Last week, nine members of IYBA visited Washington DC to gain support for a bill (HR #2369) that has been re-submitted in Congress to overturn the longstanding restrictions on foreign-flagged yachts being offered for sale to US residents while in US waters.
Under current law, it is forbidden for a foreign-flagged vessel to be offered for sale to US residents while in US waters without first importing the yacht and paying duty prior to the yacht going on the market. This 108-year old law has not been revised since the Tariff Act of 1930.
The original bill (HR #4065) was submitted in 2015 by Democrat Lois Frankel of Florida, but with some of its supporters not re-elected during last year’s elections, Frankel was required to resubmit the bill (HR #2369) on 5 May 2017.
Since its reintroduction, and as expected, there has been a flurry of bi-partisan support from members of Congress, Republicans and Democrats alike, with eight co-sponsors – and original co-sponsors – signing on the same day.
“We now have 15 co-sponsors in the House of Representatives so we have a lot of positive momentum,” Cynthia Sailor, executive director of IYBA, told SuperyachtNews. “We expect a Senate version to be introduced very shortly and anticipate it will be included within the tax reform bills currently being worked on in Washington DC.”
“It is estimated that there are about $2 billion of boats currently afloat that cannot be offered for sale to US residents,” says Bob Denison, president of Denison Yacht Sales and IYBA board member. “Many of these boats decide to stay offshore in the Caribbean, or even the Mediterranean, as it’s only there that they can be legally viewed and sold to US residents.”
IYBA is not requesting a tax cut, just a more logical timing for the collection of the duty. The bill would defer the import duty of 1.5 per cent to the time of the closing, rather than at the time of listing the boat for sale. Denison exemplifies: “Could you imagine having to pay taxes when you list your house for sale, rather than at the closing?
“The economic impact of these boats in local US ports while they are listed for sale is substantial. Boats big and small spend about 10 per cent of their value every year on maintenance, dockage, fuel, supplies, groceries, etc. while they are in a port,” continues Denison. “Encouraging them to stay in US ports to get their service work done, or to be offered for sale, would only have a positive impact for our local communities.”
Staley Weidman of The Catamaran Company and IYBA board member, added: “We have determined from the Marine Industries Association of South Florida that, on average, a new yacht owner will spend up to 13 per cent of the value of the boat in the first year on upgrades and refit items.
“We support having these jobs and works completed in the US. The average marine industry worker earns a 28 per cent higher wage working in the marine industry than similar jobs in other industries, like construction, for example.”
As the US yachting industry has grown in size, this law has increasingly restricted business development and been a thorn in the side for brokers, management companies, marinas and service providers alike. A repeal would offer the US as the key region for vessel sales regardless of the flag, inject a sizeable economic contribution and consolidate its position as the world’s largest yachting market.
Pictured (left to right): Staley Weidman, Lois Frankel and Paul Flannery.
If you've found this story to be 'a report worth reading', and you would like to enjoy access to even more articles, insight and information from The Superyacht Group, then you may well be interested in our VIP print subscription offer. We are inviting industry VIPs to register for a complimentary subscription to our print portfolio, which includes the most insightful information on the state of the superyacht market. To see if you qualify for our VIP subscription package, please click here to fill in an application form