EY 2013 Shipping Industry Almanac

Shipping Industry
Almanac
2013
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Table of contents
Introduction i
Australia 1
Barbados 23
Belgium 29
Brazil 45
Canada 61
China 77
Curaao 89
Cyprus 95
Denmark 101
Dominican Republic 109
Egypt 121
Estonia 125
Finland 133
France 139
Cermany 1^9
Creece 159
Honq Konq 169
India 177
Indonesia 191
Ireland 199
lsle ol Man 209
Italy 219
Japan 227
Luxembourq 233
Malaysia 2^7
MalLa 255
Mexico 265
The Netherlands 273
New Zealand 285
Norway 295
Oman 305
Panama 315
Philippines 331
Portugal 353
Qatar 359
Russia 373
Singapore 389
South Africa 399
Spain 407
Sri Lanka ^15
Sweden 421
Taiwan 427
Thailand 435
Turkey 441
UniLed Arab LmiraLes ^51
UniLed Kinqdom ^59
UniLed SLaLes ol America ^69
Ernst & Young shipping industry network 475
Shipping Industry Almanac 2013
The Shipping Industry Almanac is published annually by Ernst & Youngs
shipping industry network, which comprises more than 100 shipping
execuLives lrom LrnsL & Younq member lrms in over 50 counLries
around the globe.
The Shipping Industry Almanac has been keeping our clients and friends
inlormed and updaLed lor Lhe lasL 16 years since our lrsL ediLion in 1998. lL
provides a valuable overview of the current investment climate for shipping
companies in 47 countries worldwide.
A directory of Ernst & Young shipping professionals across our four service lines
of assurance, tax, transactions and advisory is included, and highlights our in-
depth local knowledge and our global reach.
The information published in this Almanac was researched and compiled
by Ernst & Young professionals in the countries concerned. Each country
chapter covers the following subjects: tax, human capital, corporate structure,
grants and incentives as well as general information, such as registration
requirements.
The content is based on information current as of 1 January 2013, unless
otherwise indicated.
For more information, please visit us on ey.com or contact us at
eyshippin.rcupey.ccm cr caII ycur IccaI Ernst & Ycun cfhce.
This publication contains information in summary form and is therefore
intended for general guidance only. It is not intended to be a substitute for
detailed research or the exercise of professional judgment. Neither
LYCM LimiLed nor any oLher member ol Lhe qlobal LrnsL & Younq
organization can accept any responsibility for loss occasioned to any
person acting or refraining from action as a result of any material in this
publicaLion. On any specilc maLLer, relerence should be made Lo Lhe
appropriate advisor.
Introduction
i
Australia
1. Tax
1.1 Income tax treatment of shipping companies
1.1.1 Australian domestic tax law
Shipping companies are subject to the general tax laws of Australia, including income tax, goods and services
Lax, sLamp duLy and employmenLrelaLed Laxes {includinq lrinqe benelLs Lax, payroll Lax and superannuaLion,
i.e., compulsory pension).
Subject to the following comments, shipping companies operating in Australia generally pay tax at the rate of
30% of taxable income. Australian tax resident companies include worldwide income in their taxable income.
Non-Australian tax resident companies include only income derived from sources in Australia. The source
ol specilc income depends on Lhe individual lacLs and circumsLances ol each case and relies on a ranqe
of factors, including the place of execution of contracts, where the services are performed, and where the
remuneration is payable. Where a non-Australian resident shipping company operates by way of leasing
equipmenL {i.e., a bareboaL charLer) lor use in AusLralian waLers, specilc rules apply Lo impose AusLralian
royalty withholding tax on the charter payments at the non-treaty rate of 30% on gross. The imposition of
such royalty withholding tax is subject to the overriding application of Australias double tax agreements
(DTAs). For the sake of completeness, true time charter payments (i.e., payments for the provision of
services) are not subject to such royalty withholding tax.
A specilc reqime, commonly relerred Lo as Lhe "lreiqhL Lax reqime," applies Lo enLiLies whose principal place
of business is outside Australia and who own or charter a ship to carry passengers, goods, livestock or mail
shipped in Australia. These entities will be taxed at the current corporate tax rate of 30% on 5% of the
amount paid or payable to them in respect of such carriage. In this regard, 5% of charter fees is effectively
deemed to be that entitys Australian taxable income, with no offsetting deductions allowed. This means
ellecLively a lnal Lax ol 1.57 is imposed on qross lreiqhL income.
Under Lhis reqime, "shipped in AusLralia" means LhaL qoods or passenqers are placed on board Lhe ship in
AusLralia, reqardless ol Lheir lnal desLinaLion, i.e., Lhe reqime applies Lo AusLralian coasLal Lrade as well as
exports from Australia.
ln March 2006, Lhe AusLralian 1axaLion Ollce {A1O) issued Lhe lnalized 1axaLion Rulinq, 1R 2006/1, which
considered the type of payments that form the basis for calculating the deemed Australian taxable income
for the freight tax regime. In the ruling, the ATO considered whether the following types of payments were
subject to the freight tax regime:
AmounLs paid or payable by way ol demurraqe
Any dispaLch moneys paid by a shipowner or charLerer
Cleaninq charqes
DeadlreiqhL paymenLs
1.1.2 Potential effect of Australias double tax agreements
Australias DTAs may impact the Australian tax treatment of shipping companies, including those subject
Lo Lhe specilc lreiqhL Lax reqime. AusLralia has neqoLiaLed D1As wiLh a ranqe ol counLries, includinq Lhe
following:
Argentina, Austria, Belgium, Canada, Chile, China, Czech Republic, Denmark, Fiji, Finland, France,
Germany, Hungary, India, Indonesia, Ireland, Italy, Japan, Kiribati, Malaysia, Malta, Mexico, Netherlands,
New Zealand, Norway, Papua New Guinea, Philippines, Poland, Romania, Russian Federation, Singapore,
Slovakia, South Africa, South Korea (ROK), Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand,
Timor-Leste*, Turkey, United Kingdom, United States of America, Vietnam.
* The treaty between Australia and Timor-Leste (formerly East Timor), the Timor Sea Treaty, is an
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agreement which creates the Joint Petroleum Development Area (JPDA) and dictates how tax revenues,
etc., from petroleum resources within the JPDA are to be shared. The treaty grants taxing rights over 90%
of the income from petroleum resources derived from working in the JPDA to Timor-Leste and 10% to
Australia.
Under Lhe shippinq and air LransporL prolLs arLicles ol AusLralia's D1As, prolLs lrom Lhe operaLion ol ships
are qenerally only Laxable in Lhe counLry ol residence unless Lhe prolLs relaLe Lo operaLions "conlned solely
Lo places" in Lhe oLher counLry. Unlike Lhe business prolLs arLicle {reler below), such Laxinq riqhLs {i.e., over
coastal shipping) will be granted to Australia regardless of the existence of a permanent establishment (PE) for
the non-Australian resident company.
In this regard, it must be noted that it is the view of the ATO that voyages to nowhere, embarking and
disembarkinq in AusLralia, are considered Lo be "conlned solely Lo places in AusLralia." ln deLermininq
residence, tiebreaker provisions apply under most (but not all) DTAs, deeming residence to be the place of
effective management.
ln addiLion, as a resulL ol Lhe broad inLerpreLaLion ol Lhe 2005 decision in Lhe McDermoLL case {see below),
each of Australias DTAs needs to be carefully considered to determine whether the use of equipment (e.g.,
ships) in Australia may cause a PE to exist.
1his has been reinlorced by recenL D1As {e.q., Finland, Japan, Norway, Lhe UK, Lhe US) LhaL require Lhe
lessor Lo "mainLain" or "operaLe" Lhe subsLanLial equipmenL in AusLralia in order lor a PL Lo arise. SiqnilcanL
A1O quidance now exisLs on Lhese issues in Lhe lorm ol public rulinqs: 1axaLion Rulinq 1R 2007/10 and 1R
2007/11 {reler below).
1.1.3 Recent ATO activity impacting shipping companies
Application of the decision in the McDermott case
The ATO continues to focus attention on the shipping industry. During 2005, the Full Federal Court (the
CourL) handed down a decision in Lhe McDermoLL case. 1his dealL wiLh a Sinqaporean company which
bareboat chartered (i.e., an equipment lease) a barge to a related Australian company for use in Australia.
The Court determined that while the charter payments constituted a royalty for Australian tax purposes, the
Australian company was not required to withhold royalty tax. The Court found that the use of the barge in
AusLralia resulLed in Lhe Sinqaporean company havinq a PL lor Lhe purposes ol Lhe AusLralia/Sinqapore D1A.
Some current Australian DTAs (including the Singapore DTA) deem a foreign resident to have a PE and to
carry on business through that PE where substantial equipment is used in Australia by, for or under contract
with the foreign resident. Where such a PE exists, Australias DTAs generally prevent Australia from imposing
royalty withholding tax (as the income of the PE is subject to 30% Australian tax on a net assessment basis).
In this regard, it is worth noting that Australias current approach to DTAs is to exclude equipment leasing
lrom Lhe delniLion ol royalLy such LhaL wiLhholdinq Lax will noL be levied. 1his approach is relecLed in Lhe
US, UK and Norweqian D1As, amonq oLhers. 1he CourL also commenLed LhaL Lhe shippinq arLicle was noL
applicable, as the barge was not a ship for its purposes.
Public rulings on vessel leasing structures
Over the last decade, the ATO has released a number of rulings relating to the treatment of shipping and
vessel leasing operations, setting out its interpretation of how both domestic Australian tax law and DTAs
treat such arrangements.
1hese rulinqs include 1R 2003/2, 1R 2006/1, 1R 2007/10, 1R 2007/11, 1R 2007/31 and 1R 2008/8.
As a result of those rulings, there is now greater clarity around the approach the ATO is likely to take in
considering the Australian tax implications of vessel leasing arrangements as well as the use of ships for
transport and non-transport operations.
A central theme in these rulings is that the ATO will determine the implications of an arrangement by its
subsLance raLher Lhan iLs leqal lorm. For example, il a BalLic and lnLernaLional MariLime Council {BlMCO)
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Shipping Industry Almanac 2013 3
time charter arrangement is in substance a true bareboat charter (i.e., a contract for the lease of equipment,
albeit with, for example, supernumerary crew), the ATO is likely to characterize the payments as a royalty.
As such, care needs to be exercised in relation to the tax implications where payments (e.g., royalties,
payments for services) are made to a non-Australian resident relating to a vessel located in Australian waters.
The tax implications for the parties will depend on a number of circumstances, including the substance of
the arrangement, the nature of the activity undertaken, the degree of activity required and whether any of
Lhe parLies have an AusLralian PL. ln relaLion Lo lnance, lease or hire purchase arranqemenLs, Lhe loreiqn
residenL lessor/provider {sub|ecL Lo oLher lacLs and circumsLances) should qenerally noL have a PL in
Australia, as such arrangements are viewed as a sale from an Australian tax perspective.
As a resulL ol Lhe A1O's inLerpreLaLion in 1R 2008/8, Lhere is Lhe poLenLial lor nonLransporL acLiviLies aboard
a ship in Australian waters to be caught in the Australian tax net, despite not giving rise to a PE for the
purpose of the treaty.
Summary of general characterization of charter party contracts
* Particular DTAs may affect the liability for royalty withholding tax, particularly if the use of the equipment
results in the non-resident having a PE.
** Particular DTAs (e.g., UK, USA, Norway) do not treat payments under equipment leases as royalties.
Focus on international transactions
The ATO has continued to take an increased interest in international tax transactions. In particular, the
A1O has increased iLs scruLiny ol corporaLe LransacLions ol larqe businesses. Specilc areas ol inLeresL
have included merqers, acquisiLions and divesLmenLs; classilcaLion ol insLrumenLs inLo debL/equiLy; capiLal
raisings; international structures used; debt funding; and the interaction of the thin capitalization and transfer
pricing regimes.
1he A1O has released various discussion papers and rulinqs over Lhe lasL lve years relaLinq Lo inLernaLional
LransacLions, business resLrucLurinq, and inLraqroup lnancinq and loans. Amonq oLher Lhinqs, Lhese provide
the ATOs position regarding the application of the transfer pricing, thin capitalization and general anti-
avoidance provisions, as well as domestic Australian tax law and relevant compliance obligations.
The rulings released include:
1R 2010/7 inLeracLion ol Lhe Lhin capiLalizaLion and Lransler pricinq provisions
1R 2011/1 Lransler pricinq impacL ol crossborder resLrucLures by businesses
1R 2010/7 conLains Lhe A1O's observaLions on appropriaLe meLhods Lo be used Lo deLermine Lhe arm's
length consideration for cross-border intra-group debt arrangements under Australias transfer pricing
provisions. These methods apply even where such arrangements comply with the safe harbor thresholds
under the thin capitalization rules.
The ruling is retrospective in its application. Furthermore, the ruling provides that the transfer pricing rules
are paramount; therefore, the thin capitalization provisions do not prevent the transfer pricing provisions
from operating to price intra-group debt at arms length.
Substance of arrangement
Character
of income
Royalty
withholding tax*
Equipment lease (e.g., a true demise or
bareboat charter or dry lease) **
Royalty income

Provision of service (e.g., a true time charter
party or wet lease)
Fee for services N/A
A voyage charter party Fee for services N/A
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1R 2011/1 considers crossborder business resLrucLures ol AusLralian acLiviLies and Lhe Lransler pricinq
implications. The ruling also sets out the ATOs views as to the need for:
A commercial raLionale lor Lhe resLrucLurinq lrom an AusLralian benelL perspecLive
AppropriaLe pricinq ol luncLions or asseLs movinq overseas
lLs power Lo recharacLerize a resLrucLurinq Lo relecL arm's lenqLh behavior
Advance pricinq arranqemenLs have also been revised Lhrouqh PracLice SLaLemenL Law AdminisLraLion {PS LA)
2011/1 as released on 17 March 2011. 1his resLaLes Lhe A1O's commiLmenL Lo Advance Pricinq AqreemenLs
(APAs) and sets out timelines and processes for such agreements between taxpayers and the ATO.
Changes to the transfer pricing rules
Historically, Australias transfer pricing legislation has been encompassed in Division 13 Income Tax
Assessment Act 1936 (Cth). Division 13 applies to any taxpayer who has supplied or acquired property
under an international agreement, where the Australian Commissioner of Taxation (the Commissioner)
considers that the taxpayer has:
Received consideraLion which was less Lhan Lhe arm's lenqLh consideraLion in respecL ol Lhe supply
NoL received any consideraLion, when an arm's lenqLh parLy would have expecLed such consideraLion
Civen consideraLion LhaL exceeds an arm's lenqLh consideraLion in respecL ol Lhe acquired properLy
1hese provisions were inLended Lo counLer "nonarm's lenqLh Lransler pricinq" or "inLernaLional prolL
shilLinq" by enablinq Lhe Commissioner Lo ad|usL "prolLs by relerence Lo Lhe condiLions which would have
existed between independent parties under comparable circumstances. . However, during recent transfer
pricinq courL cases in AusLralia, Lhe abiliLy ol Lhe A1O Lo apply prolLbased Lransler pricinq meLhods and
rely upon Lhe OrqanisaLion lor Lconomic CooperaLion and DevelopmenL {OLCD) Cuidelines was called inLo
quesLion, since Lhe wordinq ol Division 13 relers specilcally Lo "arm's lenqLh consideraLion" and Lhe OLCD
Cuidelines are noL specilcally incorporaLed inLo AusLralian law.
In particular, the ATO has historically relied upon the Associated Enterprises articles of Australias double
LaxaLion LreaLies as a separaLe power Lo impose Lransler pricinq ad|usLmenLs/apply prolLbased Lransler pricinq
methods and it became apparent during the course of these court cases that the legal ability of the ATO to do
this may be viewed as questionable by the Australian courts.
As a result of the recent activity in the courts and the associated concerns with the appropriate application
of Division 13, which became apparent as a result of the various proceedings, a major reform of Australias
transfer pricing legislation is currently under way. During August 2012, a bill was introduced into the
Australian parliament which included new proposed transfer pricing legislation in the form of Subdivision
815A 1reaLyequivalenL cross border Lransler pricinq rules." 1his bill has now been qiven Royal AssenL and
is hence now effective.
The key aims of the legislative reforms are:
1o ensure LhaL Lhe A1O is empowered Lo apply prolLbased Lransler pricinq meLhodoloqies, where
deemed appropriate
1o aliqn AusLralia's domesLic leqislaLion around Lransler pricinq wiLh OLCD quidelines and quidance {Lhe
OLCD Model 1ax ConvenLion and OLCD 1ransler Pricinq Cuidelines are now specilcally relerred Lo as
being relevant in interpreting the arms length principle
1o lurLher clarily and leqislaLe Lhe A1O posiLion in relaLion Lo lnancinq arranqemenLs and Lhe inLeracLion
ol Lhe Lhin capiLalizaLion/Lransler pricinq rules.
During November 2012, a second exposure draft was released (containing Subdivisions 815-B to 815-E),
which, if (as expected) enacted, will introduce a full self-assessment regime in Australia for transfer pricing
and implement similar rules to those outlined above for all international related party transactions. The new
dralL leqislaLion also makes relerence Lo Lhe concepL ol a "Lransler pricinq benelL" and requires Laxpayers
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Taxation Ruling TR 94/14 para 10
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Taxation Ruling TR 94/14 para 10
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OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations
to consider whether the actual conditions with related parties are consistent with what the arms length
conditions would have been.
The exposure draft released in November 2012 did not introduce mandatory contemporaneous transfer pricing
documentation requirements; however, it does state that where a taxpayer has not prepared contemporaneous
transfer pricing documentation, it will be treated as not having a reasonably arguable position in relation to their
transfer pricing arrangements. Where no reasonably arguable position is accepted by the ATO in any future
review, higher penalties are likely to apply in the event of any adjustments to taxable income.
The new draft legislation contained in the second exposure draft will apply prospectively from the date of
Royal Assent being granted (which is expected to be in early 2013). At this time, Subdivision 815-A and
Division 13 will be repealed and replaced by Subdivisions 815-B to 815-E (applicable to all international
related party transactions in treaty and non-treaty countries).
One of the key impacts of the new legislation is that it effectively reinforces the power of the ATO to
reconstruct a transaction between related parties, on the basis that independent parties dealing at arms
length would not have entered into the arrangements which actually exist between two related parties. In
this case, the ATO may seek to hypothesize an arms length arrangement and then assess what a commercial
outcome from those arrangements would be.
International dealings schedule
The ATO has introduced a new schedule, the International Dealings Schedule (IDS), which replaces
Schedule 25A and the thin capitalization schedule for 2012 income tax returns, including early balancers.
The IDS is mandatory where the aggregate amount of transactions or dealings with international related
parties, including the value of property transferred or the balance outstanding on any loans, is greater than
A$2 million or the thin capitalization provisions apply.
The IDS requires a greater level of detail in many of the disclosures compared to Schedule 25A. The ATO has
recognized that taxpayers might not be able to fully complete the schedule and has stated that taxpayers
should approach the 2012 IDS on a best efforts basis. However, the ATO does expect taxpayers to be in a
position to be fully compliant for the 2013 IDS and onward.
Reportable tax position schedule
The ATO undertook a pilot program for the 2012 income year that required some taxpayers to disclose
whether they have a material reportable tax position (RTP). A RTP is one or more of the following:
A maLerial posiLion LhaL is abouL as likely Lo be correcL as incorrecL or less likely Lo be correcL Lhan
incorrect, i.e., where there is 50% or less likelihood of the position being upheld by a court
A maLerial posiLion in respecL ol which uncerLainLy abouL Laxes payable or recoverable is recoqnized and/
or disclosed in Lhe Laxpayer's or a relaLed parLy's lnancial sLaLemenLs
A Laxpayer Lriqqers a capiLal qains Lax evenL durinq Lhe income year, Lhe Laxpayer's capiLal proceeds
exceed A$200 million, and there is a material difference between the accounting and tax consequences
of the event
This pilot applied to selected large and key taxpayers in Australia, other than those with advance compliance
arrangements with the ATO. It is expected that the RTP pilot will be rolled out to a wider population of
taxpayers in 2013.
Other issues
ConsisLenL wiLh recenL OLCD and C20 acLiviLy, Lhe renewed locus ol Lhe A1O has also exLended Lo scruLiny ol
tax haven countries. In this regard, Australia has recently signed tax information exchange agreements with
a ranqe ol counLries, includinq Andorra, Bahrain, Lhe Cook lslands, CosLa Rica, Liberia, LiechLensLein, Macau,
MauriLius and MonLserraL.
1.2 Other Australian income tax considerations
1.2.1 Shipping reforms
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ln 2012, Lhe CovernmenL inLroduced inLo ParliamenL a comprehensive packaqe ol relorm bills Lo Lhe
Australian shipping industry designed to increase the international competitiveness of the Australian shipping
industry and allow Australian shipping companies to compete more effectively on international routes.
The reform package had four key elements:
1ax relorms Lo remove barriers Lo invesLmenL in AusLralian shippinq and Lo losLer Lhe qlobal
competitiveness of the shipping industry
Simpliled LhreeLier licensinq lramework lor parLicipaLion in Lhe coasLal Lrade
LsLablishmenL ol an AusLralian lnLernaLional Shippinq ReqisLer
LsLablishmenL ol a MariLime Worklorce DevelopmenL Forum
The package of bills received Royal Assent on 21 June 2012.
The tax reforms contained in the package aim to address the cost disadvantages faced by Australian ship owners
and encouraqe renewal lor Lhe aqinq AusLralian leeL. 1he Lax relorms were ellecLive lrom 1 July 2012.
