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Marinas Urge Gov't: Chase 4% Charter Fee

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

MARINA operators yesterday urged the Government to pursue the largely uncollected 4 per cent Charter Fee levied against foreign yachts and potentially exempt their sector from 15 per cent Value-Added Tax (VAT), warning that the uncertainty was already “steering” business away from the Bahamas.

Peter Maury, president of the Marina Operators of the Bahamas (MOB), estimated that the Government was only collecting about 30 per cent of the revenues due from the 4 per cent Charter Fee, and urged it to pursue this “low hanging fruit”.

Speaking with Tribune Business at an MOB meeting and VAT presentation, Mr Maury said there was a great deal of uncertainty as to how the new tax structure would impact the marina industry, suggesting operators could instead facilitate collection of the charter fee if it was treated as ‘exempt’.

Mr Maury said other Caribbean countries do not charge a 4 per cent charter fee, and that, in addition to 15 per cent VAT on consumables such as fuel, would devastate the marina industry.

“If a charter fee for a 100 foot yacht is $100,000, they will pay the 4 per cent fee on that to the Government,” he said. “We told the Ministry of Finance that rather than put a VAT on these charter contracts, we make it easier for the yachts to make their payments online, for instance, so that we don’t have to reinvent something here. If they can get those fees we could exempt the 15 per cent VAT that’s being discussed.”

Mr Maury added: “A lot of these charter contracts are written outside of The Bahamas, and VAT legislation shouldn’t even affect the charter for people booking to come into the Bahamas.

“The fact that we don’t know what the legislation is and what the rules are, it affects the marina business, where we have guests who have to book the charter and the captain who has to go and book the reservation at the marina.

“This is already impacting the business. The brokers can’t sell the charters because they don’t know what the fee is. In essence, some of the charters are being steered outside of the Bahamas because we don’t have a clear position now what these taxes are going to be.”

Mr Maury said that with the Miami International Boat Show set for next week, Bahamian marina operators needed a clear indication on how VAT would affect the industry, so they could inform potential visitors.

“Our 4 per cent fee is already higher than any other Caribbean country, which makes it more expensive to come here,” he warned.

“To add new taxes on, whether it’s dockage or fuel, is going to impact us negatively. One thing with the yacht business is these people don’t have to come to Bahamas. They can easily go to the Florida Keys, for instance, if they want.

“I think that the beauty of our waters and our proximity to the US makes us very attractive, but if we keep increasing fees it’s just going to drive business way. Until we get a definitive answer the marina business is left in limbo.”

Earl Miller, general manager of the super yachts department at the Ministry of Tourism’s Florida office, said: “From where we sit as far as the marina business is concerned, we are just cautioning the Government that the VAT plus the 4 per cent we are already collecting, and the VAT on the other consumables, is going to be detrimental to this business, especially during a time when we are putting more emphasis on this market. We know that a lot of these boats are leaving Europe and coming our way.”

Mr Miller added: “I think that this is the time for us to come up with a sizable incentive for us to get them here. It’s not about the few dollars that they pay in taxes, but it’s about what they pump into the wider economy.

“This is going to be the number one issue at the Miami Boat Show. It’s all about education right now. We just have to educate people on how this is going to affect their bottom line, especially on the charter side. If we lose that cord it takes about three years for them to return into that loop.”

Financial Secretary John Rolle admitted that more clarification on the VAT issues related to the marina indusry was needed.

“That is something we will get some further clarification on. The more central issue there is collecting the revenue, because even if we change the nature of it or repaint it with a different brush, we have to tackle the collections,” Mr Rolle said.

“In this case we will work with them to look at some of the solutions in terms of how we can collect this revenue for the charters.”

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