Bloomberg News

Brazil’s Yacht Boom Faces Tax Crackdown as Millionaires Multiply

October 23, 2012

Brazil’s Yacht Boom Faces Tax Crackdown as Millionaires Multiply

Among the companies seeking to profit from the boom is Italian mega-yacht builder Ferretti S.p.A., which last year opened a factory near Sao Paulo with the capacity to produce 120 cabin cruisers per year, some measuring as long as 83 feet. Photograph: Ferretti S.p.A.

(Corrects numbers of boats built in second paragraph of story published Oct. 22.)

Brazil’s government is cracking down on luxury boat owners who allegedly evaded taxes and customs duties, as rising incomes in the world’s second-largest emerging market drive demand for high-priced leisure goods.

The federal government’s tax authority yesterday instructed a team of 30 employees, supported by boats and helicopters, to inspect foreign-made yachts and other “suspect” vessels, some of which may be used to launder money, the agency said in a statement.

Brazil’s warm climate, long coastline and growing economy have enticed both shipbuilders and boating enthusiasts to its shores in recent years. Production of fiberglass recreational boats grew to 4,700 in 2010 from 3,500 in 2006, according to the national boat builders’ association. The value of motorboat, sailboat and jet ski imports ballooned to $133 million from $13 million in the same period, the group said.

Among the companies seeking to profit from the boom is Italian mega-yacht builder Ferretti S.p.A., which last year opened a factory near Sao Paulo with the capacity to produce 120 cabin cruisers per year, some measuring as long as 83 feet. About 30 percent of Ferretti’s sales globally come from Brazil, compared with less than 5 percent in 2007, GQ Brasil magazine reported in April, citing an interview with Marcio Christiansen, head of the company’s local operations.

The tax agency can seize boats found to be in violation of tax and customs rules until further information is forthcoming. Alexandre Miguel da Silva, the chief customs inspector for the Itaguai port, will hold a press conference at 3 p.m. local time to report preliminary figures from the first day of the ongoing operation.

In June, the tax agency announced plans to seize 12 luxury aircrafts, with a combined value of more than 560 million reais ($276 million), for evading an estimated 192 million reais in taxes.

The number of Brazilian millionaires jumped 6.2 percent to 165,000 last year, making the country the fastest-growing major market for high net worth individuals, according to the 2012 World Wealth Report by Capgemini SA and RBC Wealth Management.

To contact the reporter on this story: David Biller in Boston at dbiller1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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