The tax reforms provide a tax exemption regime for Australian ship operators for coastal shipping to and
from Australia (but excluding service vessels for offshore oil and gas projects). The exemption delivers an
effective tax rate of zero on the qualifying elements for corporate income tax. Ship operators can qualify for
Lhis exempLion where, amonq oLher requiremenLs, a "shippinq exempL income cerLilcaLe" is obLained lrom
the Department of Infrastructure and Transport.
Broadly, a shippinq exempL income cerLilcaLe will be issued on a vesselbyvessel basis when all ol Lhe
following conditions are met:
a. The operator is an Australian corporation.
b. 1he vessel, lor aL leasL one or more days durinq Lhe cerLilcaLe year:
MeeLs Lhe Lonnaqe requiremenL {broadly has a qross Lonnaqe ol aL leasL 500)
ls reqisLered under AusLralia's Primary or lnLernaLional Shippinq ReqisLers
Does noL lall wiLhin Lhe lisL ol excluded vessels, prevenLinq, amonq oLher ollshore indusLry vessels,
tugboats and vessels used mainly in inland waterways and harbors from accessing the exemption
c. During the income year, the vessel was used, or was available for use, wholly or mainly for business or
commercial activities involving carrying shipping cargos, or shipping passengers on voyages.
d. The operator meets the management requirements.
e. The operator has a training plan that meets the training requirements.
Companies are required Lo apply lor Lhe shippinq exempL income cerLilcaLe on an annual basis and are
required to make a 10-year lock in commitment to being an Australian registered ship and meet Australian
maritime safety conditions, along with minimum training requirements.
1he benelL ol Lhe income Lax exempLion may be reduced in cerLain circumsLances. Any dividends paid by an
Australian company to its immediate parent company out of tax exempt earnings are likely to be unfranked
and sub|ecL Lo up Lo 307 dividend wiLhholdinq Lax {sub|ecL Lo applicable D1A reliel). Clearly, il prolLs are
able to remain within Australia for reinvestment in the business, withholding tax will not apply.
Other tax incentives introduced as part of these reforms include:
Accelerated depreciation
For certain vessels not eligible, or whose owners choose not to claim the above exemption, their effective
lives will be capped at 10 years (rather than the current effective life of 20 years). To access this, it will still
be necessary lor Lhe owner Lo obLain a cerLilcaLe issued by Lhe MinisLer, buL iL is noL required Lo meeL Lhe
more onerous manaqemenL or Lraininq requiremenLs ol Lhe shippinq income exempLion cerLilcaLe criLeria
(i.e., only requirements (a) to (c) above will apply).
Roll-over relief
Similar to the availability of accelerated depreciation, those owners not qualifying for the shipping income
exemption may take advantage of proposed roll-over relief provisions. Broadly, roll-over relief will be available
Lo deler Lhe qain or prolL on Lhe sale ol an old vessel LhaL is replaced by a new vessel wiLhin Lwo years. Where
the gain is higher than the cost of the new vessel, the excess will remain taxable.
Seafarer refundable tax offset
A refundable tax offset (payable to employers) will be introduced for withholdings on payments made
to Australian resident seafarers for overseas voyages, where the seafarer is engaged on a vessel that has
obLained an exempLion cerLilcaLe. Broadly, in order Lo claim Lhe ollseL, Lhe company musL have aL leasL one
individual who qualiles lor Lhe Lax ollseL lor 91 days or more in Lhe income year. AlLhouqh Lhe vessel will
need Lo hold an exempLion cerLilcaLe, iL will noL be necessary lor iL Lo meeL Lhe manaqemenL and Lraininq
requiremenL ol Lhe shippinq income exempLion cerLilcaLe.
Royalty withholding tax exemption
From 1 July 2012, payments made by an Australian company lessee under a bareboat lease to a foreign
lessor may qualify for exemption from Australian royalty withholding tax (of up to 30%) where the vessel:
ls noL an excluded vessel {e.q., ollshore indusLry vessels and inland waLerway or harbor vessels)
MeeLs condiLion {c) ol Lhe income Lax exempLion above
1here is no requiremenL lor Lhe AusLralian residenL company Lo hold eiLher cerLilcaLe in order Lo access Lhe
royalty withholding tax exemption.
1.2.2 Consolidated groups for tax purposes
From 1 July 2002, wholly owned Australian groups may elect to form a consolidated group for income tax
purposes. Cenerally, qroups wiLh a sinqle common AusLralianresidenL parenL enLiLy are able Lo consolidaLe.
However, Australian-resident entities with a common overseas 100% ultimate owner (i.e., a holding
company) may also form a consolidated group (known as a multiple entry tax consolidated group).
Consolidation is optional, but if a group decides to consolidate, all wholly owned companies and trusts must
be included, where the wholly owned entity is owned by a single common Australian-resident parent or under
an Australian entry point which has elected to be included in the consolidated group.
When the consolidation election is made, the head company of the group will submit a single income tax
return on behalf of all of the wholly owned entities within the group. From the time of consolidation, intra-
group transactions (such as asset transfers, provision of services) are disregarded and all tax attributes
(such as franking account balances, carryforward tax losses) are held at the head company level. When a
single company exits the group, its losses and franking credits must remain within the group.
1.2.3 Loss recoupment rules
Prior year losses may be utilized to reduce current year taxable income subject to the satisfaction of various
rules, primarily mainLaininq conLinuiLy ol ma|oriLy benelcial ownership {known as Lhe "conLinuiLy ol
ownership test) or failing that, passing the same business test.
On 23 August 2012, Assistant Treasurer David Bradbury released for consultation exposure draft legislation
and explanatory material to introduce company loss carry-back (carry-back) into the Australian tax
system. The stated purpose of the carry-back is to assist certain companies (the carry-back is not applicable
to trusts or sole traders) during the period of global economic downturn. Broadly, under the proposed loss
carry-back:
lniLially, lrom Lhe 2013 income year, companies will be able Lo carry back up Lo AS1 million ol qualilyinq
revenue losses to obtain a refund of tax paid in the 2012 income year.
From Lhe 201^ income year, companies can carry back up Lo AS1 million ol qualilyinq revenue losses
against Australian income tax paid up to two years earlier.
The loss carry-back will be delivered via a refundable loss carry-back tax offset in the current income year.
The amount of the offset will be capped at the companys franking account balance at the end of the income
year in which the offset is sought to be claimed. Subject to the outcome of the federal election called for
September 2013, these rules are expected to be enacted into law during the 2013 calendar year.
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1.2.4 Taxaticn cf prcht distributicns
1he currenL corporaLe Lax raLe ol 307 qenerally applies Lo shippinq companies. DisLribuLions ol prolLs by way ol
dividends which have been subject to corporate tax at the corporate level (i.e., franked) are generally not subject
to further Australian tax when paid to a corporate shareholder. For resident shareholders, a credit for the tax paid
in respecL Lo underlyinq prolLs will be available and nonresidenL shareholders are enLiLled Lo an exempLion lrom
Australian dividend withholding tax.
ll a company makes a disLribuLion ol unLaxed {or unlranked) prolLs {lor example, income sub|ecL Lo income
tax concessions or tax timing differences), the tax outcome depends on the status of the shareholder. Non-
Australian resident shareholders will be taxed at a dividend withholding tax rate of 30% unless the relevant
DTA provides for a lower rate (in the range of 0% to 15%), depending on a range of factors. These include
the tax residence and legal character of the shareholder and that shareholders percentage of shareholding.
Australian-resident shareholders generally pay tax at the corporate rate of 30% or at the applicable individual
rates (up to 46.5% or 47.5% for the 2013 income year).
A nonresidenL company carryinq on business in AusLralia can repaLriaLe prolLs wiLhouL any branch prolLs
Lax. However, il LhaL nonresidenL company pays a dividend ouL ol Lhose AusLraliansourced prolLs Lo
another non-resident, its shareholder may be subject to Australian income tax, subject to the operation of
the relevant DTA.
1.2.5 !ntrcducticn cf specihc withhcIdin reimes
1he payasyouqo {PAYC) wiLhholdinq rules apply Lo a ranqe ol paymenLs, includinq Lhose made Lo loreiqn
residents for gaming and casino junkets (including on board ships) and construction and related activities
taking place in Australia (for example, activities associated with the construction, installation and upgrading
of plant and equipment).
Under Lhe rules, Lhe payer {qenerally an AusLralian residenL) is required Lo wiLhhold and remiL reqardless ol
whether the underlying income is taxed in Australia in the hands of the recipient or is exempt (e.g., under
D1A as business prolLs). 1hese wiLhholdinq rules also apply in addiLion Lo Lhe LradiLional reqimes, impacLinq
on royalties, interest and dividends, and may catch, for example, subsea services provided in Australian
waters by a non-Australian resident provider.
Therefore the potential impact of these rules needs to be taken into account.
1.2. Taxaticn cf hnanciaI arranements
Foreign exchange gains and losses
1he LaxaLion ol lnancial arranqemenLs {1OFA) rules provide a comprehensive lramework lor Lhe LaxaLion
of foreign exchange gains and losses arising from foreign currency transactions. The TOFA rules set out a
number of different events that give rise to realized gains (taxable) and losses (deductible) for tax purposes.
Special rules also apply Lo loreiqn currency bank accounLs lor calculaLinq loreiqn exchanqe qains/losses
attributable to bank account movements during the course of the year.
The TOFA rules also contain tax functional currency rules. An entity that maintains its accounts
predominantly in a foreign currency may elect to determine its income and deductions in that currency, with
the net result being converted into Australian currency for the purposes of calculating the entitys Australian
income tax liability. This concession is especially relevant for non-Australian residents required to report to
the ATO and pay Australian tax.
1axat|on of hnanc|a| arranements
Clearer rules have been inLroduced lor Lhe Lax recoqniLion over Lime ol qains and losses lrom lnancial
arrangements. The default accruals and realization methods are supplemented by various elective methods
usinq accounLinq approaches wiLh respecL Lo cerLain lnancial asseLs. 1he elecLive accounLinq meLhods
available lor speciled lnancial arranqemenLs include hedqe LreaLmenL; lair value reporLinq; reLranslaLion lor
loreiqn currency arranqemenLs; and, in cerLain cases, usinq Lhe values in lnancial reporLs lor Lhe lnancial
arrangements.
These laws apply to affected taxpayers (broadly, those with assets over A$300 million or annual turnover
over AS100 million, or lnancial insLiLuLions wiLh Lurnover over AS20 million or holdinqs ol prescribed Lax
delerral securiLies). 1hese relorms apply Lo lnancial arranqemenLs lrsL held in income years commencinq on
or after 1 July 2010.
1.2.7 Resource taxation
The petroleum resources rent tax (PRRT) has been expanded effective from 1 July 2012.
Previously, Lhe PRR1 applied aL a ^07 raLe Lo Lhe Laxable upsLream prolLs ol cerLain ollshore
pro|ecLs only. 1he expanded PRR1 also applied Lo Laxable upsLream pro|ecL prolLs lrom Lhe
extraction of onshore non-renewable petroleum resources (e.g., coal seam gas and oil shale). PRRT
is deductible for corporate tax purposes.
1he mininq resources renL Lax {MRR1) applicable Lo iron ore and coal producLion is ellecLive lrom 1
July 2012. 1he MRR1 applies a raLe ol 307, alLer providinq a 257 exLracLion allowance {resulLinq in
an ellecLive Lax raLe ol 22.57) Lo mininq prolLs, wiLh an allowance lor cerLain capiLal expendiLures.
MRR1 is deducLible lor corporaLe Lax purposes, and a crediL is allowed lor sLaLe royalLies.
1.3 Recent changes to the tax law
1.3.1 Recent developments in DTAs
During 2010, Australia signed new DTAs with Chile and Turkey. However, at the time of printing, there was no
date available as to when these agreements would enter into force.
Australia has continued to negotiate with Canada and the Netherlands to update their respective DTAs, and
also with Pakistan to establish a DTA. In addition, Australia and Switzerland have announced they will enter
inLo neqoLiaLions Lo updaLe Lhe exisLinq AusLralia/SwiLzerland D1A. An amendinq proLocol Lo Lhe AusLralia/
India DTA has been signed on 16 December 2011. However, there is no date available as to when this will
enter into force.
1he proLocol Lo Lhe AusLralia/Sinqapore D1A was siqned in 2009 and enLered inLo lorce on 22 December 2010.
On 7 July 2011, Belqium raLiled Lhe amendinq proLocol Lo Lhe Belqium/AusLralia D1A {oriqinally siqned in
2009). On 8 AuqusL 2011, Lhe proLocol Lo Lhe Malaysia/AusLralia D1A enLered inLo lorce {oriqinally siqned
in early 2010). On 17 August 2011, the tax-related agreements between Australia and the Netherlands in
respect of Aruba entered into force (originally signed in 2009). Australia has signed the exchange of notes
regarding Article 27 of the DTA between Australia and Norway, with effect from 1 July 2011.
Australia has also signed agreements with various countries relating to the taxing rights for certain income
of individuals and the establishment of a mutual agreement procedure in respect of transfer pricing
adjustments.
AusLralia currenLly has mosLlavorednaLion clauses in iLs D1As wiLh AusLria, Finland, France, lLaly, Malaysia,
Lhe NeLherlands, Norway, SouLh Korea and SwiLzerland. Under Lhe mosLlavorednaLion clause, AusLralia and
the other treaty country must try to renegotiate their DTA if the withholding tax rates in another of Australias
DTAs are lower.
Honq Konq has expressed an inLeresL Lo conclude a D1A wiLh AusLralia.
Please refer to section 1.1.2 for a general list of countries with which Australia has a DTA.
In addition to the above, India formally agreed to commence negotiations for a free trade agreement
(FTA) with Australia. The ASEAN-Australia-New Zealand FTA has entered into force for Indonesia (the
FTA is already in force for New Zealand, Australia and the other nine members of ASEAN).
1.3.2 Other international tax developments
A series of amendments have been made to the income tax laws of Australia, and proposed reforms were
announced during 2010 to attract foreign investment into Australia and promote the establishment of
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regional holding companies in Australia. These amendments and proposals include:
Proposed modilcaLions Lo Lhe scope ol income aLLribuLable under Lhe conLrolled loreiqn company {CFC)
rules (further details below).
Repeal ol Lhe loreiqn invesLmenL lund {FlF) and deemed presenL enLiLlemenL rules.
A parLicipaLion exempLion lor capiLal qains arisinq lrom Lhe sale ol loreiqn shareholdinqs Lo Lhe exLenL
that the underlying assets are active. However, interests in partnerships or entities that are treated
similarly Lo a parLnership lor Lax purposes {e.q., US LLCs) may noL always benelL lrom Lhis exempLion.
1he abiliLy Lo pass loreiqn dividends and loreiqn branch prolLs Lhrouqh an AusLralian corporaLe sLrucLure
without attracting Australian corporate tax or dividend withholding tax.
LxempLions lor cerLain dividend and prolL repaLriaLions.
LxempLion lor nonAusLralian residenLs on capiLal qains arisinq lrom Lhe disposal ol shares in AusLralian
resident (non-landholding) companies.
SimplilcaLion ol Lhe rules dealinq wiLh Lhe LreaLmenL ol loreiqn loss and loreiqn Lax crediLs.
CFC rules proposed amendments
There are currently proposals to simplify the CFC regime, and an exposure draft law for the revised regime
was released in February 2011. Further exposure draft legislation is expected to be released by mid-2013.
1here is no proposed daLe lor Lhe inLroducLion ol Lhe lnal leqislaLion. 1he revised rules il inLroduced are
intended to provide for the following:
Aliqn Lhe concepL ol "conLrol" in Lhe CFC rules Lo Lhose under accounLinq sLandards
Narrow Lhe Lypes ol income earned by a CFC which may be sub|ecL Lo Lhe rules {which should no lonqer
include related party sales and services income)
Reduce aLLribuLion lor income derived lrom anoLher member ol Lhe CFC's qroup or lrom Lhe conducL ol
an active trade or business
FAF Rules
Foreign investment fund (FIF) rules dealing with attribution of income related to certain non-controlling
inLeresLs were repealed, ellecLive lor Lhe 2010/11 income year onward. 1he loreiqn accumulaLion lund
(FAF) rule will replace the FIF rules and be effective from the same time as the CFC rules discussed above.
1he FAF rule is inLended Lo creaLe a narrowly delned anLiavoidance rule LarqeLinq "inLeresLlike reLurns in
certain foreign entities.
1.3.3 Tax depreciation
To encourage capital investment, amendments have been made to the tax depreciation regime. The
amendments allow an acceleration of tax depreciation deductions to the earlier part of an assets effective
life. This is achieved by increasing the rate at which the asset can be depreciated under the diminishing value
{or reducinq balances) meLhod. 1hese chanqes applied Lo asseLs lrsL held on or alLer 10 May 2006. 1here
are specilc Liminq consideraLions lor Lhe applicaLion ol Lhese rules il Lhe asseL is held under a conLracL or il
the asset is constructed.
1.4 Other Australian taxes
1.4.1 Goods and services tax
AusLralia has a qoods and services Lax {CS1) LhaL is applied Lo mosL qoods and services connecLed wiLh
Australia (i.e., goods imported into Australia or goods installed or assembled in Australia), which is levied at
a raLe ol 107. A shippinq enLiLy LhaL is reqisLered lor CS1 can qenerally claim back inpuL Lax crediLs lor CS1
incurred on acquisitions provided the acquisitions were made for a creditable purpose (i.e., the acquisition
was acquired in carrying on an enterprise and must not relate to making supplies that would be input taxed or
of a private or domestic nature).
MosL qoods imporLed inLo AusLralia are sub|ecL Lo CS1. Where a shippinq enLiLy imporLs qoods inLo AusLralia
and Lhe imporL qualiles as a Laxable imporLaLion, CS1 is prima lacie payable by Lhe shippinq enLiLy aL Lhe Lime
ol imporLaLion. 1he shippinq enLiLy can Lhen claim an inpuL Lax crediL lor Lhe CS1 paid on Lhe imporLaLion
provided iL is reqisLered lor CS1 and Lhe imporLaLion was lor a crediLable purpose. FurLhermore, approved
imporLers can use Lhe delerred CS1 scheme. 1his scheme enables Lhose imporLers Lo deler Lhe CS1 oLherwise
payable on imporLaLion unLil Lhe lrsL business acLiviLy sLaLemenL is submiLLed alLer Lhe qoods are imporLed.
ln mosL cases, Lhis delerral means LhaL CS1 is canceled, as a correspondinq inpuL Lax crediL can be claimed in
the same return.
CS1lree sLaLus is usually applied Lo exporLs ol qoods, inLernaLional LransporL, associaLed insurance, and
arranqinq LransporL and exporL services. While CS1lree supplies are noL sub|ecL Lo CS1, Lhe supplier may sLill
claim input tax credits incurred on acquisitions connected with the supply.
GST proposed changes
Under consideraLion are a number ol chanqes beinq proposed Lo simplily Lhe applicaLion ol CS1 on cross
border transactions. The proposed reforms include the following:
Makinq CS1reqisLered enLiLies wiLh a presence in AusLralia responsible lor Lhe CS1 consequences ol
supplies of goods, services and intangibles supplied to them by non-residents who do not carry on an
enterprise in Australia (or have one and do not use it)
Chanqes Lo Lhe volunLary and compulsory reverse charqe provisions Lo alleviaLe Lhe requiremenLs ol non
residenLs Lo reqisLer lor AusLralian CS1 in some circumsLances
Chanqes Lo Lhe aqency provisions Lo apply more broadly and limiL Lhe circumsLances in which a non
residenL is required Lo reqisLer lor AusLralian CS1
Removinq Lhe requiremenL lor nonresidenLs Lo reqisLer lor AusLralian CS1 when Lhey only make CS1lree
supplies
1.4.2 Stamp duty
The various stamp duty acts may also apply to certain transactions involving vessels (e.g., acquisition or
Lransler ol vessels or business). Civen LhaL sLamp duLy is a sLaLe Lax, Lhe implicaLions essenLially depend upon
the state or territory of Australia in which the vessels are located. Depending on the relevant jurisdiction, the
transfer or acquisition of a vessel may attract an exemption from duty. In addition, stamp duty may not be
payable when the vessel is not within the relevant states territorial waters at the time of the transaction. This
will depend on the nature of the transaction and the jurisdiction(s) in question.
1.4.3 Employment taxes
Salaries and waqes and noncash benelLs paid/provided Lo sealarers have Lhe poLenLial Lo aLLracL a ranqe ol
taxes in Australia, including:
Payasyouqo {PAYC) wiLhheld aL various raLes lrom paymenL ol salary and waqes Lo employees where
those payments are taxable in Australia. The rate of withholding is affected by the tax residence of the
individual.
Frinqe benelLs Lax {FB1) payable by Lhe employer aL ^6.57 ol Lhe qrossedup value ol cerLain non
cash benelLs provided Lo employees.
Payroll Lax qenerally payable aL ^.757 Lo 6.857 ol waqes paid Lo employees and, in some cases,
contractors. Companies may be entitled to an annual payroll tax exemption between A$550,000 and
A$1,750,000 depending on the state in which the wages are incurred. When a company is related to
another company (i.e., as a parent or subsidiary, or by reason of common directors, common employees
or shared ownership), the companies may be grouped for the purposes of calculating their payroll tax
liability and may only determine their annual exemption entitlement on the basis of the total wages of the
group.
SuperannuaLion concepLually equivalenL Lo pension supporL. ConLribuLions are required Lo be made Lo a
superannuation fund at 9% (up to a capped amount) of earnings paid to employees and, in some cases,
contractors. An exemption may apply depending on the location of services and tax residence of the
individual.
The compulsory superannuation rate is to increase to 9.25% in the 2014 income year. This rate will increase
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over the succeeding income years to a rate of 12% in the 2020 income year.
