Friday, June 8, 2018
By NEIL HARTNELL
Tribune Business Editor
The Bahamas' aircraft registry ambitions "would not have been taken seriously" unless the ten percent Customs duty was eliminated, an attorney revealed yesterday.
Llewellyn Boyer-Cartwright, a leading advocate for the creation of an enhanced registry, told Tribune Business that the move represented "a huge step in the right direction" for achieving this goal - especially since it raised little to no revenue currently.
A Bahamian aviation law specialist and Callenders & Co attorney, Mr Boyer-Cartwright said that while the 10 per cent duty was not implemented in practice, its existence on the statute book was a major "deterrent" to aircraft registration, financing and leasing through this nation.
"For me it's fantastic news," Mr Boyer-Cartwright said of the 2018-2019 Budget change, something he has long campaigned for. "As I have said to you previously, no other jurisdiction would take us seriously in terms of doing business here in terms of registration, financing and leasing aircraft if that duty was not removed.
"This is a huge step in the right direction. There's no doubt. It's very encouraging. I feel very confident, very positive, and it looks like this may have happened. I have been advised by others in the industry that as long as that Customs duty remains, the jurisdiction will not be taken seriously.
"It'll create more interest now in the jurisdiction. It really does. I think we're going to see a little more attention now once the word gets out."
Mr Boyer-Cartwright revealed he had multiple experiences where the 10 per cent Customs Duty's existence has cost him business. "I can't speak for the Government, but let me say this," he added. "The duty had never been imposed, so I'm not sure what revenue was being lost or has been lost.
"Aircraft owners who were looking at registering their aircraft in the Bahamas or doing a financial arrangement through the Bahamas, once they learned of the 10 per cent Customs Duty it was a significant deterrent. The fact it's law, it's on the books, I can't ask you to lay your hand on that."
Mr Boyer-Cartwright has at times seemingly led a 'one-man crusade' to establish an upgraded Bahamian aircraft registry, said these essential reforms would build on the platform provided by the Civil Aviation Act 2016 and its accompanying regulations.
Reiterating that the Customs duty elimination was a "first step", he added that efforts to establish an aircraft registry would receive a further credibility boost if the Bahamas became a signatory to the Cape Town Treaty (Aircraft Convention), which gives financiers and leasing companies confidence that their liens and charges over planes - and plane parts - will be recognised and secure whatever jurisdiction the craft is in.
"The Minister of Tourism and Aviation [Dionisio D'Aguilar] has expressed his intent, and the Government's commitment, to the establishment of an enhanced aircraft registry with a mortgage registry and ratification of Cape Town," Mr Boyer-Cartwright said.
"The Minister has mandated myself and another... really, he's tasked us to start working with the Cape Town Convention in terms of getting the Bahamas signed on and ratified. That gives me even more hope that we'll see it through. It's adding almost another industry, or arm, of the financial services industry and to the aviation industry."
Mr Boyer-Cartwright previously revealed that Bahamas-based companies and residents typically have to pay more when leasing aircraft from US companies because this nation is not a Cape Town Convention signatory, and the owner wants extra compensation for the extra risk.
Apart from increasing cost, and reducing affordability for Bahamas-based interests, the Callenders & Co attorney said the reluctance of banks to finance purchases of "mobile assets" such as aircraft meant buying options were limited.
As a result, Bahamian parties frequently ended up leasing planes long-term, while being reluctant to entertain lease-to-purchase deals for fear of being hit with the 10 per cent Customs Duty when the aircraft was brought to the Bahamas.
An improved Bahamian aircraft registry has been viewed as a value-added complement to the financial services industry's high-end clients, many of whom own or lease planes. It also fits in with the shipping registry and other efforts to expand and diversify the economy.
Mr Boyer-Cartwright added that "other jurisdictions wouldn't be in the game" if aircraft registries were not lucrative, with virtually all the Bahamas' international financial centre (IFC) rivals possessing their own facilities.
"I just hope that we can structure it in such a way and make it so competitive that we will be just as competitive as any of the other jurisdictions," he told Tribune Business.