts which typically reserve dockage space in advance have yet to do so this time around.

Mr Williams, speaking to Tribune Business from the Monaco Boat Show, which is being attended by both ABM and Ministry of Tourism representatives, also said 2024 bookings “do not seem as strong” at this point. However, he said the Bahamian team had received positive feedback from show attendees given that the VAT rate in the Mediterranean is more than twice that of The Bahamas at around 22 percent.

“Marinas are seeing a decrease in many areas,” the ABM president said. “However, the season doesn’t pick up until after the Boat Shows. The end of October is when the season starts, then we’ll see what we’re facing. A lot of the yachts that typically come in have booked years in advance, and reserved for the following year, have not reserved yet. Our bookings for next year do not seem as strong but we’re waiting to see what the season provides.”

He added that The Bahamas delegation will today meet with more vessel captains and owners, as well as brokers, at the Monaco Boat Show “talking to as many of them as we can”. He added that the reception so far had been “great” and “pretty good”, although the question about VAT’s imposition on foreign yacht charter fees had arisen.

“They’ve very much aware. They have VAT all over the Mediterranean,” Mr Williams said, adding that The Bahamas just needs to have “clarity of voice” on how the tax works, the mechanisms for paying it, what is expected of boats, their captains, brokers and owners, and how they can access this nation in compliance with the proper procedures. 

VAT’s imposition, when added to the already-existing 4 percent fee levied by the Port Department, took the combined tax rate facing foreign charters to 14 percent with effect from July 1, 2022. The Davis administration justified its introduction as a means to level the taxation playing field with Bahamian tour and excursion providers, and ensure visitors paid something for use of The Bahamas’ natural resources - especially since there had been significant avoidance/evasion of the 4 percent Port Department fee.

However, Dr Sands yesterday blasted the Government for imposing VAT given the negative impact for Bahamian marinas and associated businesses that serve the boating/yachting industry as a result of the subsequent decline in yachting/boating business.

Suggesting the Government was being greedy, he asserted: “Pigs get fed, hogs get slaughtered. In the great money grab of 2023 [VAT was imposed in 2022], this new administration had a bright idea to squeeze more money out of foreign yacht charters through the addition of 10 percent VAT to the existing 4 percent tariff.

“The problem is the competitors, all the other islands in the Caribbean, have far lower fees, so now yachts go somewhere else and will avoid The Bahamas. I hear the marinas around here are like ghost towns. What was supposed to increase Public Treasury revenues has resulted in a crash in market share and it’s been a disaster - not just for the Treasury.”

Besides marinas, Dr Sands suggested that suppliers, provisioning companies, mechanics, florists, grocery stores and fuel suppliers are all feeling the impact from the reduction in boating and yachting traffic due to VAT’s imposition. Describing the move as “a misguided decision, a dumb decision” that has hurt the economy, the FNM chairman alleged that the “most hurtful part” was that the Government had been warned this was the likely outcome but pressed ahead anyway.

He provided no evidence to back-up this assertion, but added: “You know what they say: Hard head doesn’t make good soup. Would you believe that business tanked exactly as the experts predicted, and still the Government has not seen fit to reverse that decision, and so today our marinas remain emptier than anyone can remember.”

Calling on Prime Minister Philip Davis KC, in his capacity as minister of finance, and Simon Wilson, the financial secretary, to reverse course, Dr Sands said: “It’s never too late to admit you made a mistake. How hard is to acknowledge you messed up even if you don’t apologise?”

Mr Williams, though, said the ABM “understands what the Government’s position is and we understand what the Government is trying to do”. He also pointed to the Davis administration’s decision to award a multi-million dollar contract to a contractor to create an online portal, that will enable visiting boats to pay the VAT and 4 percent Port Department, as evidence that it is aiming to improve the ease of doing business for the sector.

“For the most part it’s the messaging and how it was delivered,” he said of the marina industry’s concerns. “That is pretty much our main focus. It was the roll-out, when it came into effect, and how the process was supposed to work. Those kind of things were a little bit confusing. Questions were being asked of us, questions were being asked of the Port Department, and a lot of times we didn’t know.

“That was a lot of the issues with it. We are working with the Ministry of Tourism and the Government on the messaging and getting a unified voice on what it is going to do. We need to wrap our heads around it, and how we’re going to make this work.”