Whether the above taxes apply will depend on a number of factors, including:
WheLher Lhe "economic" employer ol Lhe sealarer has a PL in AusLralia.
WheLher AusLralia has neqoLiaLed a D1A wiLh Lhe counLry in which Lhe sealarer is Lax residenL.
1he number ol days LhaL Lhe sealarer works in AusLralian LerriLorial waLers in any 12monLh period
generally, Australian territorial waters are those within 12 nautical miles of the low water mark (unless the
vessel is connected to the exploration or exploitation of natural resources).
In addition to the above, employers may be required to take out workers compensation insurance in relation
to seafarers.
1.4.4 Carbon pricing mechanism
On 1 July 2012, AusLralia implemenLed a carbon pricinq mechanism. Under Lhe carbon pricinq mechanism,
Australias largest greenhouse gas emitters (an estimated 500 entities whose facilities emit greater than
25,000 meLric Lons ol CO2e) will be direcLly liable Lo buy and surrender Lo Lhe CovernmenL a permiL lor
every metric ton of carbon pollution they produce.
Under Lhe lrsL Lhree years ol Lhe carbon pricinq mechanism, Lhe price on carbon will be lxed, belore movinq
Lo a loaLinq emissions Lradinq scheme on 1 July 2015. Durinq Lhe lxed price period {sLarLinq on 1 July
2012), the carbon price will start at A$23 per metric ton, rising at 2.5% a year in real terms. From 1 July
2015, the carbon price will be set by the market (within certain boundaries) via a cap-and-trade emissions
Lradinq scheme dependenL on Lhe supply ol permiLs by Lhe CovernmenL.
Levels ol assisLance by way ol lree permiLs will be provided Lo emissionsinLensive, Lradeexposed {Ll1L)
industries. Between 40 and 50 activities will be eligible to receive either 94.5%, 66% or possibly 50%
(reducing over time) shielding of their carbon liability, depending on the level of emissions intensity.
In addition to this direct liability on large emitters, an effective carbon cost in the form of a reduction in the
Fuel Tax Credit (FTC) (or an additional price imposed on gas retailers) will be imposed on emissions from
liquid fuels (other than for individual and light commercial vehicles).
Emissions from shipping businesses using liquid fuels will be subject to an equivalent carbon price, applied
through a reduction in FTC (see table at Section 4.4).
For large users of liquid fuels, there is the ability to opt into the carbon pricing mechanism.
1he "OpLln Scheme" will commence on 1 July 2013 and provides lexibiliLy Lo larqe luel users {enLiLies
that have embedded emissions through the combustion of fuel exceeding 25,000 metric tons of CO2e) by
allowing them to manage their carbon liability through the purchase and surrender of permits rather than
through a reduction in FTCs.
When an entity opted in, it will claim the full rate of FTCs as shown in the table under Section 4.4.
2. Human capital issues
2.1 Formalities for hiring personnel
AusLralia's labor laws in Lhe mariLime indusLry have underqone siqnilcanL chanqe in recenL years. AusLralia
has moved from a system of organized employment to company-based employment. Employees are no
lonqer recruiLed lrom a personnel lisL prepared wiLh Lhe assisLance ol Lhe unions, nor are posiLions llled by
the next available person on the list. Employers can now choose their employees (subject to the relevant
qualilcaLions). AlLhouqh union membership is volunLary, qiven Lhe hisLoric imporLance ol Lhe unions in Lhe
industry, employers should be prepared to work with them.
In July 2009, the Fair Works Act 2009 (FWA) came into operation in Australia, introducing amendments in
relation to national labor laws. In particular, these amendments deal with issues including unfair dismissal,
bargaining in relation to enterprise agreements and dispute resolution. In addition, from 1 January 2010,
employees and employers are covered by the modern awards standards, the National Employment Standards
(NES) and the Seagoing Industry Award 2010, under which employees are entitled to certain minimum
conditions. The NES include minimum entitlements to leave, public holidays, notice of termination and
redundancy pay.
1he FWA applies Lo AusLralian ships and some loreiqn laqqed ships operaLinq in AusLralia's LerriLorial seas,
extending to those that are operating pursuant to a license or permit while the ship is in the exclusive
economic zone or in the waters above the continental shelf of Australia.
2.2 National labor law
AusLralia's labor laws apply Lo all AusLralianlaqqed vessels as well as inLernaLionally laqqed vessels LhaL
carry Australian domestic cargo on a permit issued under Navigation Act 1912.
All personnel (including international seafarers on Australian regulated ships and personnel who work on
and/or supply ollshore oil and qas laciliLies) who are required Lo work unmoniLored in a mariLime securiLy
zone musL hold a MariLime SecuriLy ldenLilcaLion Card {MSlC). 1his card idenLiles an individual who has
been Lhe sub|ecL ol a backqround check and is valid lor lve years.
2.3 Regulations on employing personnel
Lmployees on AusLralianlaqqed vessels need Lo be residenLs ol AusLralia {alLhouqh noL necessarily
ciLizens) who have marine qualilcaLions lrom Lhe AusLralian MariLime SaleLy AuLhoriLy {AMSA) or overseas
qualilcaLions recoqnized as an equivalenL by AMSA.
Vessels involved in coasLal Lrade {wheLher AusLralian or loreiqnlaqqed) musL obLain a license Lo Lrade. One
ol Lhe requiremenLs ol LhaL license is LhaL Lhe owner pays AusLralian waqes Lo Lhe crew. Marine qualilcaLion
services are provided through nine centers around Australia.
1o qualily lor an AMSA marine qualilcaLion, sealarers musL compleLe an approved course ol sLudy. 1hese
are conducLed aL Lhe AusLralia MariLime Colleqe in LauncesLon, 1asmania, and aL Lechnical and lurLher
educaLion insLiLuLes and colleqes in FremanLle, NewcasLle and Sydney. AddiLionally, lor issue ol a cerLilcaLe
ol compeLence, Lhe Lrainee has Lo pass an oral examinaLion conducLed by AMSA examiners on operaLional
knowledge and critical skills.
Cverseas qua||hcat|ons
All crew members on AusLralian ships are required Lo hold an AusLralian marine qualilcaLion relevanL Lo Lheir
duLies. AMSA assesses marine qualilcaLions issued overseas Lo loreiqn residenLs who wish Lo miqraLe Lo
AusLralia and require AusLralian qualilcaLions Lo work on AusLralian ships.
2.4 Treaties relating to social security contributions
Social security treaties regarding double superannuation coverage have been negotiated with Austria,
Belqium, Canada, Chile, CroaLia, Cyprus, Lhe Czech Republic, Denmark, Finland, Cermany, Creece, Hunqary,
lreland, lLaly, Japan, Korea, LaLvia, Lhe lormer Yuqoslav Republic ol Macedonia, MalLa, Lhe NeLherlands,
New Zealand, Norway, Poland, PorLuqal, Slovak Republic, Slovenia, SouLh Korea {ROK), SwiLzerland and
Lhe US. Reciprocal healLh aqreemenLs have been neqoLiaLed wiLh Belqium, Finland, lreland, lLaly, MalLa, Lhe
NeLherlands, New Zealand, Norway, Sweden and Lhe UK.
2.5 Mannin issues with Byin the AustraIian Ba
AusLralianlaqqed vessels are sub|ecL Lo AusLralian piloLaqe where Lhe vessel exceeds 2^ meLers in Lonnaqe
length.
3. Corporate structure
3.1 Most commonly used legal structure for shipping activities
The most commonly used legal structure for the operation of shipping activities is a limited liability
corporaLion, known in AusLralia as a proprieLary limiLed {PLy LLd) company.
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4. Grants and incentives
4.1 Specihc and/cr eneraI subsidies avaiIabIe tc shippin ccmpanies
No specilc incenLives are available lor shippinq companies. However, Lhere is a qovernmenL sysLem LhaL
provides shipping subsidies and applies to the shipping of certain goods and cargo between the mainland
of Australia and Tasmania (the Tasmanian Freight Equalization Scheme and the Tasmanian Wheat Freight
Scheme).
4.2 Investment incentives for shipping companies and the shipbuilding industry
AL Lhe Lime ol publicaLion, Lhere are no oLher specilc incenLives currenLly available Lo Lhe shipbuildinq
industry. In the meantime, there are general tax incentive programs designed to encourage research and
development (R&D) activities in Australia.
A number of changes to the R&D Tax Incentive system have been enacted (in effect from 1 July 2011),
including a move towards an R&D tax credit system. This involves a 40% tax credit (equivalent to a 133%
tax deduction at current corporate tax rates), a cash refundable 45% tax credit for smaller companies
(with annual aggregated turnover of less than A$20 million), the removal of the former 175% incremental
deducLion and a narrowinq ol Lhe acLiviLies LhaL will qualily under Lhe new R&D Lax benelL proqram.
Furthermore, the R&D Tax Incentive will also be available to an expanded range of claimants, including foreign
corporations that are residents of a country with which Australia has a DTA and carries on business through a
PE in Australia.
In order to claim the R&D Tax Incentive:
1he company musL eiLher be {a) incorporaLed in AusLralia; {b) incorporaLed under loreiqn law buL an
Australian resident for income tax purposes; or (c) incorporated under a foreign law, a resident of a
country with a DTA with Australia and carry on a business through a PE in Australia.
1he R&D acLiviLies musL be underLaken on behall ol Lhe company {special rules apply when Lhe R&D is
conducted on behalf of a non-Australian parent company).
1he R&D acLiviLies musL include experimenLal acLiviLies based on principles ol esLablished science
{HypoLhesis LxperimenL Observe/LvaluaLe Conclusion) and be perlormed lor Lhe purpose ol acquirinq
new knowledge, including the creation of new or improved materials, products, devices, processes and
services.
1he company musL spend a minimum ol AS20,000 in a qiven year.
1he company musL reqisLer wiLhin 10 monLhs ol Lhe Lax yearend and have conLemporaneous
documentation to substantiate R&D projects.
4.3 Specihc incentives fcr shipbuiIdin industry fcr envircnmentaI awareness
No specilc incenLives are available Lo Lhe shipbuildinq indusLry lor environmenLal awareness. However, Lhe
AusLralian CovernmenL is in Lhe process ol developinq a ranqe ol dillerenL qranLs and incenLives Lo assisL in
the development and implementation of clean technologies to reduce emissions and enhance environmental
sustainability, some of which are expected to apply to transportation (including shipping). These grants are
expected to be awarded from mid-2012 with application details and materials currently being prepared.
4.4 The Fuel Tax Credits Scheme
From 1 July 2006, Lhe Fuel 1ax CrediLs Scheme replaced Lhe Lnerqy CranLs {CrediLs) Scheme. 1he ma|or
elements of the Fuel Tax Credits Scheme are as follows:
Claims lor luel Lax crediLs are made on a business's acLiviLy sLaLemenL in Lhe same way as claims lor CS1
credits are made (subject to special transitional claiming arrangements).
Claims are made in dollars insLead ol liLers.
CusLoms imporL duLy is levied on luel imporLed inLo AusLralia. CurrenLly, Lhe luel Lax crediL raLe per liLer is
equivalent to the import duty rate per liter, although this may change in the future.
AlLernaLive luels are eliqible lor luel Lax crediLs, however aviaLion luels are noL.
Marine LransporL is an eliqible acLiviLy.
PeLrol, as well as diesel, can be claimed lor elecLriciLy qeneraLion. 1his includes commercial elecLriciLy
generation that was previously not eligible.
As not all consumption of fuels is eligible, claiming of FTCs should be considered on a case-by-case basis.
The current fuel tax rate is A$0.38143 per liter for most fuels, including diesel, petrol and fuel oils. However,
the introduction of a price on carbon emissions has an impact on the rate of FTCs available for each type of
eligible fuel. While fuels are not covered directly under the carbon price mechanism, an effective carbon price
will be imposed through changes in FTCs or changes in excise, with the exception of when an entity is part of
the opt-in scheme for liquid fuels (see Section 1.4.4).
1he lollowinq Lable lisLs Lhe relevanL F1C impacL lor each luel Lype over Lhe Lhreeyear lxed price period,
and Lhe lqures are based on Lhe emissions raLe ol Lhe various luels. 1he amounLs shown lor each lnancial
year period are subLracLed lrom Lhe 1007 raLe. 1herelore, in Lhe 201^15 income year, F1Cs lor diesel luel
consumed in an eliqible acLiviLy will be available aL 31.285 c/L {38.1^36.858). NoLe LhaL lrom 1 July
2015, Lhe price on carbon will be loaLinq and Lhe F1C raLe will be deLermined wiLh relerence Lo Lhe sixmonLh
average of the carbon price.
*Duty rate increases over transitional period to reach full rate on 1 July 2015.
- Full rate claimed when entity is part of the opt-in scheme
1he lnancial impacL ol Lhe reducLion in F1Cs will be reduced by Lhe lacL LhaL, since 1 July 2012, Lhose
activities previously eligible for FTCs at the 50% rate are now eligible for credits at the full rate less the price
on carbon.
5. General information
5.1 Infrastructure
5.1.1 Major ports
Name of port Location of port
Botany Bay New South Wales
Kurnell New South Wales
Newcastle New South Wales
PorL Kembla New South Wales
Sydney Harbour New South Wales
Darwin Northern Territory
100% rate Carbon price
Fuel 100% rate c/L 201213 201314 201415
Petrol 38.143 5.52 5.796 6.096
Diesel 38.143 6.21 6.521 6.858
LPG* 2.512.5 3.68 3.864 4.064
LNG/CNG* 5.2226.13 c/kg 6.67 7.004 7.366
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Brisbane Queensland
Bundaberg Queensland
Cairns Queensland
CladsLone Queensland
McKay Queensland
Rockhampton Queensland
Townsville Queensland
Adelaide South Australia
PorL Lincoln South Australia
Whyalla South Australia
Burnie Tasmania
Devonport Tasmania
Hobart Tasmania
LauncesLon Tasmania
Ceelonq Victoria
Hastings Victoria
Melbourne Victoria
Portland Victoria
Albany Western Australia
Broome Western Australia
Bunbury Western Australia
Cockburn Sound Western Australia
Dampier Western Australia
Esperance Western Australia
Fremantle Western Australia
Port Hedland Western Australia
5.1.2 Port facilities
The following facilities are available:
MainLenance and repair
Dockinq
SLoraqe
Cranes lor every size ol vessel {cranes, loaders, unloaders and roro laciliLies are available aL all ma|or
ports)
5.1.3 Airports close to the major ports
Name of port Name of airport
Location
of airport
Adelaide Adelaide Adelaide
Albany Albany Albany
Botany Bay Kinqslord SmiLh MascoL, Sydney
Brisbane Brisbane Brisbane
Name of port Location of port Location
of airport
Broome Broome Broome
Bunbury Bunbury Bunbury
Burnie Devonport Devonport
Cairns Cairns Cairns
Darwin Darwin Darwin
Devonport Devonport Devonport
Fremantle Perth Perth
CladsLone CladsLone CladsLone
Hobart Hobart Hobart
Kurnell Kinqslord SmiLh MascoL, Sydney
LauncesLon LauncesLon LauncesLon
Melbourne Tullamarine Tullamarine
Newcastle Newcastle Williamstown
PorL Kembla Wollongong Albion Park
Sydney Harbour Kinqslord SmiLh MascoL, Sydney
Townsville Townsville Townsville
Whyalla Whyalla Whyalla
5.1.4 Support services for the shipping industry
The following support services for the shipping industry are readily available:
Banks wiLh a shippinq desk
ConsulLinq lrms specializinq in shippinq
MariLime law services
lnsurance brokers lor Lhe shippinq indusLry
5.1.5 Maritime education
MariLime educaLion is provided by AusLralian MariLime Colleqe LauncesLon, 1asmania, and Lechnical and
further education institutes and colleges in Fremantle, Newcastle and Sydney. Increased government funding
has been proposed to support the delivery of maritime and maritime-related vocational education and
training to improve the national seafarers shortage.
5.2 Safety and environmental issues
5.2.1 Implementation of the International Safety Management Code on board vessels
All vessels reqisLered in AusLralia as Phase 1 Ships have implemenLed Lhe lnLernaLional SaleLy ManaqemenL
Code.
5.2.2 The !nternaticnaI Dranizaticn fcr Standardizaticn 9002 certihcate
MosL larqe Lradinq vessels apply lor cerLilcaLion under lnLernaLional OrqanizaLion lor SLandardizaLion {lSO)
9002 Lhrouqh DeL Norske VeriLas or Lloyd's ReqisLer sysLem. 1his is in addiLion Lo Lhe lSM Code, buL clearly
Lhe lSM Code lorms minimum pracLices reqardinq saleLy on board a vessel.
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5.2.3 Safety rules regarding manning
Australias rules regarding manning are seen as relatively strict by some in the industry.
5.2.4 Special regulations on safety and the environment
AusLralia has siqned Lhe lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea and Lhe Marine PolluLion
ConvenLion. RequlaLions reqardinq saleLy and Lhe environmenL relecL Lhe obliqaLions under Lhese
conventions.
Australia has recently announced that ships containing asbestos or that have not been checked for toxic
subsLances could be Lurned away lrom AusLralian shores. 1his specilcally applies Lo ships builL alLer 1
January 2005.
From 1 January 2013, new requirements apply which prohibit the discharge of garbage waste into the sea
lrom ships, excepL in very limiLed circumsLances. Marine NoLice 6/2012 ouLlines Lhese chanqes, amonq
others in relation to revised garbage discharge regulations for ships.
5.2.5 Australian Maritime Safety Authority
1he AusLralian MariLime SaleLy AuLhoriLy {AMSA) is Lhe naLional saleLy requlaLor lor all commercial shippinq
in Australian waters.
5.2.6 The National Plan
AMSA manaqes AusLralia's NaLional Plan Lo CombaL PolluLion ol Lhe Sea by Oil and OLher Noxious
and Hazardous SubsLances {NaLional Plan) and works LoqeLher wiLh SLaLe/NorLhern 1erriLory {N1)
governments, and the shipping, oil and chemical industries and emergency services to maximize Australias
marine pollution response capability.
The National Plan provides a national framework for responding to marine pollution incidents. The aim of the
National Plan is to protect the natural and built environments of Australias marine and foreshore zones from
the adverse effects of oil and other noxious or hazardous substances spilled into the marine environment. It
also aims to minimize those effects where protection is not possible.
A review ol AusLralia's NaLional Plan and NaLional MariLime Lmerqency Response ArranqemenLs {NMLRA)
was compleLed durinq 2011. 1he key ouLcome is LhaL Lhe NaLional Plan and Lhe NMLRA will be inLeqraLed inLo
a single emergency response arrangement; however, these changes will take time to implement.
5.3 Registration
5.3.1 Registration requirements
The Australian Register of Ships currently lists the particulars of some 7,000 active ships. All Australian-
owned commercial ships of 24 meters and over in tonnage length, capable of navigating the high seas, must
be registered.
All oLher cralL, includinq qovernmenL ships, lshinq and pleasure cralL, need noL be reqisLered, buL may be
if the owners desire. In this regard, an Australian citizen or body corporate established under Australian
corporate law can apply to have a ship registered, provided it is:
Less Lhan 12 meLers in lenqLh overall and wholly owned or operaLed by AusLralian residenLs or by
Australian nationals and residents together
On demise {bareboaL) charLer Lo an AusLralianbased operaLor
Owned in common where more Lhan hall Lhe shares are owned by AusLralian naLionals
Flagging
ReqisLered commercial ships over 2^ meLers in Lonnaqe lenqLh musL ly Lhe AusLralian Red Lnsiqn. All
oLher reqisLered ships have Lhe choice ol lyinq eiLher Lhe naLional laq or Lhe Red Lnsiqn. An unreqisLered
AusLralianowned ship can be issued wiLh a cerLilcaLe enLiLlinq iL Lo ly eiLher laq.
Registration
A ship must be registered if the owner intends to use it for travel from Australia to places outside Australia,
or on voyages from foreign ports to Australia or other overseas destinations. Any ship demise chartered
to Australian-based operators, or any craft under 12 meters in length, owned or operated by Australian
residenLs, naLionals or boLh, can be reqisLered il Lhe owner/operaLor wishes.
After registration
Once a ship has been reqisLered, Lhe owner/reqisLered aqenL musL comply wiLh Lhe rules laid down in boLh Lhe
law and regulations. So that the register can be kept up to date, the registrar must be informed of the following:
ll iL is inLended Lo chanqe Lhe name or home porL ol Lhe ship or il Lhere is any chanqe in Lhe name or
address of the owner or registered agent
ll Lhe ship or a share in Lhe ship is sold
ll any alLeraLions are made Lo Lhe ship
ll Lhere are chanqes Lo any reqisLered morLqaqes
ll Lhe ReqisLraLion CerLilcaLe is losL or desLroyed
ll Lhe ship is losL or desLroyed
1he law provides heavy penalLies includinq lnes and prison senLences lor owners/reqisLered aqenLs who do
noL comply wiLh Lhe reqisLraLion rules. 1he rules apply unLil a ship has been removed lrom Lhe reqisLer lor
example, Lhrouqh loss or alLer iL has been sold Lo loreiqn naLionals. ln Lhe case ol ships LhaL are noL required
to be registered, the registered owner may remove the ship from the register at any time.
5.3.2 Ship registration procedure
Ships that were originally registered in Australia under the British system (i.e., before 1982) were
automatically transferred to the new register subject to nationality eligibility at the time of changeover.
