By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Bahamian marinas face “a fight to get back market share” that will take years as a study revealed more than-tripling tax rates cost this nation $90m through a 40 percent slump in foreign yacht charters.
A just-released industry position paper, ‘Yachting in The Bahamas’, written by Marcel Amann, the founder of Yacht Services Bahamas, reiterated that recent tax hikes and regulatory interventions “have dampened activity” in a sector estimated to generate half a billion dollars annually for this country’s economy.
Citing recent data from Yachting Magazine, he singled out the imposition of 10 percent VAT on foreign yacht charter fees as especially harmful for The Bahamas’ competitiveness given that it tripled the overall tax rate to 14 percent when added to the already-existing 4 percent Port Department levy.
Asserting that this taxation burden was much higher than Caribbean rivals, although no comparative figures were provided, the report said the ease and convenience of conducting business in The Bahamas has also been made more costly, time-consuming and bureaucratic for visiting boaters through the introduction of requirements such as obtaining a VAT taxpayer identification (TIN) number.
“The yachting sector contributes about $500m annually to The Bahamas’ economy, though recent tax measures have dampened activity,” the industry position paper said. “The evolving regulatory landscape in The Bahamas has introduced both opportunities and challenges for the yachting industry.
“The implementation of a 10 percent VAT on yacht charters in 2022, and a 4 percent Port fee that was already previously implemented, aimed to boost government revenue but has led to concerns over its high 14 percent combined tax rate, especially compared to competitors like the Cayman Islands and US Virgin Islands.
“This policy shift contributed to a 40 percent decline in yacht charters, resulting in a reported $90m revenue loss and affecting related sectors like provisioning and hospitality. Additionally, administrative requirements, such as obtaining a Taxpayer Identification Number (TIN) for VAT compliance, have complicated operations, pushing some yachts to consider alternative destinations like Puerto Rico or the Dominican Republic.”
The report, drawing on submissions from the ABM, added that “over a few hundred yachts and boats left” The Bahamas’ Port Department and flag registry in 2023 due to what were described as “regulatory challenges”. It said: “To regain competitiveness, revisiting tax policies, streamlining compliance and ensuring reinvestment in the sector are essential steps.”
Peter Maury, the Association of Bahamas Marinas (ABM) president, whose organisation supported and contributed to Mr Amann’s report, told Tribune Business yesterday the industry was “eager” for the study’s release in the hope it might help persuade the Government to alter policy towards the sector ahead of the upcoming Fort Lauderdale Boat Show at month’s end.
Reiterating the study’s call for greater collaboration between the Government and industry stakeholders, he emphasised that the ABM is not calling for taxes and fees to be eliminated but, rather, set at a level visiting boats, yachts and charters “can live with” such as the 4 percent Port Department levy.
With a replacement online portal for visiting boaters to clear into The Bahamas, and pay the necessary taxes and fees, yet to emerge, Mr Maury said this - together with new regulatory processes and interventions such as the Immigration Department’s $200 per person processing fee to extend visitor stays - is making it harder for vessels, crews and passengers to conduct business in this nation.
And, with the advantage of being one of the first jurisdictions to open to visiting boaters post-COVID now eliminated, the ABM chief said “our competition has got stiffer and we are not the only place to go” while warning The Bahamas must now battle to regain the foreign charter and other business it has lost.
“The biggest takeaway is let’s get the whole process streamlined with one portal like we had before, and maybe more people will start coming back,” Mr Maury told this newspaper of the study’s main message. “These other jurisdictions have opened up and that’s not helping us either.
“We’re going to have to fight to get our market share back, and with the difficulties we’ve made, forget it. It would take us years for us to get it back. We now have many more slips to fill. After COVID had gone, The Bahamas opened up and we were successful in getting a big market share of what existed at the time because we were ahead of everyone else.
“Now, that’s gone away. Cruise ships, resorts, all sorts of things are around now. Our competition has got stiffer, and other jurisdictions have opened up and built marinas. For businesses to make money and the Government get taxes out of this, we have got to get competitive with the rest of the world. We are not the only place to go. We are not the only destination any more. It’s got way more competitive.”
