It may come as no surprise to you that wealthy individuals and corporations will go to great lengths to avoid paying taxes or following regulations. So what happens when they spend half a billion dollars on a megayacht? Paying taxes on the purchase is too burdensome, especially when they can evade it by flying another country’s flag. It’s just a flag, right? Who cares? Their lifestyle is more important than taxes or safety inspections.
Many boat owners, including major cruise companies, choose to register their vessels in countries they never visit. This is a tactic to avoid taxes, environmental laws, safety regulations, and higher wages for crew members. For example, if you’re registered in The Cayman Islands but sail from Miami or San Diego, you don’t have to comply with U.S. regulations, pay U.S. taxes, or undergo U.S. inspections.
According to the ultimate yacht registration guide, a non-commercial pleasure yacht registered in the Cayman Islands “benefits from all of the privileges of the British flag, while simultaneously having the tax-free and confidentiality perks of the Cayman Islands.” It also receives protection from the British Royal Navy in the case of piracy.
Like the Cayman Islands, Panama is a popular choice for billionaires looking to hide their wealth and register their yachts. If you’re not Panamanian, it costs a flat fee of just $1500 to register your ship in Panama. There are no taxes paid to Panama, and the country doesn’t require a dry dock inspection, making the process quick and inexpensive.