ApplicaLions can be made in person or Lhrouqh Lhe mail aL Lhe Shippinq ReqisLraLion Ollce in Canberra or aL
any ollce ol AMSA. As Lhe reqisLraLion ol a ship qives qood LiLle Lo Lhe owners, an applicaLion lor reqisLraLion
must be accompanied by the following:
ApplicaLion
DeclaraLion ol ownership and naLionaliLy
DocumenLs describinq ship and qivinq evidence ol ownership
Demise charLer parLy {il applicable)
Call siqn license {il applicable)
Lvidence ol markinq ol ship
Fee
1onnaqe cerLilcaLe il applicable
NoLice ol Lhe appoinLmenL ol a reqisLered aqenL
Marking and measuring
A ship will noL be reqisLered unless iL has been marked wiLh iLs ollcial number, iLs Lonnaqe or lenqLh overall,
its name and its home port.
Registration of ships which are intended to go on international voyages and which are 24 meters and over in
tonnage length are not possible unless the tonnage has been measured in accordance with the relevant law.
Changes to the registration of ship mortgages
Security interests currently recorded on the Australian Shipping Register have been moved to the new
Personal Property Securities Register (PPSR) since early 2012.
The PPSR replaces over 20 existing asset registers, including registers operated by the Australian
CovernmenL such as Lhe AusLralian ReqisLer ol Ships, amonq oLhers.
5.3.3 Requirements fcr the cfhcers and crew servin cn vesseIs
Ollcers and crew servinq on AusLralianreqisLered vessels musL be AusLralian naLionals {AusLralian
residents) but not necessarily citizens.
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5.4 General comments
Bunker duty
A vessel on an international voyage is eligible to purchase bunkers duty-free. An international voyage means
LhaL Lhe owner/masLer inLends lor Lhe ship Lo deparL AusLralia and proceed direcLly or indirecLly Lo a place
outside Australia. This is best illustrated in the examples below:
A voyaqe ol a vessel arrivinq in and deparLinq lrom AusLralia aL a sinqle porL remains an inLernaLional
voyage.
A voyaqe ol a vessel carryinq inLernaLional carqo lor discharqe aL a number ol AusLralian porLs and Lhen
departing from Australia remains an international voyage.
A voyaqe ol a vessel currenLly enqaqed in makinq inLernaLional voyaqes and on iLs inLernaLional schedule
loading no more than 10% of the vessels deadweight tonnage with Australian coastal cargo remains an
international voyage. If more than 10%, the voyage is not part of an international voyage.
A reposiLioninq voyaqe ol a vessel especially Lo load AusLralian coasLal carqo is noL parL ol an inLernaLional
voyage.
A reposiLioninq voyaqe ol a vessel, where Lhe inLenLion aL Lhe Lime ol leavinq Lhe porL beinq reposiLioned
from was to proceed to the reposition port to load cargo which it will carry to a place outside Australia,is part
of an international voyage.
A reposiLioninq voyaqe where iL is noL known aL Lhe Lime ol leavinq Lhe porL beinq reposiLioned lrom wheLher
the ship will be loading cargo which it will carry to a place outside Australia is not part of an international
voyage.
A place outside Australia does not include:
A ship or an area ol waLer ouLside AusLralia
An insLallaLion ouLside AusLralia
A reel or an uninhabiLed island ouLside AusLralia
WaLers and insLallaLions in Lhe JPDA
Where Lhere does noL exisL Lhe requisiLe inLenLion Lo deparL AusLralia lor a place or porL beyond AusLralian
waters
On 16 June 2009, AusLralia became a parLy Lo Lhe lnLernaLional ConvenLion on Civil LiabiliLy lor Bunker Oil
PolluLion Damaqe, 2001 {Lhe Bunkers ConvenLion). Cenerally, Lhe Bunkers ConvenLion places a sLricL liabiliLy
upon shipowners for pollution damage resulting from the discharge or escape of bunker oil from their ships and
requires owners of ships with gross tonnage of greater than 1,000 tons to be insured to cover their liabilities for
bunker oil pollution.
AMSA has released a noLice ol amendmenL Lo Lhe applicaLion ol Lhe Bunkers ConvenLion in AusLralia. 1he
amendmenL aliqns AusLralia's posiLion Lo LhaL adopLed inLernaLionally by Lhe lnLernaLional MariLime OrqanizaLion
{lMO). AusLralia requires owners and operaLors ol AusLralian Lankers Lo hold a Bunkers CerLilcaLe lrom AMSA.
Owners and operaLors ol AusLralian Lankers who currenLly hold a loreiqn issued Bunkers CerLilcaLe should
replace Lheir cerLilcaLe wiLh AMSA upon iLs expiry.
Penalties for pollution offenses
Marine NoLice 19/2011 provides inlormaLion on Lhe amendmenLs conLained in Lhe MariLime LeqislaLion
Amendment Act 2011 which received royal assent on 4 December 2011. The amendments include the increase
of maximum penalties for strict liability offenses for illegal discharge of oil in various forms (increased from 500
to 20,000 penalty units (A$2.2 million for an individual; A$11 million for a corporation as of the issue of the
Notice)). Other amendments include pollution offenses as provided for under the Navigation Act 1912 and
associated penalties.
Amendments to International Convention for the Prevention of Pollution from Ships (MARPOL)
On 4 August 2011, the Protection of the Sea (Prevention of Pollution from Ships) Amendment (Oil Transfers)
Act 2011 received Royal Assent. That act is designed to prevent pollution during oil transfer operations
between ships. From 1 April 2012, ships greater than 150 gross tons intending to conduct such operations
at sea (within a countrys exclusive economic zone) are required to have an onboard Ship-To-Ship Transfer
Plan approved by Lhe Flaq SLaLe AdminisLraLion. NoLilcaLion musL also be qiven aL leasL ^8 hours prior Lo
the commencement of oil transfer operations. It is noted that bunker operations are excluded from these
amendmenLs as well as lxed and loaLinq ollshore plaLlorms.
On 25 September 2012, the Maritime Legislation Amendment Act 2012 received Royal Assent.
1his AcL implemenLed amendmenLs Lo MARPOL which enLered inLo lorce on 1 January 2013 and will:
lmpose new resLricLions on Lhe discharqe ol sewaqe lrom passenqer ships in special areas ol
the sea which are particularly sensitive or vulnerable to pollution
SLrenqLhen Lhe requlaLions relaLinq Lo Lhe disposal by ships ol qarbaqe aL sea
Make mandaLory Lhe currenL volunLary Lnerqy Lllciency Desiqn lndex lor new ships ol ^00
qross Lonnaqe {C1) and over LhaL will be builL on or alLer 1 January 2013 lor inLernaLional
Lrade, and Lhe currenL volunLary Ship Lnerqy Lllciency ManaqemenL Plan lrom LhaL daLe lor
all ships ol ^00 C1 and over LhaL are enqaqed in inLernaLional Lrade
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Barbados
1. Tax
1.1 Tax facilities for shipping companies
Barbados legislation provides three different corporate vehicles that can be used for shipping activities. The
Lax incenLives are briely ouLlined below:
Shippinq corporaLions incorporaLed under Lhe Shippinq CorporaLion AcL {Lhe SCA) are limiLed Lo carryinq on
the following activities:
1o own and/or operaLe ships
To do such other things as are necessary and incidental to the ownership and operation of such ships
To hold shares or other equity interests in foreign entities that are established for the purpose of owning
and/or operaLinq ships
Shipping corporations may carry on business, conduct their affairs and exercise their powers in any
jurisdiction outside Barbados.
A company incorporated under the SCA is not subject to corporate tax in Barbados. In addition, Barbados
does not impose tax on capital gains.
Shipping corporations are exempt from withholding tax on most payments made to nonresidents.
lnLernaLional Business Companies {lBC) licensed under Lhe lBC AcL conducL a wide ranqe ol business
activities but must not do business within Barbados.
IBCs are liable to corporate tax on their worldwide income at the following rates:
2.507 on all prolLs and qains up Lo USS5,000,000
2.007 on all prolLs and qains exceedinq USS5,000,000 buL noL exceedinq USS10,000,000
1.507 on all prolLs and qains exceedinq USS10,000,000 buL noL exceedinq USS15,000,000
0.257 on all prolLs and qains in excess ol USS15,000,000
IBCs may elect to take a credit in respect of taxes paid in a country other than Barbados. This credit cannot
reduce Lhe Lax payable in Barbados Lo a raLe less Lhan 0.257 on Lhe prolLs and qains lor an income year.
IBCs are exempt from withholding tax on management fees, royalties, interest, dividends and fees paid to a
nonresident.
No tax is imposed in respect to the transfer of most assets.
IBCs have access to most of the Barbados tax treaties.
Reqular Barbados Companies {RBC) incorporaLed under Lhe Barbados Companies AcL {Lhe BCA) and Lax
residents in Barbados are liable to corporate tax on their worldwide income at the rate of 25%.
RBCs can be used to provide qualifying overseas professional services to residents outside the Caricom
markeL. Under Barbados' domesLic Lax leqislaLion, Lhe Lerm "qualilyinq overseas prolessional services"
includes, among others, shipping activities.
When income is derived from the provision of qualifying overseas professional services, in computing
the tax payable on such income, a foreign currency earning credit (FCEC) would be applied against
the tax otherwise payable. The application of the FCEC can reduce the effective corporate tax rate to
as low as 1.75%.
Dividends made by an RBC out of foreign-sourced income are exempt from withholding tax in Barbados.
PBCs can oeneht from a|| tne Baroacos tax treat|es.
1.2 Tax facilities for seafarers
No personal tax or social security obligations should arise.
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1.3 Tax treaties and place of effective management
Barbados has entered into tax treaties with the following countries:
Austria, Botswana, Canada, CARICOM, China, Cuba, Czech Republic, Finland, Iceland, Luxembourg, Malta,
Mauritius, Mexico, Netherlands, Norway, Panama, Seychelles, Spain, Sweden, Switzerland, United Kingdom,
United States, Venezuela.
Barbados has also siqned LreaLies wiLh Lhe lollowinq counLries LhaL have yeL Lo come in lorce:
Bahrain, Chana, OaLar, PorLuqal, San Marino
Barbados has siqned bilaLeral invesLmenL LreaLies wiLh Lhe lollowinq counLries:
Canada, China, Cuba, MauriLius, UniLed Kinqdom, UniLed SLaLes, Venezuela.
1.4 Freight taxes
Barbados does not levy freight taxes.
1.5 SpeciaI vesseI reistraticn benehts fcr the ship cwners
1here are no Lax reqisLraLion benelLs.
1.6 Changes to tax law anticipated in the near future
No changes are expected in the near future.
2. Human capital
1he Barbados Shippinq AcL {Lhe BSA) does noL impose resLricLions on Lhe naLionaliLy ol Lhe masLer, ollcers or
crew. No work permit is required.
The master of every Barbadian ship shall enter into an agreement with every seaman whom he engages as
one of his crew. Crew agreements should be in accordance with the provisions of the BSA and in the form
deLermined by Lhe Principal ReqisLrar, who is based in London.
Upon Lhe execuLion ol a crew aqreemenL, Lhe masLer shall inlorm Lhe Principal ReqisLrar ol Lhe name, qrade and
number ol Lhe cerLilcaLe and endorsemenL ol each ollcer employed on Lhe ship, includinq himsell.
Crew members of Barbadian ships are subject to the provisions of the BSA.
Ollcers musL hold eiLher a cerLilcaLe or an endorsemenL issued under Lhe BSA ol a qrade appropriaLe
Lo Lheir rank. RaLinqs musL obLain a cerLilcaLe ol compeLency lrom Lhe Principal ReqisLrar.
Ollcers and raLinqs musL hold a valid medical cerLilcaLe ol compeLency complyinq wiLh Lhe
ConvenLion on SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq lor Sealarers {S1CW)
78/95 and a valid medical cerLilcaLe allowinq Lhe issuance ol Lhe Barbados Ollcers LndorsemenL
Document.
2.4 Collective labor agreements
There is no obligation to have a collective labor agreement.
2.5 Manning issues of registering a ship in Barbados
The manning scale for the size and type of ship is subject to the approval of the Principal Registrar, who will issue
Lhe Minimum Sale Manninq CerLilcaLe.
3.1 Most commonly used legal structures for shipping activities
The most commonly used legal structures for the operation of shipping activities are the Shipping
Corporations and IBCs. The RBC structures have been recently introduced in legislation. This vehicle is
expecLed Lo be popular in Lhe luLure due Lo Lhe lacL LhaL iL qualiles lor LreaLy purposes.
3.2 Taxaticn cf prchts distributicn
Under domesLic law, Lhere is no LaxaLion on prolL disLribuLions derived lrom loreiqnsourced income, oLher
than portfolio investment.
There are no subsidies for shipping companies.
There are no investment incentives.
4.3 Special incentives for environmental awareness
There are no special incentives for environmental awareness.
4.4 !ssues with Byin the Barbadcs Ba
1he Barbados laq en|oys Lhe sLaLus ol beinq on Lhe Paris Memorandum ol UndersLandinq on PorL SLaLe
ConLrol {MOU) WhiLe LisL and Lhe US CoasL Cuard OUALSHlP 21, Lhereby lesseninq Lhe conLrols on ships
lyinq Lhe Barbados laq.
4.5 Major changes in shipping subsidy legislation in the near future
No major changes are expected in the near future.
5. General Information
5.1 Infrastructure
5.1.1 Major ports
Deep Water Harbour
Port St. Charles
Port Ferdinand
Stevedoring
Storage
Tugboats
LilLs and cranes
Bunkering
Fresh water
Carbaqe disposal
Medical services
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5.1.3 Airport close to the major ports
The international airport of Barbados is located approximately a 20-minute drive from the Deep Water
Harbour and approximately a 45-minute drive from Port St. Charles and Port Ferdinand.
5.1.4 Support services for shipping industry
Ship agents
Surveyors
AlLhouqh Barbados banks do noL have specialized shippinq desks, Lhe Barbados branches ol wellesLablished
international banks are equipped to deal with shipping companies.
MariLime educaLion is provided by Lhe Caribbean MariLime lnsLiLuLe locaLed in KinqsLon, Jamaica. 1his
insLiLuLion has been recoqnized by Lhe Caribbean CommuniLy {CARlCOM) as Lhe leadinq cenLer lor mariLime
education, training, research and consultancy.
Owners and managers of Barbados-registered ships of 500 gross registered tons or more are required to
comply wiLh Lhe lnLernaLional SaleLy ManaqemenL Code {lSM) Code.
1he saleLy rules reqardinq manninq may be characLerized as quiLe sLricL. MosL ol Lhe mariLime leqislaLion
(particularly on safety issues) is set out in the BSA and regulations made under the same Act.
Barbados is parLy Lo mosL lnLernaLional MariLime OrqanizaLion {lMO) convenLions on saleLy and Lhe
environment. In addition, Barbados enacted the Shipping Oil Pollution Act (SOPA), which establishes a
code of regulations, enforcement procedures and liabilities for the discharge of oil anywhere in the world by
Barbados-registered ships.
5.3 Registration
1he headquarLers ol Lhe Barbados MariLime Ship ReqisLry {BMSR) are based in London, Lnqland.
1he procedure lor reqisLraLion ol ships under Lhe Barbados laq is simple and sLraiqhLlorward.
A ship qualiles lor reqisLraLion il iL is owned by an individual who is a Barbados or a CARlCOM ciLizen, or a
company incorporaLed in Barbados or in CARlCOM. ln addiLion, loreiqnqoinq ships and near coasLal Lrade
ships of 150 gross registered tons or more may, regardless of the nationality of the owners, be approved for
registration.
1he BMSR operaLes a separaLe YachL ReqisLry open Lo all yachLs carryinq 12 persons or lewer.
Ships older than 20 years are restricted from registration.
Provisional registration:
Provisional CerLilcaLes may be issued by Lhe Principal ReqisLrar or by any ReqisLrar appoinLed by him in
different ports around the world.
ln order Lo obLain a Provisional CerLilcaLe, Lhe owners shall provide Lhe lollowinq:
CerLilcaLe ol ReqisLraLion
Notice of Name proposed for a Barbados ship
Particulars of the ship
Copies ol Bill ol Sale or Builder's CerLilcaLe
Copies of the incorporation documents of owner
Details of the master
ConlrmaLion ol Class
1he Provisional CerLilcaLe will be valid lor a period ol six monLhs lrom Lhe daLe ol issue. Durinq Lhis period ol
time, Permanent Registration must be completed.
Permanent registration:
PermanenL ReqisLraLion Lakes place eiLher in London or BridqeLown.
ln order Lo obLain a Provisional CerLilcaLe, Lhe owners shall provide Lhe lollowinq:
Approved Notice of Name
AppoinLmenL ol auLhorized ollcer
CerLiled copies ol Bill ol Sale or Builder's CerLilcaLe
Declaration of ownership
CerLiled copies ol incorporaLion documenLs
Manaqinq Owner DeclaraLion
Cancellation from previous registry
Protection & Indemnity (P&I) Cover
Former 1onnaqe MeasuremenL CerLilcaLe
SaleLy ol Lile aL Sea {SOLAS), Load Line and lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom
Ships {MARPOL) CerLilcaLes
DescripLive ParLiculars Survey CerLilcaLe
Radio Accounting Authority (AAIC) with application and particulars for radio station license
Minimum Sale Manninq Proposal
Registration and annual fee
SubsequenLly, Lhe owner will receive a Ship's Carvinq and Markinq NoLe, which has Lo be compleLed by Lhe
ClassilcaLion SocieLy's surveyor and Lhen reLurned Lo Lhe Principal ReqisLrar.
5.3.3 Parallel Registration
1he BSA provides lor bareboaL charLer reqisLraLion ol loreiqnreqisLered ships under Lhe Barbados laq.
Bareboat charter registration shall apply for the duration of the Bareboat charter, and no mortgage
instrument shall be recorded before the registry in respect of any bareboat-chartered ship registered under
the laws of a foreign country.
1he BSA also provides lor Lhe bareboaL charLer reqisLraLion ol Barbados ships under a loreiqn laq as lonq as
the ship is registered as a Barbados ship under the BSA and the bareboat charter registry where the ship is to
be registered is a compatible registry. No mortgage instruments shall be recorded against those ships in the
foreign registries.
1he BSA does noL impose resLricLions on Lhe naLionaliLy ol Lhe masLer, ollcers or crew. No work permiL is
required.
Ollcers musL hold eiLher a cerLilcaLe or an endorsemenL issued under Lhe BSA ol a qrade appropriaLe Lo
Lheir rank. RaLinqs musL obLain a cerLilcaLe ol compeLency lrom Lhe Principal ReqisLrar.
Ollcers and raLinqs musL hold a valid medical cerLilcaLe ol compeLency complyinq wiLh S1CW 78/95 and a
valid medical cerLilcaLe allowinq Lhe issuance ol Lhe Barbados Ollcers LndorsemenL DocumenL.
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5.3.5 International Conventions
Barbados is a conLracLinq parLy Lo all ma|or lMO convenLions.
5.3.6 Mortgages
A registered ship or share in a registered ship may be security for a loan or other valuable consideration, and
on the production of the prescribed mortgage, the Principal Registrar shall record it in the register.
Mortgages shall be recorded in the order in time in which they are produced to the Principal Registrar.
Loans and morLqaqes can be recorded durinq Lhe provisional reqisLraLion sLaqe.
29 Shipping Industry Almanac 2013
Belgium
1. Tax
1.1 Special tax facility for shipping companies: the tonnage tax regime
The law of 2 August 2002 introduced a special tax regime for shipping companies (tonnage tax). The law of
27 December 2004 adapted this special regime in light of remarks made by the European Commission (EC).
This initiative aims to make Belgian shipping more competitive in the global market by creating a positive
lscal environmenL in line wiLh oLher ma|or mariLime counLries. lL also aims Lo preserve and resLore Luropean
Union {LU) mariLime employmenL and knowhow.
Qualifying operations for this regime are those that are engaged in the exploitation of seagoing vessels for
Lhe LransporL ol qoods or persons in inLernaLional Lrallc, as well as lor Lhe exploraLion ol naLural resources
aL sea. FurLhermore, Lhe prolL obLained lrom Lhe operaLion ol a vessel wiLh a cerLilcaLe ol reqisLry lor Lhe
performance of towing operations, the performance of assistance and other activities at sea, as well as all
operations that are directly connected with the abovementioned operations, qualify.
ln order Lo be able Lo benelL lrom Lhe Belqian Lonnaqe Lax reqime, i.e., Lo be eliqible Lo have "prolLs lrom
ocean shipping taxed on a lump-sum basis (according to Article 115, 2, 2 of the law of 2 August 2002),
the Belgian company or branch:
a) MusL be Lhe owner, coowner or bareboaL charLerer ol a seaqoinq vessel LhaL is manaqed Lo a
considerable extent in Belgium and not bareboat-chartered out to a third party
Or
b) MusL be enqaqed in Lhe crew and Lechnical shippinq manaqemenL lor LhirdparLy owners {i.e., carryinq
out the commercial management in Belgium for another taxpayer), provided that the ship managers are
entrusted with both the management of the entire crew and the technical management of the seagoing
vessel(s), and the company takes over the full responsibility from the owner of the vessels operation and
all the duties and responsibilities regarding safety and pollution
Or
c) MusL have charLered seaqoinq vessels on a Lime charLer or voyaqe charLer basis
In the case of b) and c), respectively, the annual total of the net daily tonnages of the seagoing vessels
for which the commercial manager acts, or of the chartered vessels, may not contribute more than three
times the annual total of the net daily tonnages of the vessels that he or she manages as owner, co-owner or
bareboat charterer. Jointly owned or bareboat-chartered seagoing vessels are included in the overall tonnage
if the co-ownership or co-chartering is at least 5%.
Also, ship managers (this refers to the management of a seagoing vessel for the account of third parties and
concerns Lhe Lechnical manaqemenL and/or Lhe supply ol crew) benelL lrom Lhe same prolL calculaLion,
but the regulation is reserved for taxpayers whose sole activity is the management of ocean-going vessels.
A lurLher requiremenL is LhaL aL leasL 757 ol Lhe number ol vessels manaqed lor Lhird parLies should ly Lhe
Belqian laq.