Mr Maury said the western coast of South America was emerging as a major boating competitor due to the ability of large vessels to transport high-end yachts to this region via the Panama Canal. “Our biggest competitor is not the Caribbean any more,” he added. “Now, with the larger vessels, they are shipping yachts right through the Panama Canal and dropping them off in the Pacific at a higher rate than I’ve seen.
“We need to be mindful of that. It just seems that nobody in our government understands what is going on in the industry but they make policy. We definitely need greater government and private sector collaboration because we are making simple processes way too confusing.
“We’re trying to get the word out. We need some help so they [the Government] can bring some good news to the Boat Show. They can sure fix this quickly. We’re eager for some kind of change before the Boat Show on the 28th.”
The Davis administration, though, has sought to justify the boating-related fee increases by accusing many foreign yacht charters of evading and avoiding the 4 percent Port Department fee that had been in place for years. As a result, these vessels - and their owners and operators - were enjoying a ‘free ride’ by using The Bahamas maritime environment, in particular, for their business will contributing nothing to its upkeep.
Michael Halkitis, minister of economic affairs, argued in the wake of VAT’s introduction in the 2022-2023 Budget 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.
And Dexter Fernander, the Department of Inland Revenue’s operations chief, told Tribune Business recently he is “baffled” at assertions that yacht and boat charters are facing significant delays in obtaining TINs because there is a “fast track process” for their issuance given that this represents “easy money” for the Government.
A key feature of the administration’s tax policy, in its search for greater revenues for the cash-strapped Public Treasury, has been to raise fees on foreigners - primarily tourists - while being careful to avoid increases that would turn off the voting Bahamian public.
This has led to the increase in cruise passenger departure taxes, as well as the imposition of tourism and ‘environmental’ levies, as well as the hikes levied on both the boating/yachting and private aviation industries. The last two, in particular, appear to have been singled out because their customers are perceived as wealthy and therefore able to easily absorb and afford the increases.
There are also solid arguments for some of the increases. Certain fees have not been raised for years, thus failing to keep pace with inflation, while the environmental impact from the cruise industry needs to be offset. Bahamian tour and excursion operators have hailed the VAT on foreign yacht charters as helping to create a more level playing field for them by evening out the taxation burden.
Mr Maury, though, said yesterday that the Government needs to look at the wider picture. He argued that the fee increases have coincided with more cumbersome and bureaucratic processes, with visiting boats now needing to often physically visit agencies such as the Port Department and Immigration to obtain all the approvals they require and pay the associated fees.
This has also combined with the post-COVID cost of living crisis, which has made food, electricity and other supplies that visiting boats obtain in The Bahamas far more expensive. “We’re not growing the business for Bahamian companies,” the ABM president added. “There’s no communication with the industry, stakeholders. Everybody throws in what they think is best.
“We’re seeing it in aviation, seeing it in other industries, where people say it’s not getting easier to do business in The Bahamas and cost is a big part of it. ...A lot of us know these captains personally and individually, and they’re telling us we love coming to The Bahamas but it’s become [cost] prohibitive.
“Over-bureaucratising it is not going to get the business back. I’m not saying to go to zero [on taxes] but let’s make it something they can live with. The Port’s 4 percent, nobody couldn’t live with that.” Mr Maury again lamented that the promised replacement for the marina industry’s SeaZPass portal, which was ordered closed by the Ministry of Finance, has yet to materialise two-three years later.
That portal enabled incoming boats to clear into The Bahamas online and pay their 4 percent Port Department charter fee. Mr Maury said it collected $4.5m in revenue but, despite the 2024-2025 Budget allocating financing for DigieSoft Technologies to develop the $3.355m replacement, this has yet to occur.
The ‘Yachting in The Bahamas’ paper added: “Demand is increasingly shifting towards multi-destination trips across the Caribbean, as yacht owners seek longer stays, privacy and unique cultural experiences. To remain competitive, countries like The Bahamas must improve marina services, streamline regulations and collaborate regionally to retain their status as a premier yachting destination....
“The yachting industry is a key contributor to The Bahamas’ economy, driving tourism, job creation and tax revenue. While the sector faces challenges, including increased taxes and regulatory hurdles, there remains significant potential for growth. Strategic investments in infrastructure and reforms to simplify the regulatory environment will help The Bahamas maintain its competitive edge as a top yachting destination in the Caribbean.
