Bahamas targets US$50m in yacht charter fees

The Bahamian government is focused on improving revenue and is targeting what one official calls the “low hanging fruit” of existing, uncollected revenue sources such as the island nation’s 4% yacht charter fee.

“We know there are vessels that come here and stay for six months conducting charter business during that time and not registering as commercial entities,” Deputy Prime Minster K Peter Turnquest told a recent business conference. “As a result, The Bahamas gets no revenue. There is a 4% charter fee we are supposed to collect but, if they don’t register, then we are not collecting our 4%. It’s estimated that it could be as high as US$50m a year,” according to Tribune242.

The Association of Bahamas Marinas (ABM) has been urging the government for years to enforce the 4% charter fee on foreign-owned vessels in Bahamian waters, estimating in 2014 only about 30% of the revenues due were being collected.

“We’re putting in place some legislation as well as technology-based solutions to help us control that and, hopefully, drive that yield up over the next year,” Turnquest said. “A side benefit is that we will be able to deal with some of the illegal activity happening in our waters because we will be able to tell who, where, when and what by using data.”

Facing a budget crisis, The Bahamas is seeking to avoid new or increased taxes from traditional sources such as VAT and customs duties for fear the local economy could not bear the burden. The 2019-2020 budget is likely to focus on plugging revenue loopholes such as the yacht charter fee.

It is almost certain to include the imposition of VAT or some other levy on Airbnb and vacation rental-type businesses, and a renewed focus to ensure all taxes existing on the books are fully collected.