As already stipulated above and according to Article 115, 2, 2 of the law of 2 August 2002, seagoing
vessels have Lo be manaqed Lo a considerable exLenL in Belqium. "ManaqemenL" relers Lo Lhe main
responsibility for the activities, including:
Concludinq aqreemenLs concerninq Lhe ship
1akinq care ol Lhe ship's supplies
1akinq care ol Lhe ship's mainLenance
LnLerinq inLo insurance conLracLs
Keepinq Lhe accounLs
Fullllinq adminisLraLive lormaliLies
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AppoinLinq masLers
Considerable extent indicates that the taxpayer carries out most activities or that he or she has them
carried out under his or her authority.
To this end, the Royal Belgian Shipowners Association has developed a self-assessment matrix, which has
also been adopted by the Belgian tax authorities. This self-assessment matrix can be used as a guideline or
tool to verify compliance with the requirement of ship management to a considerable extent in Belgium.
1his maLrix is divided inLo Lhree componenLs. 1hese manaqemenL lelds are {i) sLraLeqic and commercial
manaqemenL, {ii) Lechnical manaqemenL and {iii) crew manaqemenL. ManaqemenL includes noL only
control, but also requires the execution of certain tasks. The management can be performed in Belgium by
the owner, co-owner or bareboat charterer of the seagoing vessel(s) (the Belgian shipping company) or can
be subcontracted to a Belgian company.
FurLhermore, wiLhin Lhe respecLive manaqemenL lelds, weiqhinq lacLors are assiqned Lo Lhe various Lasks Lo
be execuLed. Lach leld ol manaqemenL represenLs a LoLal score ol a maximum ol 12 poinLs. An ad|usLmenL
factor with regard to employment in Belgium is incorporated and added to the self-assessment matrix.
The aforementioned adjustment factor is capped at a maximum of 10% of the total score of 36 points and
amounts to 0.02 per Belgian employee.
1he maLrix Lherelore will enable Lhe user Lo verily compliance wiLh all criLeria and lelds ol manaqemenL in
Belgium.
The tonnage tax regime was proposed as an alternative to the normal corporate income tax regime for shipping
companies resident in Belgium or the Belgian permanent establishments of shipping companies resident in
other states. It is possible for existing companies to opt for the tonnage tax at any time, but once they have
opted for the regime, it remains applicable for at least 10 years, unless the activity ceases before the 10-year
period has lapsed. 1he reqime will be qranLed as ol Lhe lrsL day ol Lhe business year lollowinq Lhe year durinq
which a lormal requesL was lled. AlLer 10 years, Lhe Lonnaqe Lax reqime is auLomaLically renewed, unless Lhe
company gives notice to the authorities at least 3 months before the end of the 10th year.
It is also possible for existing companies to create a separate shipping division whenever they opt for tonnage
tax for their shipping activities besides other (non-shipping) activities.
1he lumpsum lxaLion ol Lhe prolL is based on an amounL per vessel, per day and per 100 neL Lons:
1he oneoll prolL will be sub|ecL Lo Lhe Belqian corporaLe Lax raLe ol 33.997.
The tariff for vessels exceeding 40,000 tons, which is lower than in many other countries, can be applied only
in the following cases:
For newly builL seaqoinq vessels
For secondhand vessels less Lhan lve years old LhaL were {permanenLly) reqisLered in a nonLU Member
State
For secondhand vessels older Lhan lve years LhaL were reqisLered in a nonLU Member SLaLe durinq Lhe
lve years belore Lhe Lax year in which Lhe special Lonnaqe Lax reqime will be applied
Total net tonnage Income per day per 100 tons ()
Up Lo 1,000
1.00
1,00110,000
0.60
10,00120,000 0.40
20,001^0,000 0.20
Over 40,000 0.05
As tonnage tax is an alternative to normal income tax, depreciation, capital gains and capital losses are
included. Consequently, companies planning an investment should evaluate whether they should opt
immediaLely lor Lonnaqe Lax or iniLially benelL lrom invesLmenL deducLion and acceleraLed depreciaLion {see
infra point 1.2) and enter the tonnage tax regime only after a few years.
Neither carried forward losses nor losses in another division (that is, engaged in a business that does not
qualily lor Lhe Lonnaqe Lax reqime) can be seL oll aqainsL Lhe lumpsum prolL ol Lhe shippinq division.
Carried forward losses will be frozen until exiting the regime.
The tonnage tax regime is effective as of 1 January 2003.
1.2 Tax facilities for shipping companies: in the normal and the alternative tax regime
In the margin of the tonnage tax regime, an alternative regime for operations engaged in the shipping
business was creaLed by Lhe law ol 2 AuqusL 2002. 1his reqime, approved by Lhe LU, came inLo lorce on 1
January 2003.
Seagoing vessels may use accelerated depreciation over their useful economic lives, generally over a period
of eight years. Depreciation may be calculated on a straight-line basis. The straight-line rates are:
For newly builL seaqoinq vessels {Lhe lollowinq raLes are provided by law):
207 lor Lhe lrsL lnancial year
157 lor Lhe second and Lhird lnancial years
107 lor subsequenL years
For secondhand seaqoinq vessels LhaL are acquired lor Lhe lrsL Lime by a Belqiumbased Lax
payer (the following rates are provided by law):
207 lor Lhe lrsL lnancial year
157 lor Lhe second and Lhird lnancial years
107 lor subsequenL years
For oLher secondhand vessels {Lhe lollowinq raLe is menLioned in Lhe commenLs issued by
the tax authorities on the Income Tax Code):
107 a year
The declining balance method is not allowed for vessels that are depreciated according to the rates provided
by law. It is still applicable to the other vessels, but the Belgian legislature has imposed a restriction: the
maximum depreciation is twice the depreciation of the straight-line method.
Tax exemption of capital gains
In order not to discriminate between companies that have opted either for or against tonnage tax, the law
of 2 August 2002 also provides for a deferred taxation of the capital gains realized on seagoing vessels if
certain conditions are complied with. These conditions are largely congruent with those mentioned in Article
^7 ol Lhe Belqian lncome 1ax Code {amonq oLher condiLions, vessels musL have been owned lor aL leasL lve
years, musL have compulsory reinvesLmenL wiLhin lve years and compulsory recordinq ol Lhe capiLal qain on
a blocked reserve account).
Investment deduction
The law of 2 August 2002 provides for a new rate of investment deduction, i.e., 30% of the acquisition
value ol new vessels or secondhand vessels LhaL are acquired lor Lhe lrsL Lime by a Belqian company. 1he
investment deduction is an investment incentive that operates by decreasing (at once) the corporate income
taxable base of the operation that is making the investment by a certain percentage of the acquisition value
of the assets that have been acquired during the business year. Alternatively, the deduction can be operated
as a certain percentage on annual depreciations.
Notional interest deduction
1he Belqian 1ax Law ol 22 June 2005 inLroduced Lhe socalled risk capiLal deducLion, also relerred Lo as Lhe
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noLional inLeresL deducLion, which Look ellecL as ol Lhe Lax year 2007 lnancial year per 31 December 2006
or later.
This notional interest deduction is a general measure, available to all Belgian companies (except for those
companies that have opted explicitly for the tonnage tax regime) and foreign companies with a Belgian
permanent establishment liable to Belgian corporate income tax, granting a tax exemption or deduction of
3% of the companys risk capital for the tax year 2013 and 2,742% as from tax year 2014 onward. The above
rates are increased with 0.5% for small and medium-sized companies.
The companys risk capital corresponds to its equity as it appears in its non-consolidated annual accounts of
Lhe precedinq lnancial year. Based on Belqian accounLinq law and Cenerally AccepLed AccounLinq Principles
{CAAP), risk capiLal includes a company's paidup share capiLal, share premiums, reevaluaLion surpluses,
reserves, carried forward result and capital subsidies.
The above rates, however, are applicable only to the adjusted risk capital. Indeed, the risk capital has to
be reduced by cerLain iLems, e.q., Lhe lscal neL value ol lnancial lxed asseLs consisLinq ol parLicipaLions
and (owned) shares, the re-evaluation surpluses, capital subsidies and the net equity of permanent
esLablishmenLs abroad {alLhouqh criLicized by many auLhors and Lhe LC). VariaLions durinq Lhe lnancial year
of the paid-up share capital or of the above-mentioned items to be deducted will be taken into account on a
pro rata basis, calculated per month.
As a consequence of the 2012 budgetary measures, the carryforward of future excess notional interest
deduction has been abolished. The deduction of existing carried forward excess notional interest deduction is
limiLed {i.e., maximum deducLion ol 607 ol Lhe residual Laxable base, no limiLaLion lor lrsL t1 million).
Finally, the deduction is not conditioned upon any investments in tangible or intangible assets, neither an
ellecLive dividend disLribuLion nor an obliqaLion Lo reserve Lhe prolLs so obLained.
1.3 Other tax facilities for shipping companies
Customs
Customs duties are suspended with respect to goods intended for incorporation in the vessels, for the
purpose of their construction, repair, maintenance or conversion, and with respect to goods intended
lor lLLinq Lo or equippinq such vessels. 1his measure is lound in Lhe lnLeqraLed 1arill ol Lhe Luropean
Communities (TARIC), Section IV.
Value-added tax (VAT) facilities
In Belgium, there are several value added tax (VAT) exemptions from which shipping companies could
benelL.
The most important VAT exemptions are summarized below.
VAT exemptions
The Belgian VAT legislation foresees in a VAT exemption for the supply of certain vessels. The vessels which
qualify for the exemption are the following:
Sea vessels, used lor passenqer LransporL or LransporL ol qoods, lor lshinq or lor Lhe pracLice ol any
industrial or business activity
LileboaLs and rescue ships lor assisLance on sea
Warships
Barqes used lor commercial inland shippinq
A VAT exemption also applies to the delivery of goods and services to builders, owners and users of vessels
of goods, which are destined to be incorporated in or to be used for the exploitation of these vessels. Please
note however that yachts and pleasure boats are excluded from the above VAT exemption.
FurLhermore, a Belqian VA1 exempLion is also under cerLain condiLions applicable Lo Lhe lollowinq supplies:
1he modilcaLion, repair, mainLenance, hirinq and cerLain oLher services rendered in direcL connecLion
with seagoing vessels
Coods desLined lor Lhe provisioninq ol cerLain seaqoinq vessels {board provisions supplied Lo vessels lor
coasLal lshinq and barqes lor inland commercial naviqaLion are excluded)
Services used in Lhe lramework ol exempL LransporL ol qoods, such as Lhe loadinq, unloadinq, Lransler,
packing, weighing, examination and receipt
ln order Lo apply {mosL ol) Lhe abovemenLioned VA1 exempLions, cerLain lormaliLies have Lo be lulllled {Lhe
recipient must provide the supplier with an order document including certain wordings).
All the above-mentioned VAT exemptions allow the recovery of Belgian input VAT. The VAT exemptions of
course only apply Lo Lhe exLenL Lhe place ol supply ol Lhe LransacLion is locaLed lrom VA1 poinL ol view in
Belgium.
Other VAT facilities
NexL Lo Lhe above VA1 exempLions, Lhere are several measures puL in place Lo laciliLaLe and/or relieve
companies from VAT-related obstacles when distributing goods through Belgium.
Import deferral license and VAT warehouse
Import VAT is in principle to be paid at the time of customs clearance. However, Belgium offers the
opportunity to defer the payment of import VAT to the VAT return.
Whereas companies imporLinq qoods in Lhe pasL had Lo make a cash deposiL in order Lo benelL lrom Lhe
import VAT deferment scheme, the Belgian government has decided to abolish, as of January 1, 2013, the
mandatory cash deposit.
As a resulL, companies should no lonqer bear Lhe cosL ol prelnancinq imporL VA1 when cusLoms clearinq
goods in Belgium.
Furthermore, in Belgium there is also the possibility to trade goods under a warehouse regime. When certain
conditions are met, goods can be traded under a VAT warehouse without having to charge Belgian VAT.
Fiscal representation under a global VAT number
In Belgium companies performing imports and subsequent supplies do not require an individual Belgian
VAT registration as such. Provided certain conditions are met, such transactions can be reported to the VAT
authorities using a so-called global VAT number of a forwarding company or customs broker.
Harbor fees
Exemption from harbor fees is possible, but it depends on negotiations with the port authorities and often
depends on job-creating potential.
Registration dties
The law of 2 August 2002 provides for an exemption from registration duties on mortgages on vessels. Only
a t25 reqisLraLion Lax is levied. 1his reducLion only applies Lo seaqoinq vessels. 1he exempLion is ellecLive as
ol 9 May 2003.
There are no special tax facilities for seafarers (there are, however, certain incentives for their employers; see
sections 1.1 and 1.2). In this respect, we further refer to point 2.6.
1.5 Tax treaties
Belgium has concluded more than 89 treaties based on the Organisation for Economic Co-operation and
Development (OECD) model treaty for the avoidance of double taxation.
ln principle, Lhe place ol ellecLive manaqemenL deLermines a counLry's riqhL Lo Lax prolLs ol inLernaLional
shipping operations. The place where the business is actually managed or where the administration is carried
out is the decisive factor. It is normally the state where the enterprise operating the vessel resides. If the place
ol ellecLive manaqemenL is noL Lhe same sLaLe as Lhe sLaLe ol incorporaLion, prolLs are Laxable in Lhe sLaLe ol
effective management.
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1herelore, il a loreiqn company has a leqal branch in Belqium, Lhe shippinq prolLs qained in Belqium by
this Belgian Branch are taxable in the country when the company is a resident, provided that Belgium has
concluded a double Lax LreaLy wiLh Lhis counLry and Lhe prolL lalls under ArLicle 8 ol Lhis LreaLy. ll Lhe prolLs
ol Lhe Belqian branch do noL meeL Lhe previous condiLions, Lhese prolLs are Laxable in Belqium.
1.6 Freight taxes
No freight taxes are levied, and no treaties that grant relief from freight tax have been concluded.
1.7 SpeciaI vesseI reistraticn tax benehts fcr the shipcwner
1here are no special benelLs lor Lhe shipowner.
As a consequence of the 2012 and 2013 budgetary measures, several changes have been made or are
expected to be made to the Belgian tax law in the near future. The changes include, among others:
LimiLaLion ol Lhe noLional inLeresL deducLion {see also above under poinL 1.2).
As lrom 1 January 2013, Lhe neL capiLal qains on shares are Laxable aL 0.^127 {and Lax exempL il Lhe
company is a small and medium sized enLerprise {SML), il dividends on such shares qualily lor Lhe
taxation test and the holding period requirement of the participation exemption. If only the holding
requirements are not met, capital gains on shares will be taxable at 25%. In all other cases capital gains on
shares will be taxable at 33.99%.
1he sLandard sLaLuLory wiLhholdinq Laxes lor inLeresL and dividends are increased Lo 257.
lnLroducLion ol a 5:1 Lhin cap rule {only lor inLraqroup loans).
1.9 Community customs law
LnLry inLo lorce ol Lhe Union CusLoms Code
On ^ June 2008, Lhe Modernized CusLoms Code {MCC) was published in Lhe Ollcial Journal ol Lhe
Luropean Union {RequlaLion [LC| ^50/2008) Lo replace Lhe exisLinq CommuniLy CusLoms Code {CCC). 1he
MCC was scheduled Lo come inLo ellecL aL Lhe laLesL on 2^ June 2013. However, in early 2012, Lhe Luropean
Commission adopLed a proposal Lo amend Lhe MCC belore iLs enLry inLo ellecL.
1he recasL proposal preserves Lhe ob|ecLives ol Lhe MCC relevanL Lo Lhe Lrade ol qoods brouqhL inLo and ouL
ol Lhe cusLoms LerriLory ol Lhe Union.
1he Commission sLaLes Lhree reasons Lo adapL Lhe MCC:
1he MCC needs Lo be adapLed Lo Lhe provisions ol Lhe Lisbon 1reaLy. As a consequence, Lhe MCC will
be renamed "Union CusLoms Code" {UCC) and will be aliqned wiLh Lhe new provisions ol Lhe Lisbon
Treaty concerning delegation of powers and the conferral of implementing powers. This has an impact
Lo Lhe implemenLinq provisions ol Lhe MCC, which now have Lo be "spliL" beLween deleqaLed acLs and
implementing acts.
1he UCC is purposed Lo adapL Lhe cusLoms leqislaLion Lo Lhe elecLronic environmenL ol Lhe CusLoms
Authorities and the economic operators. However, by June 2013, only a limited number of customs IT
systems will be installed.
Finally, some provisions in Lhe MCC daLed 2008 are noL complianL wiLh amendmenLs implemenLed since
Lhen or Lhey seem dillculL Lo implemenL, e.q., reqardinq Lhe Lemporary sLoraqe ol qoods or a cusLoms
declaration through an entry of data in the declarants records
Authorized economic operator
An auLhorized economic operaLor {ALO) can be delned as an economic operaLor LhaL is reliable LhrouqhouL
the community in the context of customs, trade and related operations and therefore is entitled to enjoy
cusLoms benelLs and Lrade laciliLaLions LhrouqhouL Lhe communiLy. An ALO applicanL should be esLablished
in Lhe LU. PermanenL esLablishmenLs {branch, subsidiary) ol nonLU companies can also apply.
The increasing success of AEOs did not come to a halt in 2012. As of July 2013, more than 11,000 European
companies successfully obtained the status of AEO. In Belgium, the Customs Authorities have issued 267
ALO cerLilcaLes, which is a qrowLh ol more Lhan ^07 in comparison Lo 2011. Up Lo now, Cermany and Lhe
NeLherlands issued Lhe mosL ALOcerLilcaLes.
In December 2012, an update of the AEO self-assessment has been published on the Taxation and Customs
Union DirecLoraLe {1AXUD) websiLe, as well as exLended explanaLory noLes.
On ^ May 2012, Lhe LU and Lhe USA aqreed on muLual recoqniLion ol Lhe CusLom1rade ParLnership AqainsL
1errorism {C1PA1) proqram in Lhe US and Lhe ALO proqram ol Lhe LU. While Lhe C1PA1 locuses on Lhe
securiLy ol inbound movemenLs inLo Lhe USA, ALO locuses on compliance relaLed Lo and securiLy ol inbound
and ouLbound movemenLs. For Lhe Lime beinq, Lhe aqreemenL is unilaLeral which means Lhere are no benelLs
lor US imporLs inLo Lhe LU. As a consequence ol Lhe MRA, a "maLchinq procedure" is esLablished Lo associaLe
Lhe LU Lconomic OperaLors ReqisLraLion and ldenLilcaLion {LORl) numbers wiLh Lhe US ManulacLurer's
ldenLilcaLion Number {MlD) number. 1his MuLual RecoqniLion AqreemenL {MRA) wiLh Lhe US is Lhe lourLh
one lor Lhe LU, lollowinq Lhe MRA's siqned wiLh Japan in 2010 and wiLh Norway/SwiLzerland and wiLh
Andorra in 2009.
Multi-Annual Strategic Plan
A revision ol Lhe MulLiAnnual SLraLeqic Plan {MASP) has been published in December 2012, which includes
all future customs projects with envisaged IT requirements, referred to as EIS (Evolution of IT Systems).
The future EIS are linked to new developments in several customs policy areas but mainly in the view of the
implemenLaLion ol Lhe UCC, which lurLher promoLes Lhe qlobal shilL Lo a paperless environmenL lor cusLoms
and Lrade. A new Business Process ManaqemenL and an embedded Business Process Modelinq {BPM)
approach have been idenLiled as a powerlul insLrumenL Lo supporL and improve Lhe luncLioninq ol Lhe
CusLoms Union, includinq Lhe use ol elecLronic sysLems. lL may Lake unLil 2020 lor all l1relaLed pro|ecLs Lo be
implemented.
Accession of Croatia and other European countries to the EU
CroaLia will be Lhe 28Lh Member SLaLe ol Lhe LU as ol 1 July 2013. 1he raLilcaLion process is in process; six
LU Member SLaLes sLill have Lo raLily Lhe Accession 1reaLy.
OLher serious candidaLes Lo become a Member SLaLe ol Lhe LU are lceland, 1urkey, MonLeneqro, Macedonia
and Serbia. OLher poLenLial candidaLes are Albania, BosniaHerzeqovina and Kosovo.
Extension of the Transit Convention
The Transit Convention has been extended with Croatia (1 July 2012) and Turkey (1 December 2012).
1his exLension allows Lhe circulaLion ol qoods beLween Lhe 27 Member SLaLes ol Lhe LU, Lhe LF1A counLries,
Croatia and Turkey with the use of the New Computerised Transit System (NCTS) system.
Free trade agreements: recent developments
a) F1A LUKorea
As ol 1 July 2011, Lhe lree Lrade aqreemenL {F1A) beLween Lhe LU and Lhe Republic ol Korea enLered
inLo lorce. For Lhe LU, Lhis is Lhe lrsL F1A concluded wiLh an Asian counLry and is Lhe mosL comprehensive
F1A ever neqoLiaLed by Lhe LU.
