By Marion Ali
Stakeholders in the cruise tourism sector, particularly those in the business of “live-aboard” charters, and those responsible for policy and the overall managing of the industry, met this week to hammer out what the stakeholders consider to be tax discrepancies in the business.
The meeting was the result of a complaint made a few years ago to the Ministry of Finance and the Belize Tourism Board (BTB) by a prominent hotelier in the south of the country. He felt that the taxes/fees imposed on proprietors of hotels are burdensome and unfair, when compared with those of “live-aboard” catamarans.
The hotelier mentioned one company in particular, and asked the two government entities to look into the matter, with a view to regularizing the rates. The Finance Ministry launched an investigation at the time, but nothing materialised.
The concern is one that more hoteliers share today. It has to do with a tax regime that the Ministry and the BTB will have to revisit to streamline tourists’ occupancy – on land and sea.
In the Caribbean, where live-aboard charters are common, proprietors of catamarans cleverly dock in waters where they are not subject to the country’s Tourism Accommodation Act. This law requires these investors to pay a tax for the business they run – allow tourists to live aboard the boats. It also governs how the tax is administered.
In Belize, the regime has been in place since the early 90’s, developed between the BTB and “live-aboard” cruise operators. It requires a $10 US fee for each occupancy per week, paid to the Belize Tourism Board.
Originally, the fee was $15 US per person per week, with an understanding that of that amount, $10 US was to go to the BTB and $5 US was to go towards a mooring/buoy project for the protection of the reef. The fee eventually fell to $10 US per person per week because the bouy project never materialized.
But the agreement between the BTB and the “live-aboard” proprietors was never passed into law through the House of Representatives or a Statutory Instrument (SI), and a few months ago, the General Sales Tax Department (GST) informed the proprietors of these “live-aboard” catamarans that the agreement for the lower tax was illegal, and that it would institute its 12.5% tax on the taxable remainder, after the BTB portions are paid.
The notification did not end there, however, because the GST advised that the taxes would include penalties and interest retroactive to the past six years – the full extent for which the law allows.
This has caused great concern among “live-aboard” charters, some of whose outstanding GST fees would exceed $2 million, for larger crafts.
Some of these investors have threatened to leave the industry on these grounds, coupled with problems they are reported to be experiencing with the Belize Port Authority, over occupational safety implements; and also with the Customs Department, over “changing tariffs”.
If the GST Department is successful in its quest to collect from these “live-aboard” investors, rough estimates indicate that the government stands to gain between $8 to $10 million in revenues.
If these investors leave port, however, their departure would affect employment, taxes currently being collected, as well as loss of revenue to hotels where the offshore guests stay prior to sailing or leaving the country.