The Tribune

• Port chair: New regime to boost competitiveness

• Inspections regime at odds with maritime standing

• Tax elimination ‘game changer’ for private vessels

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The significant hikes in boat registration fees are not designed “as a tax grab”, the New Providence Port Authority’s chairman asserted yesterday, adding that the new regime will be a “game changer” for compliance and competitiveness.

Tavares LaRoda told Tribune Business that the increases to fees that have not been adjusted for two decades were designed to try and catch up with, but not exceed, inflation that has occurred over that period as the Government seeks to incentivise more boat owners to register their vessels in The Bahamas.

Outlining the Davis administration’s strategy, amid major social media outcry over both the first-time and annual registration fee increases, he argued that the hike in the former category was more than offset by the elimination of an effective 20 percent tax rate on boat owners importing their craft to The Bahamas for the first time via the removal of VAT and Customs duty.

As for the introduction of inspection fees, Mr LaRoda told this newspaper that The Bahamas had to introduce a mandatory annual check of all private craft because the present voluntary regime was simply incompatible with the well-regulated, blue chip image this nation has in the global maritime industry.

Confirming that the Authority is seeking to improve its services to boat owners, including facilitating registration applications online, he added that the turnaround time for most commercial vessel submissions has already been “drastically reduced” to 30 days or less in most instances.

And, following expressions of “distress” by the fishing industry over the boat registration fee increases, and the potential impact on their livelihoods and businesses, Mr LaRoda said the Government is open to talking with the industry and potentially adjusting both the extent of the increases and their structure.

Confirming that boat registration fees were last changed in 2003, some 20 years ago, he added that the increases that took effect on July 1 as the 2023-2024 Budget came into force still “cannot cover the infrastructure we have” and all the Authority’s costs.

“The Government was sensitive to the overall impact,” Mr LaRoda told Tribune Business. “It [the increases] was below inflation. The annual fee is already below inflation over the interim period and the other fee, which is higher - the first-time registration - that is intended to capture some of the revenue loss that flows from the removal of VAT and Customs duty on vessels. It doesn’t cover all of that.

“The first-time registration fee, for vessels under 19 feet, if you’re going to import the vessel the VAT [that was previously charged at 10 percent] will be more than the first-time registration fee.” The Government, in the 2023-2024 Budget, eliminated both the VAT and 10 percent Customs duty on boats imported into The Bahamas in a bid to encourage their owners to register the vessels in this nation and make the jurisdiction more competitive.

Previously, many boat owners simply brought their vessels in on cheaper cruising permits and renewed these annually, registering them in other countries. The Budget changes thus eliminate a 20 percent combined tax rate which, on a $1m yacht, would have created a $200,000 tax liability. This was viewed as making The Bahamas an uncompetitive destination, thwarting any ambitions to develop a boat/yacht registry here.

“It’s intended to grow general development that will eventually support revenue gains,” Mr LaRoda said of the tax changes, “but the actual transition will not enhance revenue because you’re giving up VAT and Customs duty. The intent was not to increase the tax payable by persons in the industry. The central point is that it’s not accurate to say this is an increase in fees because it’s below the rate of inflation over the last 20 years.

“The overall thrust of it... the changes are not intended to be a tax grab or revenue enhancement. The idea was simply to reduce entry costs for vessels coming in by eliminating the tax for importing them. The fees that replaced them are generally less than the tax that preceded them.”

The changes to the Boat Registration and Water Skiing and Motor Boat Acts also introduce an annual inspection fee regime, with charges based on vessel length. Mr LaRoda said this was designed to bring The Bahamas into line with international best practices and regulatory standards by ending the previously voluntary inspection regime for private craft.

“The inspection fee, which is new, we have to move to a system where inspections are mandatory,” he told Tribune Business. “You would appreciate we are a significant player in the global maritime industry and it’s very difficult to maintain that position where we pride ourselves as being a well-regulated international flag with Carnival, etc, but don’t domestically inspect craft.

“We have a seat on the IMO (International Maritime Organisation) but can’t explain that. We don’t allow ourselves to travel on the streets without inspecting the vehicle. The fact that we don’t have a vessel inspection regime is something most people will appreciate is not acceptable at this stage of development. 

“It’s now mandated by law; the inspection of private craft. We always had an inspection for commercial vessels every year. We do have incidents, and this will further support the industry to ensure that persons travelling in our waters have seaworthy vessels.”

Mr LaRoda said that, while boat owners “on the legitimate end” registered their vessels in foreign jurisdictions and paid for annual cruising permits, others simply never paid for or obtained either. “The idea is to bring everybody into a regulated system that supports businesses that wish to expand their operations and do so in a proper, supervised fashion,” he added.

“The whole impetus of the changes coming in is to do that. None of the changes were done to enhance revenue. It you look at the totality of the changes, it’s not a revenue enhancement. It’s a move to support business and expand entrepreneurial opportunities in a regulated environment.”

Responding to the concerns of Bahamian fishermen, Mr LaRoda said he and the Government were open to adjusting the scale of the increases and the structure if warranted. “It was something that was raised, and is definitely something that can be looked at,” he added.

“Once they review the fees, and think that they create a commercial disincentive to expand their craft and operations, that’s something the Government will be open to consider. Our intent is not in any way to impair the fishermen; it’s to assist the fishermen, the industry to expand. We’d be open to reviewing it, and the Government would to what it can to assist.”

Speaking to the overall impact of the changes, the Port Authority chair said: “I think on the recreational side, where we have greater non-compliance because in the commercial space they have to follow all the protocols, it will be a game changer for persons operating in that space.

“It will also be a game changer for second home owners who keep vessels registered in their home jurisdictions because it was deemed too expensive to move here fully because they had to pay VAT and Customs duty. Those persons will bring their vessels into the jurisdiction full-time instead of leaving them in their home countries. That’s for fishing vessels or anybody.

“We’re in a competitive environment, with various countries in the region competing for the business, and the VAT and Customs duty put us at a competitive disadvantage in attracting people to move their vessels here.”