Nine months after the implementation of the FTA, it was estimated that European companies had already
made cash savinqs ol t350 million in imporL duLies. Only a limiLed number ol aqriculLural producLs are
excluded from tariff elimination.
b) F1A LUSinqapore
AlLer "reqionLoreqion" neqoLiaLions on a F1A beLween Lhe LU and ASLAN counLries proved dillculL,
neqoLiaLions lor an LUSinqapore F1A were launched in March 2010.1he lnal neqoLiaLions were compleLed
on 16 December 2012. 1he LU and Sinqapore envisaqe iniLialinq Lhe dralL aqreemenL in sprinq 2013.
c) F1A LUlndia
1he neqoLiaLions beLween Lhe LU and lndia were launched in 2007 and are currenLly in a crucial phase
wiLh boLh sides Lryinq Lo lnd muLually accepLable soluLions Lo Lhe ouLsLandinq issues {especially on
tariffs, services and procurement). During 2012, new issues were raised, blocking the conclusion of an
agreement. The main issues have been raised for the opening up of the services industry and discussions
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have been focusing on protection of intellectual property rights.
d) F1A LUUSA
ln June 2012, Lhe LUUS HiqhLevel Workinq Croup on CrowLh and Jobs published an inLerim reporL
sLaLinq LhaL an F1A beLween Lhe LU and US is Lhe "qreaLesL poLenLial" lor supporLinq |obs and spurrinq
economic qrowLh in boLh Lhe LU and US. ln Lhe course ol Lhe US PresidenLial LlecLions in Lhe lall ol 2012,
1rade Commissioner Karel De CuchL expressed his hope Lo sLarL neqoLiaLions in sprinq 2013; however,
no ollcial daLe has been published yeL. 1he qoal is Lo compleLe a "packaqe" deal, includinq Larill cuLs and
lower regulatory restrictions by 2015. Problems are foreseen in the negotiations about food security,
consumer protection and environmental issues.
e) F1A LUVieLnam
NeqoLiaLions beLween Lhe LU and VieLnam were launched in 2012 wiLh a lrsL neqoLiaLinq round in
October 2012 in Hanoi. Both sides seek for a comprehensive agreement covering tariffs, non-tariff
barriers as well as commitments on other trade-related aspects, notably procurement, regulatory issues,
competition, services, and sustainable development. However, many challenges are expected in line with
other FTA negotiations in the same region.
l) ANDLAN: F1A LUPeru and Columbia
1he Lrade neqoLiaLions beLween Lhe LU and Columbia and Peru were successlully concluded in 2011
and the trade agreement was signed in June 2012. Originally, Ecuador was also involved in the trade
agreement negotiations, but has withdrawn shortly after the start of the negotiations in 2009. At this
moment, the trade agreement is in the process of translation, signature and adoption according to each
ParLy's domesLic procedures. 1he Lrade aqreemenL has been published in Lhe LU Ollcial Journal on 21
December 2012. 1he LU hopes Lo apply Lhe aqreemenL provisionally in Lhe lrsL LrimesLer ol 2013, as
soon Columbia and Peru have taken the necessary steps.
The Agreement provides for progressive and reciprocal liberalization by means of an ambitious,
comprehensive and balanced free trade area. This is important for enhancing trade between the two
regions, attracting investment to the Andean countries and helping local businesses develop the strength
in their regional market to compete internationally.
q) F1A LU CenLral America
ln June 2012, Lhe LU and CenLral America {CosLa Rica, Ll Salvador, CuaLemala, Honduras, Nicaraqua
and Panama) signed a comprehensive Association Agreement, which also includes an ambitious trade
component. Once fully implemented, it will open up markets on both sides, as well as increase the stability
and predictability of the trading environment
h) F1A LUCanada
1he LU is currenLly neqoLiaLinq Lhe Comprehensive Lconomic and 1rade AqreemenL {CL1A) wiLh
Canada. 1he iniLial qoal ol lnalizinq Lhe neqoLiaLions by Lhe end ol 2012 has noL been reached, mainly
due to objections raised by the beef industry.
i) Other FTA negotiations
1he LU is in neqoLiaLion wiLh various oLher counLries Lo conclude an F1A. Some F1A neqoLiaLions are in
proqress; oLhers are delayed or suspended. 1he mosL imporLanL onqoinq neqoLiaLions are wiLh Malaysia
and Mercosur.
Reform of the EU Generalised Scheme of Preferences
1he Ceneralised Scheme ol Prelerences {CSP) aims aL helpinq developinq counLries by makinq iL easier lor
Lhem Lo exporL Lheir producLs Lo Lhe LU. 1he currenL CSP covers Lhree separaLe reqimes:
1he "sLandard" CSP
1he special incenLive arranqemenL known as "CSP+"
1he "LveryLhinq buL Arms" {LBA) arranqemenL {leasL developed counLries)
On 31 OcLober 2012, a new CSP RequlaLion {LU) No. 978/2012 has been published and will be applicable
as of 1 January 2014, providing ample time to economic operators to adapt smoothly.
Reforms include a better focus on countries in need, such as more advanced developing countries, which are
now globally active and many poorer countries, affected by these more advanced developing countries and
suffered from the global economic crisis. Secondly, the graduation principles have been revised in order to
ensure a better targeting and uniform treatment of products. Finally, incentives will be launched for countries
Lo |oin Lhe CSP+ scheme, such as less compeLiLion lrom more advanced developinq counLries, no qraduaLion
in Lhe CSP+ scheme, applicaLions Lo |oin Lhe CSP+ scheme will be accepLed aL all Lime {raLher Lhan once
every 1.5 years now) and the vulnerability criterions will be broadened.
1he new CSP scheme will include 89 benelciaries, ^9 leasL developed counLries {LBA), such as 1anzania,
HaLi and Cambodia and ^0 CSP/CSP+ counLries, such as Armenia, Bolivia and lraq.
On Lhe oLher side, Lhere are a siqnilcanL number ol counLries LhaL will no lonqer benelL lrom Lhe CSP sysLem
as ol 1 January 201^. 1he lrsL caLeqory includes 33 overseas counLries and LerriLories, mainly LU LerriLories
that have their own market (e.g., Netherland Antilles, French Polynesia). Secondly, 34 countries which enjoy
oLher Lrade aqreemenLs wiLh Lhe LU LhaL provide an equivalenL coveraqe, will be excluded lrom Lhe CSP
scheme {e.q., Mexico, SouLh Alrica, Luromed counLries). Finally, a qroup ol 20 counLries LhaL have been
listed by the World Bank as high- or upper-middle income economies for the past three years will be no longer
included in Lhe CSP scheme {e.q., Saudi Arabia, UniLed Arab LmiraLes, Brazil, ArqenLina, Cabon, Russia,
KazakhsLan, Malaysia).
2. Human capital
The law of 3 June 2007 (replacing the law of 5 June 1928) regarding labor contracts for seafarers
stipulates that an employment contract must be in writing, has to be drawn up in three copies and must
conLain specilc clauses. Sub|ecL Lo cerLain condiLions, an employmenL conLracL can be siqned by means ol an
electronic signature. The seafarers must be registered in a book kept by the Belgian maritime authorities.
Duration of the contract
According to the employment law for seafarers, the employment contract must include the duration of the
contract or the voyage(s) for which it was signed. It has to be entered into for a certain period of time, but
it can be renewed without limitation. If the vessel is still at sea when the contract expires, the agreement is
still valid until reaching the next port where there is a possibility of disembarking. The law of 3 June 2007
stipulates different possibilities for terminating an employment contract.
Wages
1he waqe scales lor sealarers reqisLered in Lhe MerchanL Navy Pool and lor nonPool sealarers are lxed in
collective bargaining agreements. Also, the stipulations in the law of 3 June 2007 concerning loss of wage,
payment of the wage, power of attorney and advanced payment have to be taken into account.
Belqian labor law applies il a vessel sails under Lhe Belqian laq.
Crew
All sealarers employed on a Belqianlaqqed vessel have Lo be reqisLered wiLh Lhe Belqian mariLime
auLhoriLies {DirecLoraaLqeneraal MariLiem Vervoer FOD MobiliLeiL en Vervoer).
1hey need Lo apply lor a Belqian seaman's book and musL have a valid medical cerLilcaLe and a valid
SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq {S1CW) cerLilcaLe {sLandard applicaLion lorms
can be found on www.mobilit.fgov.be).
A copy ol Lhe employmenL conLracL, as well as a copy ol Lhe cerLilcaLe ol service musL be senL Lo Lhe
maritime authorities.
Moreover, LUresidenL sealarers musL be reqisLered in Lhe Belqian MerchanL Navy Pool.
These regulations are based on the STCW Convention, which was implemented in Belgian legislation by the
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Royal Decree ol 2^ May 2006.
Nationality of the captain
In principle, the command of a vessel registered in Belgium must be entrusted to a Belgian captain. The authorized
ollcial may waive Lhis rule aL Lhe vessel owner's requesL il Lrade or shippinq circumsLances so require.
Minimum standards
1here are requlaLions on minimum sLandards lor livinq condiLions on board. Belqium has raLiled lnLernaLional
Labour OrqanizaLion {lLO) ConvenLion 68.
Social security
ln accordance wiLh LU RequlaLion 883/200^, Lhe laq ol Lhe vessel in principle deLermines Lhe applicable
social security scheme.
On vessels lyinq Lhe Belqian laq, a disLincLion is made beLween:
Crew who are LU ciLizens and crew whose place ol residence is a counLry wiLh which Belqium has siqned
an aqreemenL on social securiLy Lhese are sub|ecL Lo Lhe sLaLuLory order ol 7 February 19^5 relaLinq Lo
social securiLy lor sealarers in Lhe MerchanL Navy. 1hey are insured in Belqium.
Crew noL menLioned above Lhey may be excluded lrom Lhe scope ol Lhe abovemenLioned sLaLuLory
order. In this case, with respect to social security, these crew members are either covered in their
countries of origin or by a private insurance contract entered into by the shipowner to cover them.
RequlaLion 883/200^ {and iLs implemenLinq requlaLion) has replaced RequlaLion {LC) N 1^08/71 as ol
1 May 2010. However, Lhe rules seL ouL by RequlaLion 1^08/71 wiLh reqard Lo Lhe socalled "laq ol vessel"
principle have remained unchanged.
Durinq a LransiLory period {10 years), Lhe provisions ol RequlaLion 1^08/71 will conLinue Lo apply Lo exisLinq
situations as long as the factual elements of that situation have not changed, unless the employee explicitly
requests that the new regulation be applied.
2.4 Competent authority to tax income of employees
As a general rule, most Belgian double tax agreements stipulate that the state where the place of effective
manaqemenL is locaLed, can Lax Lhe waqes ol Lhe employees in case ol inLernaLional Lrallc. However, iL
is recommendable to check the applicable double tax treaties and dito protocols, since some treaties and
protocols contain exceptions to this rule.
2.5 Collective bargaining agreements
1here are several collecLive barqaininq aqreemenLs {CBAs) lor sealarers reqisLered in Lhe Belqian MerchanL
Navy Pool, for example:
CBA lor ollcers
CBA lor raLinqs
CBA wiLh clauses {obliqaLions lor sealarers) LhaL are common Lo ollcers and raLinqs
Free days
In view of the fact that seafarers are on board for 24 hours, 7 days a week, a system of compensation
holidays was creaLed. 1his sysLem and Lhe leqal holidays are delned in Lhe CBAs menLioned above.
Essentials of the discharge law
1he applicable CBAs delne Lhe LerminaLion ol Lhe employmenL conLracL, includinq Lhe dismissal and Lhe
resignation procedures.
Working hours
Belqium has raLiled lLO ConvenLion 180 on workinq hours.
The following treaties are in force:
LU RequlaLions 1^08/71 and 883/200^. ln Lhese requlaLions, Lhe sealarer is qenerally required Lo work
on board a vessel LhaL lies Lhe laq ol an LU Member SLaLe. {Please noLe LhaL LU RequlaLion 833/200^,
Lhe new version ol LU RequlaLion 1^08/71, has enLered inLo lorce.) 1he requlaLion is applicable Lo Lhe 10
new Member SLaLes lrom 1 May 200^ {in case bilaLeral LreaLies exisLed wiLh such counLries, Lhey will be
replaced by Lhe correspondinq provisions ol LU RequlaLion 883/200^).
A number ol bilaLeral LreaLies, lor insLance:
1he LreaLy wiLh Luxembourq ol 25 March 1991
- The treaty with the Tunisian Republic of 29 January 1975
- The treaty with Israel of 5 July 1971
1he adminisLraLive aqreemenL ol 28 March 1978 annexed Lo Lhe LreaLy wiLh 1urkey ol ^ July 1966
1he LreaLy wiLh Lhe UniLed SLaLes ol America ol 19 February 1982
2.7 Mannin issues with Byin the BeIian Ba
Several measures have been Laken Lo decrease Lhe crew cosL ol Belqianlaqqed vessels. 1he ellecLive
difference between gross and net wages is about 13%.
Social security
LU ciLizens reqisLered in Lhe Belqian MerchanL Navy Pool benelL lrom Lhe lollowinq reducLions ol social
contributions:
1oLal exempLion lrom employer's social securiLy conLribuLions
ParLial exempLion lrom employee's social securiLy conLribuLions
Reduced conLribuLions Lo Lhe AccidenLs aL Work Fund
Withholding tax deducted from salaries
For certain seafarers employed on board vessels that are registered in the EEA, shipowners are exempt from
the payment of withholding tax on professional income levied on seafarer wages, provided certain conditions
are met (in accordance with the law of 20 July 2005).
Tax measures for shipping companies
For more details, please refer to section 1.
MosL companies operaLe as limiLed liabiliLy companies, or Naamloze VennooLschap {NV). 1he liabiliLy ol Lhe
shareholders of an NV is limited to their interest in its share capital. The tax rate depends on the amount of
Laxable prolL, buL in mosL cases amounLs Lo Lhe sLandard raLe 33.997. Foreiqn companies can also opL Lo
operate via a legal branch in Belgium, rather than establishing a company.
3.2 Taxaticn cf prcht distributicn
Under Lhe parLicipaLion exempLion, up Lo 957 ol dividends received by a Belqian company or branch are Lax
exempt. The dividends received exemption applies only if the distributing company is subject to a standard
corporate income tax regime in its country of residence (taxation condition) and if the recipient of the
dividend holds a participating interest of at least 10% for a minimum of one year, or with a purchase value of
aL leasL t2.5 million {parLicipaLion condiLion).
Marco Polo ll {200713)
1he Marco Polo proqram lnancially supporLs iniLiaLives Laken by commercial underLakinqs {wheLher privaLely
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or publicly owned) aiming at shifting freight transport off the road in order to reduce congestion and to
improve the environmental sustainability of the European transport system.
Companies with viable projects to shift freight from roads to greener modes (such as railways, sea-routes or
inland waLerways) can as such Lurn Lo Marco Polo lor lnancial supporL. Five main Lypes ol pro|ecLs are eliqible:
Modal shilL lrom road Lo rail and waLerborne sysLems
CaLalysL acLions LhaL promoLe modal shilL
MoLorways ol Lhe sea beLween ma|or porLs
1rallc avoidance
Common learninq acLions
lnLermodal pro|ecLs combininq Lhe dillerenL LransporL modes road, rail and waLerborne are eliqible as
well. 1o qualily lor lundinq, pro|ecLs musL involve inLernaLional Lrallc. Passenqer LransporL pro|ecLs do noL
qualify. For mixed projects like ferry services, only the freight segment is eligible. Pure infrastructure projects,
research or study projects and air transport also fall outside its scope.
Funding is always in the form of an outright grant. Applicants must meet a series of conditions to obtain a
grant. When approved, grants cover a share of the eligible costs, with a standardized maximum funding level
of 35%. Eligible costs are those necessary to implement the project. They do not include return on capital,
VAT, debt and debt service charges.
1he currenL proqram {Marco Polo ll) runs unLil 2013 wiLh an annual qranL budqeL ol abouL t60 million. 1he
LC annually publishes a "call," which is a requesL lor llinq proposals ol pro|ecLs wiLhin a preseL period ol Lime.
1he 2013 call mosL likely will be launched in March or April. Pro|ecLs run mosLly lrom Lwo Lo lve years.
Flemish strategic investment support
1he Flemish CovernmenL ollers qranLs lor sLraLeqic invesLmenL pro|ecLs in Lanqible lxed asseLs in Lhe
Flemish region.
This grant is open to small- and medium-sized companies with an establishment (the place where the
invesLmenLs Lake place) in Lhe Flemish reqion. Larqe companies only qualily lor invesLmenLs in Lhe Flemish
regional development zones.
Principal conditions:
1he company has Lo meeL cerLain economical, social and ecoloqical criLeria.
1he company has Lo demonsLraLe Lhe sLraLeqic and added value ol Lhe pro|ecL and Lhe need lor a qranL.
1he company has Lo presenL a qualiLaLive business plan.
1he pro|ecL has Lo qeneraLe aL leasL t8 million ol eliqible cosLs wiLhin Lhree years.
The maximum grant ranges between 5% and 10% of the eligible costs. This grant is open continuously, but a
company can only apply once in a three-year period and needs to apply before the investments start.
Beginning in 2013, the Flemish strategic investment support will change into a new support mechanism
called Strategic Transformation Support. This new mechanism will focus on investments in strategic clusters
and leadplanLs in Flanders, supporLinq inLernaLional qrowLh and developmenL ol innovaLive Small and Medium
Sized LnLerprises {SMLs) and invesLmenLs LhaL lead Lo LranslormaLion and realize a susLainable anchorinq ol
important employment in Flanders.
Flemish strategic training support
1he Flemish CovernmenL ollers qranLs lor sLraLeqic Lraininq pro|ecLs in Lhe Flanders reqion. 1his qranL is open
to all companies (also companies engaged in the shipping industry) with an exploitation seat in the Flanders
region that carry out major training projects.
The maximum grant ranges between 20% and 25% of the eligible costs.
It is possible to submit an application combining both strategic training and investment support as long as
both projects are undertaken in the Flanders region.
Beginning in 2013, the Flemish strategic training support will change into a new support mechanism called
Strategic Transformation Support. This new mechanism will focus on investments in strategic clusters and
leadplanLs in Flanders, supporLinq inLernaLional qrowLh and developmenL ol innovaLive SMLs and invesLmenLs
that lead to transformation and realize a sustainable anchoring of important employment in Flanders.
Flemish grants for ecological investments
1he Flemish CovernmenL ollers qranLs Lo enLerprises LhaL make cerLain ecoloqical invesLmenLs in Flanders.
All enterprises that are established in Flanders and whose main activity belongs to one of the admitted
secLors on Lhe basis ol Lhe Luropean ClassilcaLion ol Lconomic AcLiviLies {NACL) code can apply lor Lhe
lollowinq Lwo qranLs: Lhe LcoloqiePremie Plus {LP+) and Lhe SLraLeqic Lcoloqy SupporL {S1RLS).
1he LP+ incenLive is only qranLed Lo Lechnoloqies LhaL are on a limiLaLive Lechnoloqy lisL {L1L). 1his lisL
contains about 150 technologies (note: ecological investments that are eligible for aid through green
cerLilcaLes and coqeneraLion cerLilcaLes are noL eliqible lor an ecoloqical incenLive).
1he heiqhL ol LP+ is deLermined by Lhe perlormance ol Lhe Lechnoloqy in which Lhe invesLmenL is made and
varies accordinq Lo Lhe size ol Lhe enLerprise {a disLincLion is made beLween SMLs and larqe enLerprises).
Furthermore, the subsidy percentage depends on the nature of the investment; for an ecological investment
iL ranqes lrom 57 Lo 357, lor an invesLmenL in renewable enerqy sources or hiqhellcienL coqeneraLion Lhe
grant ranges from 5% to 45% and an energy-saving investment can go from 5% to 60%. An additional bonus
between 3% and 10% can be added if an enterprise can prove it has performed an energy audit, or it has a
valid environmenLal cerLilcaLe or an environmenLal manaqemenL sysLem.
As of January 2013, also ecological investments in technologies that cannot be standardized because of
Lheir unique company specilc characLer and Lherelore are excluded lrom Lhe L1L can claim a Flemish
grant, called Strategic Ecology Support (STRES). In order to be eligible for this STRES, a minimal investment
budqeL ol t3 million is required. 1he lollowinq sLraLeqic qoals will be evaluaLed:
WheLher Lhe pro|ecL ollers a qlobal environmenLal or enerqy soluLion aL enLerpriselevel wiLh closed
energy and material cycles and process-integrated solutions.
WheLher Lhe pro|ecL sLrives Lo supporL qeneric environmenLal or enerqyrelaLed policy ob|ecLives.
WheLher Lhe pro|ecL is parL ol qlobal vision ol Lhe company wiLh respecL Lo Lhe environmenL or Lhe durable
use of energy.
1he exLenL Lo which Lhe Lechnoloqy ouLperlorms currenL Luropean sLandards
1he exLenL Lo which Lhe Lechnoloqy achieves environmenLal ob|ecLives lor which no sLandards apply
1he heiqhL ol Lhis incenLive depends on Lhe same parameLers as LP+ {above) and ranqes lrom 57 up Lo 707.
Both incentives are calculated on the basis of the additional investment cost of the eligible investment
componenLs and can amounL Lo t1million aL mosL over Lhree years.
Walloon region
The Walloon region offers several investment, training and environmental subsidies through regional and
European structural funds. The eligibility criteria and geographic scope of the various schemes differ
one lrom Lhe oLher. More inlormaLion can be lound on hLLp://europe.wallonie.be and www.wallonie.be/nl/
enLreprises/qereruneenLreprise/lnancemenLeLmesuresdaide/aideslnancieres/index.hLml.
Certain investment incentives are also available to shipping companies. A major incentive is the investment
credit, i.e., a deduction from the taxable base amounting to 30% of the acquisition value of new vessels or
secondhand vessels LhaL are acquired lor Lhe lrsL Lime by a Belqian company. 1his invesLmenL deducLion is
not applicable under the tonnage tax regime (see section 1.2).
There are no special incentives.
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4.4 !ssues with Byin the BeIian Ba
Vessels lyinq Lhe Belqian laq benelL lrom several Lax incenLives LhaL are noL available Lo oLher Laxable
vessels in Belgium (see section 1).
