Crews on superyachts visiting New Zealand are to be exempt from paying income tax here, the Government said today.
The exemption will be effective immediately, America's Cup Minister Trevor Mallard announced.
Cabinet had agreed to the changes, he said.
Eager tax collectors were in April blamed for driving America's Cup spectator craft
away from New Zealand for expensive refits in Australia.
The marine industry told the Government it feared that would cost the sector about $100 million .
Mr Mallard said the decision had been made on a "sound economic basis".
The Government had a choice between keeping the tax law the same and having the yachts leave the country for refitting, or change the laws to keep the yachts here.
Superyacht crew would be exempt from New Zealand income tax if their yachts were here for private and domestic purposes, he said.
Details of required legislation would be worked out with the industry, and included in one of the taxation bills before Parliament.
One Auckland marine refitter -- Babcock New Zealand -- last month confirmed its Devonport yard had lost a $1 million superyacht contract to Australia because of more lenient income taxes there.
Boating Industries Association chief executive Peter Busfield said at that time he was unaware of any other countries whose tax collectors were pursuing visiting crews.
Owners of other superyachts had indicated they would come here for refits before the Louis Vuitton series, which starts in October to pick a challenger for the America's Cup contest next February, only if tax collectors were kept at bay.
Tax collectors did not pursue foreign crews when New Zealand defended the America's Cup in 2000, but the Inland Revenue Department set up a special project team to advise on tax liabilities for the next event.
The department said in January it stood to gain "several million" dollars in income taxes.
Superyachts in Auckland for the 2000 America's Cup are estimated to have generated $180 million in business.
Foreign vessels have to be in New Zealand for 183 days before their crews are liable for tax.
