By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Yacht owners and managers are warning that The Bahamas is increasingly viewed as “an unpredictable and difficult destination for charter operations” due to consistent tax and fee hikes and other reforms.

The newly-formed Bahamas Charter Yacht Owners and Managers Association, responding to Tribune Business inquiries, said the new and increased fees imposed in the 2025-2026 Budget - following closely behind the 14 percent all-in rate imposed on foreign yacht charter contracts - has created “a deepening sense of uncertainty” in the industry about The Bahamas’ future prospects.

It added that members are reporting that “higher taxes, unclear anchoring fees, the unpredictability of plans for mooring implementation, and rising fishing license costs make it nearly impossible for operators to plan or price their trips effectively”, with many questioning if they will continue to operate in The Bahamas as “regulatory burdens and costs mount with no clear path to compliance”.

The Association told this newspaper: “The primary concern across our membership is a deepening sense of uncertainty - among owners, managers and especially charter brokers - stemming from abrupt regulatory changes imposed without industry consultation or clear guidance.

“This pattern began with sudden tax rule changes in 2022, for which the Government provided no pathway for enrollment or compliance. These changes positioned The Bahamas as the highest-taxed charter destination in the Western Hemisphere, significantly impacted bookings, and drove many yachts - and the tourism spending they bring - out of the market to other destinations.

“The most recent changes, including shifts in the tax structure such as the loss of VAT input credits, unclear rules surrounding anchoring fees and sharp increases in fishing license costs with no clear or efficient online renewal process, were imposed with minimal notice and without operational clarity,” the Association added.

“These moves have only deepened the perception of The Bahamas as an unpredictable and increasingly difficult destination for charter operations. The exclusion of charter vessels between 45 and 55 feet from operating trips shorter than 48 hours, regardless of whether those trips are booked through a Bahamian broker, also undermines the industry’s ability to support the growth of homegrown Bahamian brokerages and the development of young Bahamian yacht crew, as most Family Island sailing charter catamarans fall within this size range.”

The Association acknowledged that the full fall-out from the combined regulatory changes may not have been experienced yet as charter yachts tend to book their trips six to 12 months in advance, meaning this may only become apparent in 2026.

“As a result, the immediate effects of these policy shifts may not be fully visible yet. However, many members report a sharp decline in broker confidence and an increasing number of inquiries about moving operations to other destinations in future seasons,” it added. “Several unresolved issues are making it difficult for operators to plan ahead.”

These, the Association said, include uncertainty around mooring and seabed lease fees. “Without a clear framework or cost structure, operators cannot forecast or adjust pricing to recover potential new costs,” it asserted. Meanwhile, the decision to eliminate 10 percent VAT on foreign yacht charter contracts in favour of a 14 percent all-in fee means boats will be unable to reclaim the tax paid on their inputs.

“This change increases the cost of doing business and reduces already tight margins, making The Bahamas a less competitive destination,” the Association warned. “The mandate to broadcast AIS (automatic identification systems) at all times, including while stationary in marinas or designated anchorages, raises safety, privacy and compliance concerns with the risk of fines or vessel impoundment.

“Some smaller operators are already weighing whether to cancel upcoming seasons or withdraw from the Bahamian market altogether due to the growing regulatory burdens, operational costs and persistent uncertainty.”

None of those voicing concern about the revised boating fees and their impact are disputing that The Bahamas has a sovereign right to determine and set these levies at the level it deems appropriate, or that visiting boaters should pay their fair share in taxes and fees in return for commercial exploitation of this nation’s waters and environment.

Instead, the main issue has been the zero consultation with boaters and industry, coupled with the lack of notice and time to adjust, as well as the scale and breadth of the changes and how they have been implemented in practice. This has led to significant uncertainty and confusion, with The Bahamas not providing a timely or coherent message to its visitors.

However, despite the outcry, the Government is forecasting the reforms will more than triple annual revenues generated by this earnings stream compared to the old fee structure.

The 2025-2026 Budget estimates disclose that cruising permit fees generated a combined $6.223m in the 2023-2024 fiscal year, and were forecast - under the old structure and levies - to produce $5.518m in the just-closed 2024-2025 Budget period.

That represented a year-over-over decline of 11.3 percent, although $4.064m or 73.7 percent of the 2024-2025 full-year target had been collected during the first nine months of the last fiscal year through March 2025.

However, with the addition of the two-year frequent digital cruising card (FDCC) and new anchorage fees in particular, the Ministry of Finance is forecasting that the Public Treasury during the current 2025-2026 fiscal year will generate a total $17.868m from cruising permits and related levies.

This represents a 224 percent increase upon, or more than tripling of, the $5.518m cruising permit revenues projected for the 2025-2025 fiscal full-year. The Ministry of Finance is forecasting that the FDCC, which permits vessels “unlimited entry” for a period of two years upon payment of a fee ranging from $1,500 to $8,000, which is linked to vessel size, will generate $9m alone during 2025-2026.

And the new anchorage fees, ranging from $200 to $1,500 “for foreign pleasure vessels not mooring at a marina”, and again linked to vessel size, are projected to deliver $2.8m in new revenues. Together, the FDCC and anchorage fees are predicted to produce $11.8m for the Public Treasury, with the new “temporary” 12-month permit for boats below 50-feet forecast to produce $4.417m

And the Ministry of Finance, despite all the dire predictions and warnings, is clearly anticipating that The Bahamas’ boating and yachting market will continue to expand as it is forecasting steady growth in the FDCC, anchorage fees and temporary cruising permit revenues through the next two Budget cycles to the close of the 2027-2028 fiscal year.

In particular, FDCC income is forecast to rise from $9m this fiscal year to $10m in 2026-2027, and then to $11.65m in 2027-2028, while anchorage fees are also projected to move from $2.8m to $3.08m and $3.452m over the same timeframe.