Pallet Transportation Aid
1his is a Lemporary iniLiaLive ol Lhe Flemish CovernmenL Lo sLimulaLe inland river LransporL in Flanders,
especially for construction materials (e.g., gypsum blocks, quickly building blocks and bricks). Within that
segment alone there would be a real potential of 6 to 7 million tons of goods per year qualifying for a modal
shift from road to waterway.
Projects that are submitted must:
Have Lhe operaLional sLarLup ol palleL LransporL by barqe as aim
Comprehend an inland LransporLaLion includinq a sLarL or end poinL in Flanders
Have Lhe aim Lo salequard Lhe lonqLerm conLinuiLy ol Lhe pro|ecL
Over Lhe nexL Lhree years, Lhe Flemish CovernmenL has more Lhan t1.5 million aL iLs disposal lor Lhe
iniLiaLive. FirsL call was launched December 2011: MarkeL parLicipanLs who wished Lo parLicipaLe were able Lo
apply lrom 12 December 2011 unLil March 2012 wiLh Lhe aqencies WaLerweqen en Zeekanaal NV and NV De
Scheepvaart. An application could have been made for:
lnvesLmenL supporL: a oneLime lnancial compensaLion paid under an 80:20 sLaLe Lo privaLe raLio, up Lo
t200,000 over Lhree years
OperaLinq aid: a slidinq scale supporL based on demonsLraLed exLra operaLinq cosLs compared Lo palleL
transport by road
1he applicaLions were evaluaLed on ellciency and volume quaranLee, realism, Lhe exLenL ol modal shilL, social
value and general deployability (generic solution for multiple players).
The new call has not been announced yet.
5.1 Infrastructure
5.1.1 Major ports
The major ports are:
AnLwerp {secondlarqesL porL in Lurope lor inLernaLional shippinq lreiqhL)
ChenL
OsLend
Zeebruqqe
Cranes lor every size ol vessel {in AnLwerp and Zeebruqqe)
SpecialisL Lerminals {AnLwerp) lor iLems, includinq cars, cereals, china, clay, coal and ores, collee,
containers, fertilizers, forest products, fruits, hazardous cargo, iron and steel products, perishable goods,
plastics, roll-on and roll-off, sugar and tank storage
Dense neLwork ol roads {AnLwerp: ^00km, ChenL: 135km, Zeebruqqe: 180km, OsLend: 55km), railways
{AnLwerp: 1,113km, ChenL: 250km, Zeebruqqe: ^0km, OsLend: 20km) and canals {+/1,500km)
More Lhan 350km ol pipelines in Lhe AnLwerp urban area alone lor naLural qas, crude oil, oxyqen,
hydrogen, ethylene, propylene, nitrogen and all kinds of liquid hydrocarbon
1he LoLal area ol Lhe porL complex is 21,229ha {AnLwerp: 13,057ha, ChenL: ^,667ha, Zeebruqqe: 2,8^7ha,
Ostend: 658ha), which breaks down as:
WaLer area ol Lhe docks: +/ 3,959ha {AnLwerp: 2,128ha, ChenL: 623ha, Zeebruqqe: 1,009ha, OsLend: 199ha)
lndusLrial siLes: 3,720ha {AnLwerp), 2,780ha {ChenL)
Covered warehouse space: 5^2ha {sLoraqe capaciLies ol indusLrial lrms are noL included AnLwerp)
Antwerp-based companies can choose between Brussels airport and Antwerp airport. Brussels airport
is 30 minutes from Antwerp by road, is used by most of the largest airlines and has direct links to every
continent. It is also one of Europes largest airports for air freight, and some hundred different cargo
agencies are based at Brucargo already. Antwerp airport has a solid position in the interregional airlines
network linking major European cities. Furthermore, Schiphol airport (the Netherlands) is 1 hour and 25
minutes from Antwerp by road.
The following support services for the shipping industry are available:
ConsulLinq lrms specialized in shippinq
Belqium has a MariLime Academy, based in AnLwerp, aL Lhe colleqe level LhaL ollers a masLer's or bachelor's
program in nautical science for the deck department and a professional bachelors program in marine engineering.
Furthermore, certain maritime training institutes provide maritime training at a high-school level. The
UniversiLy ol AnLwerp {UA) ollers various proqrams in LransporL and mariLime law and manaqemenL
{l1MMA). 1he UniversiLy ol ChenL {UCenL) and UA oller a combined curriculum in mariLime sciences, while
Lhe APLC AnLwerp/Flanders PorL 1raininq CenLer ollers proqrams includinq, amonq oLhers:
PorL manaqemenL
ConLainer Lerminal manaqemenL
PorL environmenLal policy and Lechnoloqy
l1 and LlecLronic SiqnaLure {LDl) in porL business
PorL securiLy
CusLoms, Laxes and Lrade allairs
Dredqinq Lechnoloqies
PorL enqineerinq
5.2 Safety, security and environmental issues
Belqium has implemenLed Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code.
AlmosL every shippinq company has lnLernaLional OrqanizaLion lor SLandardizaLion {lSO) 9002 cerLilcaLion.
No information is provided.
1he Belqian CovernmenL has approved and raLiled mosL lnLernaLional MariLime OrqanizaLion {lMO) requlaLions.
5.2.4 Security measures
Belgium has implemented both the International Ship and Port Facility Security (ISPS) code established by
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Lhe lMO and iLs LU LranslaLion, as esLablished by RequlaLion {LC) No. 725/200^ and DirecLive 2005/65/
LC, respecLively, ol Lhe Luropean ParliamenL and ol Lhe Council ol 31 March 200^ and 26 OcLober 2005,
respectively, on enhancing ship and port facility security, by the law of 5 February 2007.
5.2.5 AED Security and Safety certihcate
See 1.9 above.
5.3 Registration
The owner and the operator of a ship can, under certain conditions, apply to register a ship. The owner, as a
naLural person, musL eiLher be a naLional ol an LU Member SLaLe or reside in Belqium. 1he headquarLers ol a
company musL be in Lhe LU.
Operators are subject to the following conditions for vessel registration:
1hey musL have an operaLion in Belqium, reqisLered in Lhe 1rade ReqisLer.
1hey musL conLrol Lhe ship lrom LhaL operaLion.
1hey musL be auLhorized by Lhe shipowner Lo reqisLer Lhe vessel.
In general, a vessel can be registered in Belgium in the register of ownership or in the bareboat register. All
vessels musL be inspecLed by Lhe Belqian MariLime lnspecLoraLe. Vessels aqed more Lhan 15 years {lrom keel
layinq) will be sub|ecLed Lo sLricLer inspecLions. Only reqisLered vessels are enLiLled Lo ly Lhe Belqian laq
(according to Article 2 of the law of 21 December 1990).
1he vessels involved have Lo be inspecLed by Lhe Belqian MariLime lnspecLoraLe. ln order Lo laciliLaLe Lhe
inspection, a certain number of documents must be presented in advance, such as:
1he reqisLraLion declaraLion lorm duly llled ouL
1he oriqinal Lonnaqe cerLilcaLe
1he documenL ol LiLle
1he oriqinal loreiqn cerLilcaLion {boLh in Lhe absence ol any reqisLraLion and on dereqisLraLion wiLh Lhe
lifting of the mortgage)
1he arLicles ol associaLion ol Lhe company or companies which own Lhe vessel
Followinq Lhe Lechnical survey, Lhe Belqian MariLime lnspecLoraLe issues a "cerLilcaLe ol classilcaLion." 1he
vessel cannoL be reqisLered wiLhouL Lhis cerLilcaLe. 1his documenL includes all ol Lhe cerLilcaLes relaLinq
Lo lMO convenLions {e.q., lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea [SOLAS|, lnLernaLional
ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships [MARPOL|).
5.3.3 Parallel registration
A vessel registered in the Belgian full register cannot be registered in another country except in the bareboat
reqisLer ol LhaL counLry. ln Lhis case, Lhe ship may ly Lhe laq ol Lhe laLLer counLry.
5.3.4 International conventions regarding registration
Belqium adopLed Lhe UniLed NaLions ConvenLion on CondiLions lor ReqisLraLion ol Ships, Ceneva 1986.
Brazil
1. Tax
Brazil does not have a tonnage tax system. Brazilian shipping companies (EBN) are subject to the same
corporate income taxes as other Brazilian legal entities.
Brazilian resident legal entities are subject to income tax on their worldwide income at a rate of 15%, with
a surLax ol 107 lor prolLs exceedinq BRL2^0,000 {approximaLely t93,000) per year. ln addiLion, a social
conLribuLion Lax on corporaLe neL prolLs also applies aL a raLe ol 97. 1herelore, Lhe combined corporaLe
income tax (CIT) rate is approximately 34%.
1axpayers may annually elecL Lo pay Cl1 based on Laxable prolLs deLermined as eiLher {i) a percenLaqe ol
gross revenues (lucro presumido) or (ii) per their actual income under accounting records (lucro real).
The taxation regime based on a percentage of gross revenues is limited to companies with annual gross
revenues LhaL do noL exceed BRL^8 million {approximaLely t18.6 million). Under Lhe LaxaLion reqime based
on acLual income, Lhe Lax is calculaLed based on Lhe company's accounLinq prolLs, which are ad|usLed lor
nondeductible expenses and non-taxable revenues. In general, operating expenses are deductible for CIT
purposes, provided they are necessary and usual to the companys activity.
As a qeneral rule, lxed asseLs may be depreciaLed based on Lheir uselul lile. DocumenLaLion is required Lo
support the useful life when it differs from the useful life provided by the Brazilian Internal Revenue Service
(RFB). Examples of RFB annual depreciation rates are as follows: 5% for most shipping vessels, 10% for
machinery and equipment and 20% for vehicles, computer hardware and software. Certain limits apply for the
deduction of royalties and trademarks from the taxable income.
1ax losses may be carried lorward indelniLely, Lhouqh Lhere is a 307 limiL lor ollseLLinq Lhe company's Laxable
income in a Lax period. No carryback or inlaLion ad|usLmenLs are permiLLed. Chanqes in ownership conLrol
or in Lhe business acLiviLy may resLricL Lhe abiliLy ol ollseLLinq Lhe carried lorward Lax losses. LimiLaLions also
apply to the offsetting of non-operating tax losses.
Capital gains recognized by Brazilian resident entities are included as ordinary income and taxed at the
sLandard raLes ol Cl1. ln qeneral, capiLal losses incurred in a calendar year may ollseL operaLinq prolLs
or capiLal qains qeneraLed in Lhe same year. Lxcess capiLal losses may be carried lorward indelniLely, buL
offsetting is also limited to 30% of future capital gains.
When recognized by nonresidents, capital gains arising from the disposal of assets located in Brazil are
subject to taxation in Brazil at a rate of 15%, regardless of whether the buyer is located in Brazil or abroad.
1he raLe increases Lo 257 when Lhe benelciary is domiciled in a lowLax |urisdicLion {please see secLion 5.^.1
for countries considered as tax havens). Indirect dispositions of Brazilian assets are usually not taxable.
It is important to mention, however, that Brazil grants reciprocal income tax exemption to foreign shipping
companies domiciled in counLries where Brazilian shippinq enLiLies have Lhe same benelL in relaLion Lo Lheir
inLernaLional shippinq Lrallc acLiviLies.
CharLer ol vessel lees paid by a Brazilian residenL Lo a benelciary domiciled abroad is sub|ecL Lo Lhe
wiLhholdinq Lax {WH1) aL a zero raLe; however, when Lhe benelciary is domiciled in a counLry where Lhe
corporate tax rate is lower than 20% or, whose internal legislation imposes secrecy regarding shareholding
structure of legal entities or their ownership (i.e., a low-tax jurisdiction), the WHT increases to 25%.
For oLher applicable Laxes and specilc Lax laciliLies lor LBN, please see secLion 1.^ below.
There are no special tax facilities for seafarers. Individual resident Brazilian taxpayers are taxed on their
worldwide income based on a progressive tax table with rates varying from 0% to 27.5%.
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Nonresidents are taxed on their Brazilian-source income only, at a rate of 25%. Capital gains are taxable at a
rate of 15%.
Brazil has concluded tax treaties with the following countries:
Argentina, Austria, Belgium, Canada, Chile, ,China, Czech Republic, Denmark, Ecuador, Finland, France,
Hungary, India, Israel, Italy, Japan, Luxembourg, Mexico, Netherlands, Norway, Peru, Philippines,
Portugal, Slovak Republic, South Africa, South Korea (ROK), Spain, Sweden, Ukraine.
Though Brazil is not a member of the Organisation for Economic Co-operation and Development (OECD),
Lhese Lax LreaLies are based, in all siqnilcanL areas, on Lhe OLCD model LreaLy, which also quides Lhe
delniLion ol permanenL esLablishmenL. Under Lhese LreaLies, lederal Laxes paid Lo oLher counLries may
generally be used to offset Brazilian income tax on the same income if the treaty country grants reciprocal
treatment.
AparL lrom Lhe Philippines, in qeneral, prolLs lrom Lhe operaLion ol ships or aircralL in inLernaLional Lrallc are
taxable only in the contracting state in which the place of effective management of the enterprise is situated.
Whenever it is domiciled in both treaty countries, it is considered to be domiciled in the country in which its
effective management headquarters are based.
1.4 Freight taxes
All ships are required Lo pay Lhe exLra lreiqhL Lax lor Lhe MerchanL Marine Renewal {AFRMM) when
unloadinq carqo in a Brazilian porL. 1he AFRMM is charqed on lreiqhL, as such considered Lhe remuneraLion
for the water transportation of the relevant cargo, increased by handling charges, at a rate of 25% for ocean
navigation, 10% for coasting navigation and 40% for inland navigation on liquid bulk cargos, carried in the
north and northeast regions. The taxpayer is the consignee, as indicated in the bill of lading, though the cargo
owner may have |oinL liabiliLy lor Lhe paymenL ol Lhe AFRMM.
AFRMM is suspended lor asseLs imporLed under any special cusLoms reqimes qranLed by Lhe Brazilian
Revenue Service (RFB), such as under the drawback or the temporary admission regime with suspension of
taxes, up to the date of registration of the import declaration (DI) in the event of nationalization.
Provision ol carriaqe services is also a sLaLe value added Lax {VA1) {lCMS) Laxable evenL lor carqo carriers
whenever performed between a shipper and a recipient located in distinct municipalities or states. For cargo
LransporLaLion beLween sLaLes, lCMS raLes vary lrom 77 Lo 127, dependinq on Lhe porL ol deparLure. For
carqo LransporLaLion wiLhin one sLaLe, lCMS raLes vary lrom 177 Lo 197 dependinq on Lhe sLaLe where such
transportation occurs.
AddiLionally, lor carriaqe operaLions sLarLed abroad, Lhe lCMSLaxable evenL is Lhe lnal sLep ol Lhe carriaqe
operaLion precedinq iLs arrival in a Brazilian porL ol enLry. As a qeneral rule, lCMS raLes vary lrom 177 Lo 197
dependinq on Lhe sLaLe where Lhe porL ol enLry is locaLed. 1herelore, excepL lor express Lax benelLs qranLed
by the taxing authority, intermunicipal (among cities) and interstate carriage service providers will be subject
Lo lCMS, as Lhis Lype ol operaLion is classiled as an lCMSLaxable evenL.
Intramunicipal (within one city) carriage operations are subject to service tax (ISS). The ISS rates for
intramunicipal carriage operations range from 2% to 5% depending on the municipality.
Two federal contributions, namely the Social Integration Participation Program Tax (PIS) and the Social
Security Financing Tax (COFINS), are also levied on revenues from carriage service (freight) performed
within Brazil, at rates of 1.65% and 7.6%. On the other hand, export revenues for services in general are
exempL lrom PlS and COFlNS when represenLinq Lhe inlow ol loreiqn lunds inLo Brazil.
Brazilian shipping companies
Some specilc Lax laciliLies and lnancinq incenLives apply Lo LBN lor Brazilianlaqqed vessels and loreiqn
laqqed vessels reqisLered in a Brazilian Special ReqisLry {RLB). 1he reqisLraLion procedure musL be
perlormed belore Lhe Brazilian MariLime CourL {Tribunal Martimo).
As a general rule, the celebration of a bareboat charter agreement with an EBN entity is required for foreign-
laqqed vessels Lo perlorm coasLal, inland and porL or mariLime supporL naviqaLion in Brazilian waLers and Lo
iLs enrollmenL wiLh RLB. AddiLional requiremenLs also apply, includinq Lemporary suspension ol Lhe laq and
compliance with tonnage conditions.
FreiqhL revenues arisinq lrom qoods carried beLween Brazil and a loreiqn counLry by Brazilianlaqqed vessels
reqisLered under Lhe RLB are exempL lrom lederal conLribuLions, such as Lhe PlS and Lhe COFlNS. Moreover,
ships registered under the REB are also exempt from federal contributions to the Fund for the Development
ol MariLime Prolessional LducaLion.
1.5 Taxes and contributions on operating results of a foreign ship on cruise travel in Brazil
A specilc Lax LreaLmenL applies Lo any loreiqn ship LhaL enLers inLo Brazilian LerriLory and subsequenLly sails
along the national coast on cruise travel that includes:
Calls aL naLional porLs
Commercial acLiviLies and service provision, includinq qoods oriqinaLinq lrom abroad, inLended lor supply
of the ship and for sale to passengers
The foreign shipping company on cruise travel in Brazil shall designate a corporate attorney-in-fact in Brazil,
who in this capacity and bearing responsibility for tax issues shall be vested with powers, including the power
to compute and pay federal taxes and contributions due on activities carried out aboard the ship or related
thereto while it sails along the coast of Brazil. For this purpose, an inventory of all products available for sale
shall be delivered Lo Lhe cusLoms auLhoriLies aL Lhe porL ol enLry. MoniLorinq Lhe iniLial balance, inpuLs and
ouLpuLs and Lhe lnal balance is required, as a reporL wiLh such daLa and relevanL Lax paymenLs, includinq
those relating to the taxation levied on the nationalization of imported products, shall be presented to the
customs authority of the last port of call in the country for obtaining authorization for the ship to departure.
The operating income from such activities shall be subject to taxation by CIT and social contribution on net
prolL {SC1). PlS and COFlNS lederal conLribuLions are also levied on qross revenues.
1. SpeciaI vesseI reistraticn tax benehts fcr the shipcwner
Freight revenues relating to the transportation of goods between Brazil and any foreign country are exempt
lrom some lederal conLribuLions {PlS, COFlNS and Lhe Fund lor Lhe DevelopmenL ol MariLime Prolessional
Education) when carried by vessels registered under the REB, as described in section 1.4 above.
1.7 Changes to the tax law anticipated in the near future
ln March 2008, Lhe Brazilian qovernmenL submiLLed a Lax relorm proposal Lo be voLed on and approved
by the Federal Congress. The main goals of the proposal included simplifying the national tax system,
furthering the process of tax distress and eliminating gaps that forestall the growth of the Brazilian economy,
as well as naLional compeLiLion, especially wiLh reqard Lo Lhe socalled "lscal war" amonq Brazilian sLaLes.
Additionally, the proposal increased the amount of resources devoted to the National Policy on Regional
Development (Poltica Nacional de Desenvolvimento Regional) and inLroduced siqnilcanL modilcaLions Lo
the implementation of such policy.
One ol Lhe iLems in Lhe proposal addressed Lhe unilcaLion ol a qroup ol VA1s levied on Lhe producLion and
trading of goods and services. To this effect, COFINS, PIS, and the special social contribution on fuel products
(CIDE-Combustvel) would be consolidated into a new tax to be levied on operations involving goods and
services, referred to as federal VAT (Imposto sobre Valor Agregado Federal, or IVA-F). Under Lhe proposals,
the constitutional provisions that created the COFINS, PIS and CIDE-Combustvel taxes would be repealed.
1wo oLher imporLanL modilcaLions proposed were Lhe consolidaLion ol lederal income Laxes inLo a sinqle
income tax and payroll distressing measures, i.e., measures for the reduction of the tax burden of companies
in general through the elimination of certain contributions levied over payroll.
There has been a general consensus that the tax reform would be positive for Brazil; however, it is also
expecLed LhaL iL would underqo siqnilcanL chanqes belore iL is passed inLo law. As Lhis proposal comprises
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conlicLinq Laxinq inLeresLs, iL has been sLuck in Lhe Conqress since March 2009, and oLher proposals
introducing more focused changes are now under discussion. This is the case of a new proposal for the
qradual reducLion and unilcaLion ol Lhe lCMS charqed in inLersLaLe LransacLions Lo ^7, whose bill was
submitted by the President to the Senate for discussion in December 2012.
2. Human capital
New employees shall have their working papers (employment registration) completed in a timely fashion by
the employer with the information required (including wage, job title and hours of work). The employer must
also secure enrollment for the collection of taxes and contributions due to employees.
In addition to such conditions, the Brazilian Immigration legislation establishes that a foreign individual may
only enter the country and be engaged in gainful employment or professional activities under certain types of
entrance visas, depending on the type of activity and physical presence in the country, as follows:
1. Business: up to 90 days
2. 1echnical iLem V: one year
3. Marine iLem V: Lwo years
^. Work iLem V: Lwo years
5. PermanenL: up Lo lve years
Items (2), (3) and (4) above are different subtypes of the generic Temporary Item V visa, but only item
(4) is conditioned to the existence of a local employment contract. As it involves the performance of an
activity in the Brazilian labor market, its issuance by the Brazilian Consulate depends on an authorization
ol Lhe MinisLry ol Labor and LmploymenL. 1he applicaLion lor such visas musL be supporLed by a Brazilian
company, either as an employer or sponsor.
Brazilian labor laws apply Lo crew members ol all Brazilianlaqqed vessels or crew members hired by an LBN
in Brazil or to work in Brazil.
