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Tax dodgers ‘dominate’ foreign yacht charters

Financial Secretary Simon Wilson.

Financial Secretary Simon Wilson.

• Top official says sector must ‘pay their share’

• Marinas: Attorneys hired on portal shutdown

• Wilson: We explained why closure necessary

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Ministry of Finance’s top official yesterday hit back over concerns about VAT’s imposition on foreign yacht charters by arguing the sector was “dominated” by a few large tax-dodging companies that need “to pay their fair share”.

Simon Wilson, the financial secretary, told a Bahamas Hotel and Tourism Association (BHTA) board of directors meeting it was “inconceivable” to him that those voicing fears about the negative impact of VAT’S imposition on this nation’s boating industry were ignoring the need to collect all due revenues and crackdown on tax avoidance and evasion.

He spoke out after Marques Williams, the Association of Bahamas Marinas (ABM) president, told the same meeting that attorneys have been retained over the Government-enforced closure of the SeaZPass online portal that it created to allow client vessels to pay their yacht charter fees and other relevant fees.

Mr Williams said the ABM was “at a standstill”, and “kind of in limbo”, over the SeaZPass portal’s fate after it was recently revealed that the Government had awarded a $3.355m contract to DigieSoft Technologies to develop exactly the same solution even though the Association’s had been provided at no expense to the Bahamian taxpayer.

And he asserted that the Government had been less than forthcoming in responding to queries by the ABM and SeaZPass’s payments facilitator, Omni Financial Services, as to its plans and whether the online portal had any future.

This, though, was vehemently rejected by Mr Wilson, who said the Ministry of Finance had entrusted the ABM with “non-public information” when it called its senior executives in to explain the problems and why the Government had ordered that SeaZPass payment mechanism to be shut down

Those reasons were not divulged yesterday, but Tribune Business previously revealed that the online portal was closed over a dispute as to whether Omni had remitted the full fee sums due to the Public Treasury.

Omni asserted that all sums due and owing had been paid in response to Ministry of Finance allegations that some $5m remained outstanding, and this newspaper was informed that progress has been made in resolving this dispute. However, several sources questioned why, if the Government had concerns, it simply did not require that the digital payments provider be changed and allow SeaZ Pass to continue with a new provider.

The SeaZPass controversy erupted prior to Mr Wilson asserting yesterday that the Government plans “to make sure we get our fair share of revenues from the marine sector”. Successive administrations have long believed that many foreign charter vessels failed to pay the 4 percent levy to the Port Department prior to July 2022’s imposition of VAT on the same contract, which more than tripled the effective tax rate to 14 percent.

“This, for us, has been a vexing issue because of continued misconceptions about what our intentions are,” Mr Wilson said in relation to foreign yacht charters. We hear comments about yachts not visiting marinas because of the application of VAT and so forth.

“I personally do not understand; we don’t understand from this side... The foreign yacht charter business in The Bahamas is dominated by a couple of large businesses that have over 100 yachts chartered in The Bahamas. Those businesses have not, and have admitted to not, being consistent with taxes paid. That is a concern.

“All this discussion in the media by persons, they seem not to appreciate people have to pay their fair share of taxes. It is inconceivable to me that we have a business generating $8m-$10m in annual revenue in The Bahamas that believes the obligation to pay taxes doesn’t exist for them. That’s what the situation is.”

Mr Wilson did not identify the companies involved, but returned to the issue later during questions from hotel and tourism executives. “We are sorting through significant issues with the foreign yacht charter business,” he reiterated. “That business is dominated by a couple of large firms that are largely non-compliant and have always been non-compliant, and it will take a while for us to sort through these issues.”

The financial secretary’s comments came just one day after Obiama Knowles, the Atlantis dockmaster, told this newspaper that the resort’s marina had sustained a 20-25 percent drop-off in large vessel traffic - boats 180 feet and upwards - since VAT was imposed on foreign yacht charters. He added that it was “definitely hurting the small man” more as there were fewer boats to provide work for day cleaners, mechanics, provisioners and other professions.

As for SeaZPass, Mr Williams said the ABM first came up with the idea to develop an online portal for the collection of boating-related fees as far back as 2015. The Association viewed it as a mechanism “to simplify” foreign charter fee payments, permit approvals and the associated bureaucracy, and also a means to encourage their clients to come in and pay since it would be “a lot easier for them”.

Disclosing that the initiative was put on hold in 2017, after the Government and Customs moved to develop a single electronic gateway via Click2Clear, the ABM president said the idea was revived in 2017 due to negative experiences with that system. A proposal was subsequently submitted to the Government, and eventually approved by Cabinet, with the ABM partnering with Omni as payments solutions provider.

