Superyacht crews exempt from NZ tax

Superyachts come to the New Zealand for the America's Cup racing

LONDON, England (CNN) -- Superyacht crewmembers visiting New Zealand for the America's Cup will be exempt from paying income tax, the New Zealand government has announced.

In a bid to hold onto refit work and tourism connected to the yachts, the government said the tax change would be made effective immediately.

The decision was made after the marine industry expressed concern that millions of dollars of income would be lost if the yachts did not stay in New Zealand for refits. It was feared the yachts could go to other countries for their refits, such as Australia.

The minister for the America's Cup, Trevor Mallard, said the decision was made "on a sound economic basis."

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He said there was evidence that superyachts were spending less time in New Zealand due to the tax laws, causing the marine industry to miss out on refits that could last months.

"To remove the barrier, the government has decided to change the law so that superyacht crewmembers are exempt from New Zealand income tax if the yacht is in New Zealand for private and domestic purposes."

While missing out on the income tax from crewmembers, the New Zealand economy would still benefit from any refit or maintenance work undertaken on a yacht that would otherwise have gone elsewhere, plus any spending by the crews.

The government will continue to gain from income tax on the providers of refits, tax on the wages of refit workers and any goods and services tax on purchases by the crews.

About 75 superyachts are expected in New Zealand to participate in the four-day Millennium Cup in February 2003, shortly before the start of the America's Cup when cup holders Team New Zealand defend their position.

Mallard described New Zealand boat builders and refitters as among the best in the world.

"They have a reputation for quality and innovation that is seeing New Zealand become the preferred South Pacific destination for superyachts needing maintenance and refitting."

The tax change is currently included in a tax bill before Parliament. Once approved, it will be effective immediately.