As work continues on enhancing The Bahamas’ registry of private aircraft, the financial services sector is seeking out ways to better position the country to attract more than an estimated $20 million in government revenue.
Michael Allen, partner at Higgs and Johnson and also chair of the firm’s aviation practice group, said enhancing the registry is critical not only for the immediate revenue impact, but the economic spin-off effect.
“Obviously, we look beyond the local position, we’re really looking at participating in a global event where we can attract everything from corporate jet-type usage to aircraft onto our registry. And there are a number of spin-offs that we believe will come from that,” Allen said in an International Investment Special Report on the Bahamas Financial Services Board.
“So, it’s a direct impact on the industry but also an indirect impact as we find persons migrating to the jurisdiction to take advantage of the aircraft registry, bringing with them enhanced business and then there’s a ripple effect throughout the economy.”
Much of the industry’s focus, Allen said, would be on attracting clientele that are already taking advantage of The Bahamas’ financial services industry.
“One of the things that we have found is that we have a number of fairly well-placed, high-net-worth individuals that have their own aircraft. Whereas they may select The Bahamas as a place for a second home, they may actually have some sort of economic interest that they are operating from within the jurisdiction all legitimately, but their aircraft, notwithstanding that they are here with them in the jurisdiction, are registered somewhere else,” he said.
“So, there’s a revenue stream that we’re not actually accessing because we do need to do a few things with our registry, hence the focus on enhancing the registry. So, the intent really is simply to service a clientele that is already in the jurisdiction.”
The financial services sector has long advocated for an improved private aircraft registry, with an anticipated end of year timeline for measured improvements.
While The Bahamas already maintains a successful rating with international organizations which grade jurisdictions from an aviation perspective, Allen said the aim is to capitalize on some advantages the jurisdiction already has as an international financial center.
“We have a very strong financial services sector, we are known as a jurisdiction that is very easy going dispositionally, we are a very friendly jurisdiction, we have a very strong tourism industry and we also have a very strong shipping industry. In effect what we’re trying to do is capitalize on those factors, in addition to things like political stability that our jurisdiction affords, our proximity to the U.S. and in many ways we see ourselves as a potential hub for activity moving from the south in the Caribbean and South Central America up through the Americas and on to Europe,” he said.
“So there are a number of reasons why we think there are advantages we have over other jurisdictions and obviously we’re trying to boost the economy and build the financial services sector. We think that aviation has a significant potential.”
Allen said it’s that aviation factor that would provide an additional dimension.
“The Bahamas because of its tax environment and also the high-profile level of the financial services industry with the international business companies, the private wealth management structures and the trusts of related entities, we’re in a position to facilitate activity, which actually enhances the products that are available and the arenas in which the financial services sector can involve itself,” he said.
“We’ve had multi-jurisdictional structures where we have used international business companies for the purposes of holding aircraft and also leasing aircraft. We also have everything that’s available to put in place the security aspect of that. So there are a number of components that make a very successful multi-jurisdictional structure which focuses on acquiring and leasing aircraft.”
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