The Bahamian Government recently announced several measures that may directly impact the boating industry and the tourism sector regarding vacation rental taxation, yacht chartering fees, cruising permits and online Click2Clear procedures.

The changes became public when the government presented its annual budget for the 2019/2020 fiscal year in March.

However, before laying out the proposed changes it is important to note that at the time of this posting details remain fluid since officials are still in negotiation with prominent marine industry representatives.

At the moment there is a serious, ongoing, dialog between the Association of Bahamas Marinas (ABM) and the Bahamas Dept of Finance with another meeting scheduled for this week.

According to Waterway Guide Bahamas Cruising Editor Addison Chan, "Based on discussions with marina operators in the Bahamas there has been significant industry push back against the initial Cruising Permit fee structure changes some of which amounted to an over 500% increase. As a result of industry lobbying the fee structures are being modified and may result in little or no change for the typical private boater in a vessel less than 100’ in length although there has been no final determination as yet."

"Marina operators are still feeling the impact of a hastily enacted fee increase 3 years ago that marked a sharp drop in business that is only now returning to previous levels," Chan added. "To prevent a potential recurrence The Association of Bahamas Marinas, with additional support from The Seven Seas Cruising Association, The America’s Great Loop Cruising Association and individual boaters, are encouraging the Bahamian government to focus on the more efficient collection of the existing 4% charter taxes rather than to raise revenues through new fees and increases of existing fees. Several proposals have been advanced and discussions are on going at this time."

The changes affect the Value-Added Tax (VAT) on vacation rental properties, regulations for international yacht chartering, fee increases for cruising permits, and the introduction of an electronic payment platform to make boating in Bahamian waters more convenient.

Vacation Rental Taxes

The Bahamian government is moving to enforce VAT regulations on online marketplaces selling accommodations in The Bahamas. This means that people renting accommodations in The Bahamas through online marketplaces such as Airbnb, HomeAway and VRBO will be required to pay 12 percent VAT on their bookings with full compliance required by October 1st.

Currently, the VAT Act 2014 states that all e-commerce services provided for the use, benefit or advantage of persons within The Bahamas are a taxable supply, even if the providing company is domiciled outside of The Bahamas, but the regulations haven’t been strictly enforced.

“We feel that foreign visitors who use our vacation homes are also the beneficiaries of our tourism infrastructure and should contribute something to its maintenance and upkeep,” Minister of Tourism Dionisio D’Aguilar recently told media. “Roads, police, marketing, health care, ports, and airlift are costs that all foreign visitors to hotels  contribute toward through the payment of the 12 percent VAT plus a 10 percent promotional levy charged on their room rates.”

As part of the plan the Ministry of Tourism will also implement a digital platform for the registration and licensing of accommodation providers.

Yacht Chartering

The collection of yacht charter fees has historically been low in The Bahamas due to low enforcement rate. As part of its new measures the government plans to change this with a move to boost voluntary compliance and enforcement of existing laws related to foreign-flagged charter yachts which are currently required to pay a 4 percent fee when in Bahamian waters.

“We know that there are facilitators in the U.S. selling charters. Some of those charters are here and not declaring that they are actually doing charters from The Bahamas,” says K. Peter Turnquest, deputy prime minister and minister of finance recently said in a statement. “There are others coming over from the U.S., particularly in Bimini where this is a problem. They come over for a day fishing and whatever and don’t declare they are on a charter. We are missing all that revenue. The estimates could be anywhere from $20 million to $50 million. What we have built is a system to track marine traffic, and it is going to be able to tell us who has and has not paid. It is going to make it easier and more efficient for people to register. Hopefully, that will drive natural compliance and derive the kind of revenue we are seeking,” he adds. Turnquest also highlighted that one of the government’s overall revenue objectives is to enforce existing laws and close loopholes instead of adding new taxes and fees.

Cruising Permits

The government is consulting with the marine industry  to determine a tiered fee structure that better reflects the types of boats cruising in Bahamian waters. Currently boats up to 35’ are charged $150 for an annual cruising permit and boats over 35’ are charged $300. In the two tier structure a 36’ sailboat operated by a couple is charged the same fee as a 150’ mega yacht with a professional crew.

 Click2Clear

To support its various fiscal measures, the Bahamian government is in  the process of a phased roll-out of a new online platform for the Department of Customs, called Click2Clear.

The Ministry of Finance said that when Click2Clear is fully implemented, the benefits will include:

• Paperless Customs processing
• Automated entry checking
• End-to-end online processing and tracking, with no need for companies and brokers to run from office to office
• Tighter controls and risk management to reduce corruption and fraud
• More accountability to protect government revenue
• More statistical information for effective policy making.

The Click2Clear platform is also expected to improve the overall process of importing and exporting goods by increasing transparency and accountability. Its full-risk management portal will reduce the time for processing entries. Low-risk users benefit from automated system checks with only sample inspections, as opposed to 100 percent inspections. The system will integrate with other government agencies which allow for the seamless processing of custom-related permits from those agencies.

“It will likely be less money for some boaters since the permits will now be issued for varying lengths of stays instead of a blanket one-year permit,” adds Waterway Guide Bahamas On the Water Cruising Editor Matt Claiborne who is also following the developments closely. “That might mean that small boats visiting for short periods of time will save money. But since permits are now based more closely on length, larger yachts might be paying more.” 

As always, the team here at Waterway Guide will continue to monitor the changes and keep readers informed.