Marine trade group touts sales tax break on yacht repairs

A Florida law that caps the sales tax paid on yacht repairs to $60,000 could float millions of dollars of new business into South Florida boatyards, industry specialists said Friday.

The regulation took effect in July, limiting Florida’s sales tax to the first $1 million of a refit, according to Marine Industries Association of South Florida.

“It’s created a huge opportunity for the marine industry to capture more business,” said Phil Purcell, executive director of the Fort Lauderdale-based marine trade group.

Purcell’s group is trying to spread the word about the tax break to yacht owners, captains and others involved in deciding where a vessel goes for repairs or upgrades.

“It’s an ongoing effort,” said Purcell. “We’re going to continually hit the road talking about it.”

Purcell was moderating a panel discussion during the Refit International Exhibition Conference, a first-time event running at the Greater Fort Lauderdale/Broward County Convention Center.

The tax cap “provides some competitive advantage against states that don’t have similar tax incentives,” said panelist James Brewer, director of business development for Derecktor Shipyards in Dania Beach. “There’s also a perception among owners that finally government is trying to assist business instead of being an impediment.”

Derecktor is among the local boatyards likely to gain from the new law, along with others like Rybovich, Dania Cut Superyacht Repair and Rolly Marine Services.

South Florida as a region, especially Fort Lauderdale, has been a magnet for yacht repair and refit because it has the largest concentration of marine related businesses than anywhere in the world, Brewer said.

“There are other refit hubs globally, but there’s nothing quite like Fort Lauderdale because of the density of service and density of providers located here,” Brewer said. “So a combination of location, of weather, of services available makes this an extremely popular place to bring a yacht.”

Putting the new law into practice, however, has its challenges.

For example, its initial interpretation had to be broadened to account for scenarios such as multiple invoices and contracts rather than a single repair job, said Karen Lake, a tax specialist with Berkowitz Pollack Brant in Fort Lauderdale.

“A refit in itself or remodeling can take years,” she said.

Lake has been working closely with the state’s revenue department on how the tax cap would be implemented given the complexity of marine refits.

To stay compliant, businesses need to carefully manage their supplier contracts and track when taxes are paid and when the cap is met, Lake advised.

Panelist Parker Stockdale, who is overseeing the building of a 110-foot mega-yacht in South Florida, said more discussions like Friday’s are needed so that businesses fully understand how to reap the tax cap benefit.

“Everybody wants to take advantage of it, but they want to do it responsibly and legally,” said Stockdale, owner’s representative for the new $20 million-plus yacht.

The new-build dubbed “Project Anodyne” is being built at Derecktor, but some parts are being assembled at sites across South Florida, Stockdale said. It will likely benefit from the tax break.

The refit sales tax incentive was modeled partly after a law passed in 2010 that capped Florida’s tax on boat sales at $18,000, or the first $300,000 of the price.

That cap generated about $13.46 million in direct sales tax revenue for the state in fiscal 2011, compared with a $1.5 million first-year loss that a state legislative staff report had forecast, according to a study by Thomas J. Murray and Associates Inc.

For information on the refit tax cap, go to miasf.org or call 954-524-2733

asatchell@tribpub.com, or Twitter@TheSatchreport


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