“Collaboration between government and industry players is vital to ensure tax policies remain attractive to yacht owners and charters. By focusing on sustainable growth, supporting local businesses, and enhancing infrastructure, The Bahamas can harness the full potential of its yachting industry, ensuring long-term economic benefits and stability.”
Comments
birdiestrachan 1 month ago
Mr Maury immigration and customs visits How are important guns coming into the Country , look on the bright side less yachts less pollution,
Porcupine 1 month ago
Are you a certified idiot?
DWW 4 weeks, 1 day ago
are you not aware that all the guns coming into the country arrive via private yacht from the SE USA? and if you do know it then what is your angle?
birdiestrachan 1 month ago
Those who want to come to the Bahamas will do so and those who choose to go else where will do so those places are further away and will cost more fuel it is always Better in the Bahamas, they can not tell other Countries what to do why should we be less,
Dawes 1 month ago
Can we please have some journalism where you state what the rates are in other countries. If they are basically the same as here then no issue. if they are 10% of our rates then that could be an issue. As it is we are left with one side claiming the sky will fall down and the other saying it will be sunny all day and night.
IslandWarrior 1 month ago
Bahamas: Overstay Fee: $200 USD for the first offence. Additional penalties may apply for repeat offences.
Cuba: Overstay Fee: Overstay fines in Cuba typically range between $40–$100 USD per day, depending on the duration and specific circumstances. Penalties increase with longer overstays.
Turks and Caicos: Overstay Fee: A fee of approximately $100–$150 USD per day, depending on the length of the overstay. Boaters need to seek extensions to avoid these charges.
Dominican Republic: Overstay Fee: The Dominican Republic typically charges about $50–$100 USD per day of overstay. Extensions must be arranged to avoid these fines.
Puerto Rico (U.S. Territory): Overstay Fee: As part of U.S. regulations, Puerto Rico applies U.S. Customs and Border Protection rules, with fines ranging from $100–$500 USD, depending on the duration of the overstay.
British Virgin Islands: Overstay Fee: Boaters can incur overstay penalties of approximately $200–$500 USD, depending on the length of the overstay and whether the violation is a first offence.
IslandWarrior 1 month ago
The long-standing practice of selling The Bahamas too cheaply has acted as a whip, holding back economic growth and fairness for over 70 years. Over time, foreign interests—including cruise operators, yacht owners, and private aviation clients—have benefited enormously from our natural resources without making equitable contributions to their preservation or the national economy. As Bahamians, we must now stand united with the government’s efforts to enforce tax compliance and restore balance in these sectors, ensuring that those who exploit our nation’s wealth are held accountable. A glaring example of this exploitation is the cruise industry, which books its packages online and outside the jurisdiction of The Bahamas. This means that these companies evade VAT obligations, despite conducting business directly within our borders. The same applies to operators in the shark dive tourism sector, who similarly structure transactions to avoid VAT. This is a troubling loophole that must be closed. If businesses are profiting from our waters and natural attractions, they must pay their fair share into the Public Treasury, like everyone else. Adding further weight to this problem is the deeply concerning documentary by Nicola Smith, The True Extent of Fishing in the Bahamas, available on YouTube. This film exposes the troubling practices within the fishing sector, revealing the shameful exploitation of Bahamian resources and the treacherous culture within the industry. Even more disheartening is the complicity of some Bahamians, who refer to violators as ‘friends’ and enable destructive activities that erode the sustainability of our marine environment. This is a national disgrace, one that underscores the urgent need for stronger enforcement and cultural change. The introduction of the 10% VAT on foreign yacht charters, in addition to the existing 4% Port Department levy, is a necessary corrective measure to address years of imbalance. For too long, the yachting and cruise sectors have used our resources, profiting immensely while evading responsibility for their upkeep. The temporary decline in yacht charters and the reported $90 million shortfall should be seen for what it is—a short-term adjustment that reflects resistance to long-overdue reform. Our national policy cannot be dictated by the convenience of foreign operators; sustainability and fairness must be our guiding principles. Threats from yacht and cruise operators to move their business to other destinations—whether Puerto Rico, the Dominican Republic, or even South America—must not deter us from pursuing policies that serve our long-term interests.
