After the 1st of July 2022, any yacht charter contract signed is subject to the new 10% VAT in addition to the already existing 4% Bahamian tax. With this new tax now in place, what does this mean for luxury yacht charter vacations in the Bahamas?
Chartering in the Bahamas before the new tax announcement was pretty straightforward. Whilst VAT became a requirement for all companies conducting businesses in the Bahamas, charter yachts had a long period of exemption from this enforcement allowing guests to enjoy the sun-dappled beaches and explore the 700 uninhabited islands without the fear of much taxation.
After the COVID PANDEMIC in 2020 and prior to these tax changes, the Bahamas tourism sector- particularly the yachting industry, was one of the first to reopen bringing in a flood of yacht owners and well-heeled travelers enjoying luxury yacht charter vacations in the dazzling waters of the Bahamas. This is the first time in 30 years that the Bahamas had welcomed more yachts than their counterparts, the Caribbean.
However, due to poor regulation and a lack of priority over the yachting industry, the Bahamas were unable to benefit from this.
Having analyzed the yachting industry the following year it was apparent that yachts were now going back to Antigua and the Caribbean. In order for them to keep earning from this business, the government decided to take immediate action leading them to make the tax announcement, a decision that they thought to be the best.
If you are considering a yacht charter vacation in the Bahamas, there is a high chance that the 10% VAT will be paid by guests. Some people fear that the new taxation will push clients into other Caribbean countries that still impose little to no tax.
However, the Bahamas is still one of the most beautiful cruising grounds in the world, offering unparalleled escapism and relaxation and this is one of the many reasons the country will still continue to draw in visitors. From Nassau to the Grand Bahama Island, those on a luxury yacht charter across these glittering waters can expect many palm-fringed white beaches, historic villages and secluded island hotspots.
If you are considering a yacht charter vacation in the Bahamas, speak to your yacht charter broker for advice, guidance and everything you need to know about tax and yacht charter.