Bahamas Foreign Charter VAT Questions Answered
Date Posted: October 26, 2022
Source: Staff Report

The Bahamas Department of Inland Revenue has directly informed the Bahamas Yacht Brokers & Agents Association (BYBA) that it is now prepared and ready to collect the new VAT (Value-Added Tax) payments and submissions by all foreign yacht charters conducted in The Bahamas. Once a TIN (Taxpayer Identification Number) is obtained you must send in for access to be granted to your account - then VAT submittals and payments can be enabled.

On July 1, 2022, The Bahamas introduced a new tax rate that requires all foreign-flagged charter yachts to pay an additional 10 percent VAT. It is in addition to the 4 percent charter fee that goes to the port department and means the total cost is now an additional 14 percent.

According to a story in The Tribune from May of 2022, The Association of Bahamas Marinas (ABM) president warned at that time "that reforms set to more than triple the tax rate imposed on foreign yacht charters will "kill" an industry that last year directly injected $122m into the economy...Foreign yacht charters are already supposed to pay a fee equivalent to 4 percent of the contract value to the Port Department. However, reforms to the Boat Registration (Yacht) (Amendment) Rules 2022, which were tabled in the House of Assembly on Wednesday (May 24, 2022), effectively now subject the industry to 'double taxation' by levying 10 percent VAT on the same contract."

The Association of Bahamas Marinas (ABM) Executive Committee has developed a method for collecting on Government's behalf the 4% tax on chartered cruises - Bahamas Sea-Z Pass. See the Waterway Guide story on Sea-Z Pass.

Now, in addition to that tax, vessel owners or their agents can access their VAT account at vat.revenue.gov.bs and make the payment of any VAT due in accordance with the requirements under their quarterly VAT filing.

All told this means that all foreign entities offering sailing services in Bahamian waters are required to be registered for value-added tax (VAT) and charge VAT on all of their yacht charters sailing within the Bahamas. See the full VAT Guidance Advisory.

Senator Michael Halkitis, Minister of economic affairs, stated in an earlier release that the foreign yacht charter industry had for years "enjoyed a windfall at The Bahamas' expense" by using this country's marine environment and natural resources to earn millions of dollars without paying its fair share to the Public Treasury, according to Superyacht News.

Research from the Association of Bahamas Marinas (ABM), which includes over 55 marinas, shows that the yacht sector contributed 37.3 per cent or $122.135M of The Bahamas' $327.438M total tourism revenues in 2021. The marinas generated $78.058M in combined fuel sales last year, $18.109M in electricity and $10.819M in water sales to berthed vessels.

The standard rate of VAT, ten percent (10%), will be assessed on the value of the charter fee and will be required to be accounted for and paid for each charter in the relevant filing period. Registrants will be initially assigned a quarterly filing period.

However, where the annual charter sales for a particular vessel exceed $5 million the filing period will be changed to monthly. You must declare all yacht charter sales which fall within the VAT period on the VAT Return for the period in which the invoice is prepared or the payment received, whichever is earlier.

Provisions directly sourced by the Captain and crew without a service charge will not be subject to VAT. VAT will be applicable, at the standard rate, on the APA expenses, in those instances where a service charge is incurred due to the use of a third party to aid in provisioning.

Once a reconciliation is finalized with respect to the provisioning of the goods and services, VAT will be charged on the final bill and accounted for in the period in which the bill is issued. 

The Department of Inland Revenue (DIR) will register all vessels with information received from the Bahamas Port Department ('the Port'), from yacht owners or from agents acting on their behalf.

Thereafter, each vessel operating yacht charters will be assigned an individual tax identification number (TIN) which will be communicated to all operators. Registrants will be guided through the process of setting up their login credentials at vat.revenue.gov.bs, the DIR's Online Tax Administration System (OTAS).

This will allow them the ability to access the system to submit their VAT filings and make the required payments of VAT on yacht charters into the DIR.

Vessels that will be managed by agents will have their assigned TIN linked to the account of the agent. Agents will bear the responsibility of making payments on behalf of the vessels that they represent.

 

Comment Submitted by Jeffrey P. Schueller - October 26, 2022

Well I guess the USVI it is then. So long Bahamas.

Explore More News & Articles In Specific Cruising Areas
Recent Videos
Plan Your Boating Adventures with Waterway Guide
Waterway Guide's new Mobile App on iPad Mini with maps, data links, and downloadable guide books
Fuel Prices for Boating at Waterwayguide.com
Purchase a Guide
  • 4,000 Marinas
  • Thousands of anchorages
  • Updated Charts
  • Mile-by-Mile Navigation
  • Highlighted Alerts & Cautions
  • Full-Color Aerial Photographs
Download The App

The Waterway Guide App Makes it easy to leave reviews, use our explorer, and view waterway guide materials all on the go!