IslandWarrior 1 month ago
Part 2 of 2
Response in Support of the Bahamian Government’s Position on Regulatory and Tax Compliance in the Yachting and Tourism Sectors
Those who claim they can operate elsewhere do so to pressure The Bahamas into compliance with their demands. However, our unmatched natural beauty, strategic location, and cultural heritage remain irreplaceable. If these operators leave, they will inevitably return because The Bahamas offers a unique and unparalleled experience. It is crucial to recognize that the criticism of these new regulations often comes from those who have long benefited from lax enforcement. The government’s recent reforms have highlighted the need for improved infrastructure and streamlined processes, such as reintroducing an online portal for registration and payment of fees. While we acknowledge the need for improved efficiency, logistical challenges should not overshadow the importance of these policies. It is far better to take the time needed to enforce equitable rules than to allow the perpetuation of unfair practices. The government’s strategy to raise fees on tourists and foreign operators—without disproportionately affecting Bahamian citizens—is both prudent and necessary. Cruise passenger taxes, environmental levies, and increased fees on private aviation and yacht charters represent a move toward fairness. This policy ensures that those who profit most from our resources contribute meaningfully to their sustainability and the development of the Bahamian economy. The notion that our destination should remain a tax haven for the wealthy, while local businesses and citizens bear the burden, is both unjust and unsustainable. In closing, the recent tax increases and compliance measures are essential to charting a new course for The Bahamas—one that prioritizes economic sovereignty, environmental preservation, and fairness. As Bahamians, we must reject the narrative that foreign operators are indispensable to our success. Our economy will thrive when those who benefit from our resources contribute their fair share. If these operators believe they can find better opportunities elsewhere, they are free to explore them. However, they will discover that there is no destination quite like The Bahamas. And when they return, they will find a nation that no longer sells itself short. This is our moment to reclaim ownership over our economy and resources, and we must not allow anyone—be it cruise lines, foreign boaters, or complicit individuals within our industries—to stand in the way of progress. Let us stand firmly behind the government’s efforts and ensure that the future of The Bahamas is one of fairness, sustainability, and prosperity for all.
AnObserver 1 month ago
EXCELLENT WORK CHESTER COOPER!
One of histories greatest lessons in unintended consequences.
Porcupine 1 month ago
I appreciate the explanation for why we must raise rates to protect our environmental resources and maintain a fair playing field. I do not discount these arguments. However, it certainly seems after decades of close observation that those in Bahamian government have no understanding of economics. None. Worse, it seems that every dollar the treasury does manage to collect, (from foreigners of course) ends up missing, stolen or has treated as legally unaccounted for. How else to describe the very high indebtedness of The Bahamas, which year by year deprives Bahamians of national development? How else to describe the backwards, deteriorating state of our infrastructure, health care system, utilities, and lack of transparency in our government? How else to describe the bankruptcy of nearly every state owned enterprise run by our people? The argument in favor of raising use fees and increasing bureaucracy is said to favor our people and our natural resources. Nobody paying attention could suggest that any administration in our history has given a damn about our natural resources, or our people. They talk sweet, as all lawyers do. This move is about getting more and more money into a flailing and sinking government's coffers. Nothing more. Any administration who is willing to put VAT on healthcare is clearly not thinking of its people. If we were serious about fairness and equity, we would begin by taxing our richest Bahamians in a manner consistent with an educated Christian idea of fairness. See, this is where an ignorant and uneducated populace comes into play. Our natural resources would be best protected by educating our youth as to their spiritual, economic and biological importance to our lives. Is there one Bahamian politician who understands this? ONE? Seems not. All we can do is talk about the money other people OWE us. The yachts, the private planes, the rest of the world for climate change, the homeowners, all these foreigners are not paying their fair share, to us. That's what we keep hearing. Yet, we know that it is our own politicians and their lackeys, which constitute a far too large share of the population, who are stealing this country blind and preventing any national uplift. Is this even debatable? This administration is among the worst. Do our MP's take out personal loans every year to buy their new houses and new projects? But, they have no problem loading debt onto our children's future, do they? It seems that to ascend into Bahamian politics it is necessary to sell one's soul. Prove me wrong.
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