The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A “moderate flat fee” and/or 50 percent discount for Bahamian flagged vessels have been cited as ways to improve the yachting industry’s tax competitiveness and grow the sector by up to 30 percent.

Marcel Amann, the founder of Yacht Services Bahamas, and author of the sector’s recent position paper, ‘Yachting in The Bahamas’, told Tribune Business that a series of “very small adjustments” that can be enacted relatively quickly could drive “big industry changes” that will help regain ground recently lost due to higher taxation and greater bureaucracy.

Pointing out that a “streamlined process” for paying taxes and obtaining the necessary permits is vital to prevent boaters switching to rival destinations, he predicted that these reforms together with investment in workforce development and further ease of business-type changes could grow the Bahamian boating industry by between 20-30 percent.

Based on his paper’s estimate that boating/yachting contributes around $500m annually to Bahamian gross domestic product (GDP), such an improvement would increase the industry’s output by between $100m and $150m per year to around $600m-$650m.

Responding to a series of written Tribune Business questions, Mr Amann said: “To ensure The Bahamas reaches its full potential in the yachting industry and maximises economic and tourism benefits, several strategic reforms are necessary. These reforms should focus on practical steps that can create the most significant impact....

“By implementing these reforms, The Bahamas can significantly enhance its position as a leading yachting destination, potentially growing the industry by 20-30 percent and adding hundreds of millions of dollars annually to the national economy. The local industry is poised to support these efforts and is eager to contribute to the sector’s future success.”

Leading the reforms list is “competitive taxation”, which has been a major concern for Bahamian marinas and other local industries that benefit from the boating/yachting trade ever since the Government more than tripled the effective tax rate for foreign yacht charters in the 2022-2023 Budget by adding 10 percent VAT on to the existing 4 percent Port Department fee for a combined 14 percent rate.

Marinas have asserted that the tax hike has been a major driver behind reduced business volumes, and Mr Amann reiterated: “The Bahamas must exercise significant caution when adjusting taxation policies related to the boating and yachting industry. While the goal is to increase government revenue, these policies must be balanced to ensure the country remains attractive to yacht owners, charters, captains and managers.

“If taxation becomes too burdensome or the process too complicated, yachts may seek alternative destinations in the Caribbean where taxes are lower and payment processes are more efficient, leading to a loss of economic activity.” He suggested that, instead of the separate VAT and Port Department fees, the Bahamas should consider a “single, moderate flat fee” that would encourage tax payments and compliance.

“For example, instead of having separate 4 percent Port fees and 10 percent VAT, a single, moderate flat fee could make tax compliance easier and more attractive for yacht owners and charter operators,” Mr Amann said, also suggesting that The Bahamas offer incentives to boat owners who register under this country’s flag.

“One of the primary reforms should involve adjusting the taxation structure to make The Bahamas more competitive with other Caribbean yachting destinations. One possibility is to maintain the current 14 percent tax rate on foreign-flagged yachts but offer a lower tax rate or a flat fee of about 7 percent for yachts that reflag under the Bahamian flag,” he proposed.

“This dual approach would incentivise yacht owners to flag their vessels locally, fostering a long-term commitment to The Bahamas while still generating revenue from foreign yachts. Such an initiative could create a competitive edge, encouraging yacht owners to choose The Bahamas over other regions for both charters and longer-term stays.”

Mr Amann, who spent seven to eight years working as a chief engineer on yachts in locations such as the US and Mediterranean as well as The Bahamas, told Tribune Business by phone: “The adjustments that have to be made are very small adjustments. They are things that should not take a long time.

“I think from these adjustments big industry changes could happen. A lot of the captains I talk to would like to have an opportunity to invest in The Bahamas as well as yacht owners.” Reduced bureaucracy and red tape, and making tax and permit compliance easy for visiting boaters via simple online processes, was also cited by Mr Amann as key to The Bahamas regaining lost competitiveness.

He pointed to the Sea-Z Pass online portal, previously created by the marina industry to enable visiting boaters to pay their 4 percent Port Department fee and obtain permits, as an “already proven” solution that had also helped to generate significant data on the number of foreign yacht arrivals, where they go and their length of stay that can help this nation direct infrastructure investment to in-demand destinations.

“Establishing an efficient, user-friendly online payment portal is critical. This portal would streamline tax and fee payments for yacht owners and captains, reducing administrative delays and boosting compliance,” Mr Amann told Tribune Business. 

“The existing Sea-Z Pass platform, if fully utilised, could also provide real-time data on yacht arrivals, guest numbers, destinations visited and duration of stays. This data would give the Government valuable insights into yachting trends, enabling more informed decisions about infrastructure investment, environmental protection and support for ancillary services like refits, repairs and provisioning.”

He added: “Solutions such as the Sea-Z Pass, an online portal for processing payments, could greatly reduce the administrative burden on captains, agents and yacht management companies. However, the portal has been discontinued, forcing stakeholders to physically visit multiple locations to make payments - a time-consuming process exacerbated by traffic.

“Expanding the use of such platforms would allow more yachts to be processed efficiently, enhancing government revenue collection and providing transparency in tracking payments. Additionally, incentivising industry professionals, such as marina operators, to ensure compliance with tax payments - through mechanisms like a reinvestment of a percentage of revenues into infrastructure, environmental protection and industry training—could further drive growth.

“In its first year, the Sea-Z Pass generated $4.6m just in taxes and fees for the Government, showcasing the potential for significant revenue collection.” The Ministry of Finance ordered Sea-Z Pass to close amid a dispute with the payment provider that was collecting and remitting the fees generated by the portal to the Government.

“One of the main things I would say is to definitely have a streamlined process for yachts to pay their taxes or whatever they need to pay,” Mr Amann said. “For anybody, if it’s too confusing or too lengthy a process they would rather not deal with that and will go somewhere else.

“For yachts, it has to be efficient. If they cannot do it today, they cannot wait around, have to drive to numerous places and do multiple things. That can be mitigated by the use of Bahamian yacht and charter companies where they do that for them.”

Detailing the expected economic boost if The Bahamas gets it right, and implements the necessary changes, Mr Amann told this newspaper: “Each yacht can contribute upwards of $100,000 to the local economy through various spending channels, including hospitality, provisioning and maintenance services.

“Even a modest increase in yacht arrivals, say by 10% percent, could result in a substantial boost to overall revenues, illustrating the sector’s untapped potential. Furthermore, extending the length of stay for visiting yachts by improving marina infrastructure and offering more favourable regulations could lead to even greater spending per yacht visit, as longer stays typically result in more consumption of local goods and services.

“Taking into account these potential increases, if the industry grows by 20-30 percent it could potentially add millions of dollars annually to The Bahamas’ economy. This would represent a significant boost, particularly when combined with increased job creation and broader support for ancillary sectors like retail, tourism and maintenance services.”