The proposal, he added, saw SeaZPass developed at no cost to the Government or taxpayer, and with all revenues deposited to the Government’s account. The developer was to receive a 2 percent commission to recover its costs, which was to be shared with the ABM, and Omni 1.5 percent to cover operational expenses. The ABM was to use its share of the 2 percent to help maintain navigation aids.

“We have a significant problem around the country with navigation aids,” Mr Williams said yesterday. The SeaZPass portal was said to have collected $4m in yacht charter fees and cruising permits, with regular reports sent to the Port Department on what was being collected and deposited to the Government’s account.

The ABM and Omni were said to have yet to receive a commission payment from the Government prior to the online portal’s shutdown, and Mr Williams said there had been no response to inquiries as to how the Davis administration plans to move forward. He said the closure meant boaters and yachters lack a convenient mechanism to pay due fees to the Government.

“This is the most pressing thing for the ABM,” he added. “We are at a standstill. This is one of the most pressing issues that we are facing. We are pursuing it, trying to find out what the situation is with regard to this. We were told an audit was done [by Deloitte] but don’t have any information with regard to that.... We are now in limbo with respect to that.”

Mr Wilson, though, said the ABM and its executives knew full well why the Government had ordered SeaZPass’ shutdown. “This commentary about the decision of the Government not to use a portal that was utilised to pay fees. When that decision was made, the relevant Association was called into the Ministry of Finance and provided with an explanation as to what was occurring,” he added.

“It is not fair for the commentary to be such that they didn’t know what was happening. What we as Ministry of Finance officials do, we try to be as transparent as possible..... The portal that we took offline was because we were having a challenge, and the challenge is well known to the ABM. We were explicit. We told them non-public information, and were as transparent as we possibly could be.”

Comments

ThisIsOurs 10 months, 3 weeks ago

"Pay their fair share"???

The boats left, there's 0 share to pay

Sickened 10 months, 3 weeks ago

So a higher tax and a different portal will help to get the 'tax dodgers' compliant somehow? And increase government revenue???

The_Oracle 10 months, 3 weeks ago

“This, for us, has been a vexing issue because of continued misconceptions about what our intentions are,” (Wilson) Your intentions are always as clear as mud because your results suck worse than your communication skills. You nor any before you look forward enough to realize what you aim for is not what happens. Ever hear of a flow chart? Work it out to 5 layers and you may get something right for a change. Masters of backlash and foopah. Now fix your error of nailing Bahamian boat owners when you were targeting foreign owned vessels.

birdiestrachan 10 months, 3 weeks ago

Many not all do not pay, because some believe we are less than them and we are not deserving they will go to other places and pay

ThisIsOurs 10 months, 3 weeks ago

No foreigner "has" to pay these fees. They can leave. And they have. We can say good riddance but how did that help us achieve our objective? It seems the guys with the SeaPass app had the right idea. Just make the process easier. Now it looks like their IP will be stolen.

The model is wrong. They are using this heavy handed pay the oitlandish fees or else structure that does not work. The only people you can possibly get to comply is poor Bahamians who have nothing left to give. (case in point, BPL will end up with huge unrealized profit and possibly thousands disconnected for nonpayment, then decline in revenue from a reduced active customer base. How does that help?) The foreign man just pick up his boat, put it in his backpack and leave.

The correct model would marry a price thats in line with what marinas in the region charge. Then add on top of that proper enforcement whether thats overfishing fines, pollution fines, violation of protected species laws. The problem we have is, its easy and brainless to charge 10 times what other countries are charging and claim how well your doing because revenue increased (it didnt), its much harder and takes more thought and planning to implement and maintain a system of enforcement

I agree with @Oracle, everything from this guy ends up in a big bully tactics mess. Then the PM shows up in the chaos and says, well the FS had some views, we're reviewing the process. Why go through this over and over again?

ExposedU2C 10 months, 3 weeks ago

Simpleton Simon Wilson, Brain Dead Halkitis and Fat Head PM Davis are unwittingly shutting down our entire economy with all of this terribly misguided tax foolishness aimed at continuing to grow the unsustainable size of our already grossly over-bloated, very costly and unproductice government work force.

The size of the public sector work force is killing the private sector. It is now more than ever a deadly cancer that must be starved of, rather than fed with, additional tax dollars.

DWW 10 months, 3 weeks ago

transparent huh? do we need a dictionary ?

DiverBelow 10 months, 3 weeks ago

Before you demand tax from others, show me what YOU HAVE PAID? We Can't even get a Financial Statement from Parliamentarians!! Ah, the benefits of inefficiencies, & fog.

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