By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition yesterday pledged to slash a yacht charter tax rate, which the industry has branded "the highest in the Caribbean-Atlantic region", by more than 70 percent in percentage terms if elected.

Shanendon Cartwright, the FNM's deputy leader, promised to reverse a VAT levy -  imposed by the Davis administration on foreign yacht charters in the 2022-2023 Budget - that he asserts is responsible for causing "nearly half our market share" to disappear.

And his stance has been backed by a group of charter yacht owners and managers who, in a recent position paper submitted to the Government, revealed that the more-than-tripling of the tax rate - from 4 percent to 14 percent - via VAT's imposition has "driven many vessels elsewhere, shrinking a once-growing tourism and marine services sector".

The Bahamas Charter Yacht Owners and Managers Association, in a paper seen by Tribune Business, told the Davis administration: "In 2022, the Government added a 10 percent VAT to charters, on top of the existing 4 percent Port Department charter tax, raising the total levy to 14 percent —the highest in the Caribbean-Atlantic region.

"The roll-out provided no clear path for foreign-flagged yachts to obtain a Bahamian VAT number. Opaque registration steps, complex filing requirements and limited departmental support have driven many vessels elsewhere, shrinking a once-growing tourism and marine services sector.....

"The Port Department’s online 'Foreign Charter contractual form' already lets vessels pay the 4 percent Port tax and links each payment to Click2Clear. Given the lack of a practical VAT registration process -and the resulting revenue losses for marinas, yacht-service providers, hospitality businesses and the Bahamian government - we urge the Government to repeal the charter VAT, fold that revenue into a revised port tax, and set a rate (10-12 percent) that restores The Bahamas’ competitiveness among Caribbean-Atlantic charter destinations."

Two of those steps - eliminating VAT and rolling the levy into one - are being acted on by the Government, but there has been no cut in the effective tax rate although such a move is being considered for foreign-flagged vessels that switch to registering with The Bahamas' yacht registry.

VAT and  the 4 percent Port Department fee are set to be consolidated into one, all-encompassing 14 percent levy payable to the latter from July 1, 2025. This means foreign yachts no longer will have to pay VAT and deal with the Department of Inland Revenue, although questions remain about the de-registration process.

Mr Cartwright, though, was unmoved. In a statement, he blasted: "Since the Davis administration hiked the VAT on yacht charters from 4 percent to 10 percent, nearly half of our market share has vanished and rerouted to competitors like Turks and Caicos and St Maarten. What the PLP calls ‘growth’ is actually a mass exodus.

“While they boast about numbers on paper, small Bahamian businesses are bleeding, our economy is suffering and our neighbours are booming off our bad policy. This government is gas-lighting the public with selective statistics while ignoring the real, devastating impact their decision has had on our maritime sector.”

The Opposition's deputy leader continued: "We’ve met with the captains. We’ve met with the charter companies. We’ve met with Bahamian taxi drivers, rental car agents, yacht engineers, cleaning crews and every other professional connected to this industry.

"They are all saying the same thing: Business has collapsed. This 10 percent tax didn’t just hurt foreign yacht owners; it hurt Bahamian livelihoods. From Grand Bahama to Abaco to Exuma, Bahamian-owned support businesses have seen fewer bookings, less traffic and shrinking income.”

“What makes it worse is that the Prime Minister, deputy prime minister and minister of transport were fully briefed on this issue. They heard the warnings. They saw the data. And they chose to push forward anyway with a poorly conceived tax policy that is now gutting a once-thriving sector. They had every opportunity to reverse course but, instead, they made it worse.”

Mr Cartwright pledged that an FNM administration "will reverse the 10 percent tax on yacht charters and re-engage stakeholders across the industry to reignite maritime tourism, especially in Grand Bahama and the Family Islands. By collaborating with travel professionals, we aim to reverse negative trends and better navigate global uncertainty.

"Our strategy includes investing in targeted advertising, securing stronger airlift in key markets, expanding outreach to new regions such as Europe, Latin America and Asia, and accelerating the completion of Family Island airports and resort developments to improve accessibility and boost visitor appeal. This isn’t just about yachts; it’s about vision."

Apart from eliminating 10 percentage points from the yacht charter tax rate, much of what was suggested is already underway under the current administration. However, a recent town hall meeting featuring maritime and marina industry representatives estimated that the sector has lost $130m worth of business due to the fee hike and associated red tape and bureaucracy.

And a previous study revealed that more than-tripling the effective tax rate cost this nation $90m through a 40 percent slump in foreign yacht charters. 'Yachting in The Bahamas’, written by Marcel Amann, founder of Yacht Services Bahamas, reiterated that tax hikes and regulatory interventions “have dampened activity” in a sector estimated to generate half a billion dollars annually for this country’s economy.

Citing recent data from Yachting Magazine, he singled out the imposition of 10 percent VAT on foreign yacht charter fees as especially harmful for The Bahamas’ competitiveness given that it tripled the overall tax rate to 14 percent when added to the already-existing 4 percent Port Department levy.

Asserting that this taxation burden was much higher than Caribbean rivals, although no comparative figures were provided, the report said the ease and convenience of conducting business in The Bahamas has also been made more costly, time-consuming and bureaucratic for visiting boaters through the introduction of requirements such as obtaining a VAT taxpayer identification (TIN) number.

“The yachting sector contributes about $500m annually to The Bahamas’ economy, though recent tax measures have dampened activity,” the industry position paper said. “The evolving regulatory landscape in The Bahamas has introduced both opportunities and challenges for the yachting industry.

“The implementation of a 10 percent VAT on yacht charters in 2022, and a 4 percent Port fee that was already previously implemented, aimed to boost government revenue but has led to concerns over its high 14 percent combined tax rate, especially compared to competitors like the Cayman Islands and US Virgin Islands.

“This policy shift contributed to a 40 percent decline in yacht charters, resulting in a reported $90m revenue loss and affecting related sectors like provisioning and hospitality. Additionally, administrative requirements, such as obtaining a Taxpayer Identification Number (TIN) for VAT compliance, have complicated operations, pushing some yachts to consider alternative destinations like Puerto Rico or the Dominican Republic.”