When contracted through a local employment contract with a Brazilian entity, individuals must be duly
registered as employees and remunerated through the Brazilian company payroll. All amounts paid through
local payroll are subject to Brazilian individual WHT (rates vary from 0% to 27.5%), as well as to social
security tax withholding at source (rates of the contribution made by individuals to the National Institute of
Social SecuriLy [lNSS| vary lrom 87 Lo 117).
Moreover, local employmenL conLracLs will also Lriqqer corporaLe payroll cosLs and provisions, includinq an
annual bonus corresponding to one-month salary (also referred to as the 13th monthly salary or Christmas
bonus) and a one-third vacation bonus (in addition to the salary for the vacation period of 30 days per
year, after each 12-month period), in addition to other labor rights granted by the legislation, such as
LransporLaLion and meal LickeLs/vouchers, compensaLion ol overLime hours wiLh a 507 premium {durinq
weekdays and Saturdays) or a 100% premium (on Sundays and holidays), among others.
Brazilian entities are also obliged to pay monthly contributions on the total remuneration paid to its
employees {a lew excepLions apply) Lo Lhe Severance Pay lndemniLy Fund {FC1S), aL a raLe ol 87, and Lo
the INSS, at rates that vary from 25.8% to 28.8% (depending of the level of risk associated with the activity
developed by the entity).
Brazil requires Brazilian marine workers Lo bear specilc cerLilcaLes and habiliLaLions Lo work onboard vessels,
as per the ability level established by the maritime authority to exercise the relevant functions. International
marine cards held by loreiqn crewmembers workinq on loreiqnlaqqed vessels operaLinq in Brazilian waLers,
with no employment relationship, may be used to comply with the habilitation required in certain cases and
lor a limiLed period ol Lime. Dependinq on Lhe period ol Lime a loreiqnlaqqed vessel will be operaLinq in
Brazilian waters, a minimum number of Brazilian crewmembers is required.
Brazilian labor law also has specilc rules applicable Lo shippinq workers, mosLly relaLed Lo work load and
safety in the work environment.
In addition, it also establishes that all independent port workers (trabalhadores avulsos) should be hired
through port labor management agencies created by the port operators. Only private port terminals located
ouLside orqanized porLs are allowed Lo hire lxedLerm employees lor Lhe execuLion ol porLrelaLed services,
as recenLly auLhorized by a Provisional Measure enacLed in December 2012. As Lhe Provisional Measure
shall be amended during the discussions in the Brazilian National Congress, this authorization may suffer
siqnilcanL chanqes in Lhe near luLure.
Brazilian labor law allows the negotiation of agreements between shipping companies and workers unions.
The negotiations result in collective agreements, which rule the relations between the companies and their
employees. 1he main Brazilian shippinq workers unions are SlNDAPOR1, SlN1RAPOR1, SlNDAMAR and
SlNDMAR.
EBN employees are liable to pay contributions under the Brazilian social security system. Dockworkers are
also inserted within the Social Security system as independent workers (trabalhadores avulsos).
The Brazilian employer must also pay social security contributions on the Brazilian payroll.
Brazil has concluded several international bilateral and multilateral social security conventions with the
lollowinq counLries: ArqenLina, Bolivia, Cape Verde, Chile, Lcuador, Ll Salvador, Creece, lLaly, Japan,
Luxembourq, Paraquay, PorLuqal, Spain and Uruquay.
Brazil has also siqned aqreemenLs wiLh Cermany, Belqium, Canada and Ouebec, SouLh Korea, France, which
are under a raLilcaLion process wiLhin Lhe NaLional Conqress and, Lherelore, are noL in lorce in Brazil yeL.
2. Mannin issues with Byin the BraziIian Ba
As a qeneral rule, in Brazilianlaqqed vessels, Lhe capLain, Lhe enqine room head enqineer and LwoLhirds ol
the crew must be Brazilian individuals.
For vessels enrolled in REB, however, the requirement for Brazilian individuals is limited to the captain and the
engine room head engineer.
The most common forms of business entities in Brazil are the corporation (sociedade annima S.A.),
which may be publicly held with stock traded on the stock exchange; the public corporation or closely held
private corporation (that is, privately owned by a small number of shareholders and without its stock traded
on the stock exchange) and the limited liability company (sociedade limitada L1DA). 1he liabiliLy ol each
shareholder of a corporation is limited to the amount subscribed by the individual or company. Quota holders
in an L1DA are liable lor Lhe lull amounL ol Lhe company's leqal capiLal unLil iL has been paid in lull.
Companies domiciled in Brazil, and branch ollces, aqencies and represenLaLive ollces in Brazil ol companies
domiciled abroad, are subject to corporate taxation as independent entities. Income derived by Brazilian
companies from their foreign subsidiaries and foreign branches is subject to CIT and SCT, as described in
sections 1.1 and 1.5, respectively, above.
International Financial Reporting Standards and Law No. 11638/07
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In the process of aligning Brazilian accounting standards with International Financial Reporting Standards
{lFRS), Law No. 11638 was enacLed on 28 December 2007 and amended Lhe Brazilian CorporaLion Law
{Law No. 6^0^, daLed 15 December 1976), in order Lo allow inLernaLional accounLinq converqence, as well
as Lo increase Lhe Lransparency level ol overall lnancial sLaLemenLs, includinq Lhose ol larqe companies noL
organized as corporations (sociedades annimas).
Effective from 1 January 2008, the law prescribed, among other accounting changes, that accounting
sLandards issued by Lhe Brazilian SecuriLies Commission {CVM) musL be aliqned wiLh inLernaLional
accounting standards adopted in the main security markets, i.e., standards issued by the International
Accounting Standards Board (IASB), which is currently considered the international reference for
accounting standards.
PrivaLely held companies may now elecL Lo adopL Lhe sLandards issued by Lhe CVM lor publicly held
corporations, which allows them to also participate in the accounting convergence process.
Larqe companies, Lhose LhaL individually or under common conLrol have LoLal asseLs in excess ol BRL2^0
million {t93 million) or qross revenues ol more Lhan BRL300 million {t115 million), musL mainLain
bookkeepinq and prepare lnancial sLaLemenLs observinq Lhe Brazilian CorporaLion Law and musL also be
audiLed by independenL audiLors reqisLered wiLh Lhe CVM.
Transitional tax regime
LllecLive as ol iLs publicaLion daLe {converLed inLo Law No. 11.9^1/09), Provisional Measure {MP) no.
449, dated as of 3 December 2008, aims to achieve tax neutrality upon the conversion to IFRS. It has
created a transitional tax regime (RTT), under which, for income taxes and PIS and COFINS purposes,
the accounting methods and criteria as of 31 December 2007 shall be considered for the recognition of
revenues, costs and expenses.
The RTT was optional for the years 2008 and 2009, and it has created the need for off-book controls for the
different accounting methods and criteria for the determination of the computation basis of such taxes, thus
leading to the existence of deferred taxes. As from 2010, the RTT becomes mandatory, until other legislation
determines otherwise.
Dividends paid ouL ol prolLs accrued lrom 1 January 1996 are noL sub|ecL Lo WH1 on disLribuLion Lo residenL
or nonresidenL shareholders. ProlLs earned prior Lo 1996 are sub|ecL eiLher Lo a 157 {prolLs disLribuLion
declared in 199^ and 1995) or 257 {prolLs disLribuLion declared prior Lo 199^) WH1 when disLribuLed Lo
nonresident shareholders.
3.3 Interest on net equity
A Brazilian company may calculate interest on net equity (INE) on the net equity value (adjusted by
the deduction of certain accounts) paid to both resident and nonresident shareholders. INE is a hybrid
mechanism to reimburse capital to the extent that amounts paid are treated as deductible expenses for
corporaLe Lax purposes aL an ellecLive raLe ol 3^7 {similar Lo lnancial expenses), while shareholders are
paid for their investment in capital.
lnLeresL on neL equiLy is calculaLed on Lhe ad|usLed neL equiLy by applyinq Lhe ollcial lonqLerm inLeresL raLe
{1JLP), buL iLs deducLibiliLy is limiLed Lo 507 ol currenL earninqs or accumulaLed prolLs. lnLeresL on equiLy
paid either to domestic shareholders or to foreign shareholders is subject to WHT in Brazil, charged at a
general 15% rate (or 25% if payment is made to a low-tax jurisdiction).
4.1 Specihc and/cr eneraI subsidies avaiIabIe fcr shippin ccmpanies
1he sLaLe's ollcial lnancinq is available Lo LBN lor shipbuildinq, conversion, modernizaLion and overhaul ol
ships previously registered in the REB, at interest rates similar to those available for building, converting,
modernizing and exporting vessels.
1here is also a Financinq Proqram lor Lhe MerchanL Marine and Shipbuildinq, which is a lederal qovernmenL
program with the participation of the National Bank for Economic and Social Development (BNDES) that
provides lnancinq Lo Brazilian dockyards lor Lhe consLrucLion ol ships and Lo LBN lor orderinq ships and
equipment from Brazilian shipbuilders.
There are currently two tax incentives applicable to infrastructure, as follows.
REPORTO (Regime Tributrio para Incentivo Modernizao e Ampliao da Estrutura Porturia) is a
special regime aimed to foster investments in the modernization and enlargement of port facilities by port
operators, port concessionaries, public use port lessees, companies authorized to operate port facilities of
private and public use and dredging companies.
The regime grants the suspension of the Import Duty, IPI, PIS and COFINS upon the acquisition of certain
machinery, equipmenL and spare parLs, amonq oLher qoods, desLined Lo be incorporaLed Lo Lhe lxed asseL lor
use in porL laciliLies operaLions. Suspension is converLed inLo an exempLion lve years alLer Lhe purchase ol
goods. Applicability depends on meeting certain requirements and will be effective until the end of 2015.
REIDI (Regime Especial de Incentivos para o Desenvolvimento da Infra-Estrutura) is a special regime aimed to
losLer Lhe invesLmenLs in Lhe inlrasLrucLure secLor by privaLe enLiLies, specilcally by companies inLeresLed in
investing in the transport, port facilities, energy, sanitary and irrigation sectors.
ln order Lo be able Lo be qranLed by RLlDl, Lhe company shall apply belore Lhe appropriaLe MinisLry wiLhin Lhe
Federal CovernmenL.
RLlDl benelLs mainly consLiLuLe Lhe suspension ol PlS and COFlNS charqed on local acquisiLion and
importation of new machinery, tools and equipment to be used in or integrated to infrastructure investments
desLined Lo be incorporaLed in Lhe lxed asseL ol Lhe benelciary. Upon Lhe use or incorporaLion ol such qoods
to the infrastructure investments, the suspension of the PIS and COFINS social contributions will be converted
into zero rates.
RLlDl benelLs shall be valid by a period ol lve years, counLed as lrom Lhe approval ol Lhe inlrasLrucLure
project by the competent tax authorities.
There are no special incentives for environmental awareness (though environmental legislation in Brazil is
quite strict, so that noncompliance may result in heavy penalties).
4.4 !ssues with Byin the BraziIian Ba
Please see section 2.6 above.
4.5 Major changes in shipping subsidy legislation anticipated in the near future
No changes in the legislation concerning subsidies for shipping are anticipated in the near future.
5.1 Infrastructure
1he Brazilian qovernmenL enacLed in December 2012 Lhe Provisional Measure 595 {MP 595) wiLh new
provisions for the operation of local ports and for the activities performed by port operators. The original
LexL ol Lhe provision, which is Lo be discussed by Lhe Brazilian NaLional Conqress, esLablishes siqnilcanL
modilcaLions.
This is a new attempt to improve the regulatory framework of the industry by reducing costs and the average
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time for loading and unloading and to ensure competitiveness.
As per the reasoning presented upon enactment of such rule, new rules were meant to eliminate the
distinction between owned cargo and third-party cargo, authorizing private port terminals to operate loads
from third-party companies. Nevertheless, the wording of such rules supporting this interpretation is not
exactly clear.
There are also new rules for ports concessions depending on the activity to be performed by the operator
(as public or private port). Further requirements demanding public selection consultation and calling for the
authorization for installation of a private port terminal, among others, have been introduced.
Moreover, wiLhin Lhe boundaries ol an orqanized porL, Lhere will be only leased Lerminals or Lerminals
explored through concession of the entire port. Thus, it will no longer be possible to have private port
terminals within organized ports, though it is not clear what will be the treatment given to the existing private
terminals that are currently located within organized ports.
New management responsibility between authorities of the industry is also established.
PrivaLe porL Lerminals locaLed ouLside orqanized porLs are now auLhorized Lo hire lxedLerm employees
for the execution of port-related services, without the intermediation of port labor management agencies
creaLed by Lhe porL operaLors. Concerned abouL a poLenLial reducLion in Lhe low ol work, which could
eventually be channeled to private port terminals now authorized to operate loads from third parties,
independent port workers have been quite reactive to these new rules.
As Lhe Provisional Measure may be amended durinq Lhe discussions in Lhe Brazilian NaLional Conqress,
siqnilcanL chanqes are expecLed in Lhis new requlaLory lramework.
5.1.1 Major ports
North
Belm Belm Par
Macap Ilha de Santana Amap
Manaus Manaus Amazonas
Porto Velho Porto Velho Rondnia
Santarm Santarm Par
Vila do Conde Barcarena Par
Northeast
Aratu Salvador Bahia
Areia Branca Areia Branca Rio Grande do Norte
Cabedelo Cabedelo Paraba
Fortaleza Fortaleza Cear
Ilhus Ilhus Bahia
Itaqu So Lus Maranho
Macei Macei Alagoas
Natal Natal Rio Grande do Norte
Pecm Fortaleza Cear
Recife Recife Pernambuco
Salvador Salvador Bahia
Sergipe Barra dos Coqueiros Sergipe
Suape Ipojuca Pernambuco
Midwest
Cceres Cceres Mato Grosso
Corumb/Ladrio Corumb Mato Grosso do Sul
Southeast
Angra dos Reis Angra dos Reis Rio de Janeiro
Barra do Riacho Barra do Riacho Esprito Santo
Forno Arraial do Cabo Rio de Janeiro
Itagua Itagua Rio de Janeiro
Niteri Niteri Rio de Janeiro
Panorama Panorama So Paulo
Pirapora Pirapora Minas Gerais
Ponta Ulbu Anchieta Esprito Santo
Praia Mole Vitria Esprito Santo
Pres. Epitcio Presidente Epitcio So Paulo
Santos Santos So Paulo
So Sebastio So Sebastio So Paulo
Rio de Janeiro Rio de Janeiro Rio de Janeiro
Tubaro Terminal Vitria Esprito Santo
Vitria Vitria Esprito Santo
South
Charqueadas Charqueadas Rio Grande do Sul
Estrela Estrela Rio Grande do Sul
Imbituba Imbituba Santa Catarina
Itaja Itaja Santa Catarina
Paranagu Paranagu Paran
Pelotas Pelotas Rio Grande do Sul
Porto Alegre Porto Alegre Rio Grande do Sul
Rio Grande Rio Grande do Sul
So Francisco do Sul So Francisco do Sul Santa Catarina
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The following facilities are available at most of the ports:
Dockinq
SLoraqe
Cranes lor every size ol vessel
The following support services are available:
Port Airport name/location
Angra dos Reis Antonio Carlos Jobim International Airport Rio de Janeiro/RJ
(approximately 140km)
Aratu Dep. Lus Eduardo Magalhes International Airport Salvador/BA
Belm Belm International Airport Belm/PA
Fortaleza Pinto Martins International Airport Fortaleza/CE
Imbituba Florianpolis International Airport Florianpolis/SC
Itagua Antonio Carlos Jobim International Airport Rio de Janeiro/RJ
(approximately 50km)
Itaqu Marechal Cunha Machado International Airport So Lus/BA
Macei Zumbi dos Palmares International Airport Macei/AL
Manaus Eduardo Gomes International Airport Manaus/AM
Natal Augusto Severo International Airport Parnamirim/RN
Niteri Antonio Carlos Jobim International Airport Rio de Janeiro/RJ
Pecm Pinto Martins International Airport Fortaleza/CE
Pelotas Pelotas International Airport Pelotas/RS
Porto Alegre Salgado Filho International Airport Porto Alegre/RS
Recife Guararapes International Airport Recife/PE
Rio de Janeiro Antonio Carlos Jobim International Airport Rio de Janeiro/RJ
Rio Grande Pelotas International Airport (60 km). Salgado Filho International Airport
Porto Alegre/RS is also close (approximately 300km).
Salvador Dep. Lus Eduardo Magalhes International Airport Salvador/BA
Santos Cumbica Guarulhos/SP and Viracopos Campinas/SP (approximately
100km)
So Sebastio Cumbica Guarulhos/SP and Viracopos Campinas/SP (approximately
203km)
Suape Guararapes International Airport Recife/PE (approximately 40km)
MariLime educaLion is provided by several Lraininq cenLers in Rio de Janeiro, such as:
lnsLrucLion CenLer AlmiranLe Craa Aranha {ClACA)
lnsLrucLion CenLer AlmiranLe Wandenkolk
MerchanL Marine Ollcers' Academy {LFOMM)
Rio de Janeiro Naval School
1he DeparLmenL ol PorLs and CoasLs, Lhrouqh Lhe Prolessional MariLime School, Lrains mariLime, porL and
lshinq workers, accordinq Lo inLernaLional sLandards esLablished lor Lhe perlormance ol such acLiviLies. 1here
are also two large specialization and training centers for maritime workers, one in Rio de Janeiro and the
other in Belm, in addition to a wide network of the Department of Ports and Coasts, offering courses to more
operational categories of workers.
1he lnLernaLional SaleLy ManaqemenL {lSM) Code lor vessels, esLablished by Lhe lnLernaLional MariLime
OrqanizaLion {lMO) SaleLy ol Lile aL Sea {SOLAS) convenLion, has been mandaLory in Brazil since July
1998.
The safety rules regarding manning are considered by some in the industry to be fairly strict. Rule No. 30,
issued by Lhe Labor MinisLry, seLs lorLh obliqaLions wiLh which shippinq companies should comply.
There are numerous environmental and conservation regulations that may be relevant to shipping
companies, including, but not limited to:
ConvenLion No. 1^7, by Lhe lnLernaLional Labour OrqanizaLion {lLO), on MerchanL Shippinq Minimum
Standards
lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships, execuLed in London on 2 November
1973
lnLernaLional ProLocol on Preparedness, Response and CooperaLion in Case ol Oil PolluLion lncidenLs,
execuLed in London on 30 November 1990
ILO Convention No. 134, on Seafarers Prevention of Accidents, executed in Geneva in 1970
Besides Lhe above leqislaLion, ResoluLion No. 398/08 by Lhe NaLional Council lor Lhe LnvironmenL
{CONAMA) provides lor minimum requiremenLs lor Lhe lndividual Lmerqency Plan lor oil polluLion incidenLs
from organized ports, port facilities or terminals, ducts, platforms and respective support facilities, and
provides guidelines on the plan preparation.
5.3 Registration
LBN musL be in compliance wiLh ResoluLion No. 8^3/07 ol Lhe NaLional Aqency lor WaLer Carriaqe {AN1AO)
in order to obtain the proper authorization to operate as a shipping company in Brazil. Such authorization can
only be qranLed Lo leqal enLiLies incorporaLed under Brazilian law, wiLh Lheir head ollce and manaqemenL in
the country, which comply with technical, economic and legal requirements, established by rules issued by
ANTAQ and other supplementary standards.
For Lhe purpose ol llinq Lhe applicaLion Lo receive auLhorizaLion, Lhe leqal enLiLy musL evidence compliance
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with one of the following requirements:
Own aL leasL one Brazilian vessel, ad|usLed Lo inLended naviqaLion and prepared Lo operaLe
PresenL a charLer aqreemenL ol a Brazilian vessel, ad|usLed Lo inLended naviqaLion, enLered inLo wiLh Lhe
owner of the vessel for a period over one year
PresenL Lhe conLracL and lnancial chronoqram ol Lhe consLrucLion ol a vessel in a Brazilian shipyard
The following documents must be presented by the legal entity when requiring authorization:
ReqisLraLion ol Lhe vessel wiLh Lhe aqency ol Lhe WaLer Carriaqe 1rallc SecuriLy SysLem ol Lhe MerchanL
Marine ol Brazil
ReqisLraLion ol Lhe vessel under iLs name wiLh Lhe ReqisLry ol MariLime Ownership ol Lhe MariLime CourL
Ceneral liabiliLy insurance in lorce
AddiLionally, Lhe company musL presenL a qood economic and lnancial siLuaLion characLerized by:
Shareholders' equiLy amounLinq Lo BRL8 million {t3.1 million) lor lonq course ocean naviqaLion, BRL6
million {t2.3 million) lor caboLaqe and BRL2.5 million {t960,000) lor porL supporL and mariLime
support navigation
LiquidiLy raLio noL lower Lhan one and a lormal requesL lor auLhorizaLion addressed Lo AN1AO, presenLinq
respective documentation
The authorization request to operate shall be formalized in an application addressed to ANTAQs general
director, supported by the following documentation:
UpdaLed arLicles ol incorporaLion ol Lhe company LhaL inLends Lo operaLe as a shippinq company in Brazil,
duly registered and including the business purpose of the legal entity, intended activity of water carriage
and support services
AudiLed balance sheeL and lnancial sLaLemenLs lor Lhe mosL recenL lscal year
CerLilcaLe ol reqisLraLion wiLh an aqency ol Lhe WaLer Carriaqe 1rallc SecuriLy SysLem ol Lhe MerchanL
Marine ol Brazil or cerLilcaLe ol ownership ol vessels
CerLilcaLe aLLesLinq Lo Lhe absence ol bankrupLcy or aqreemenL wiLh crediLors issued by Lhe disLribuLor ol
Lhe leqal enLiLy's head ollce locaLion
CerLilcaLe ol qood sLandinq lrom Lhe lederal, sLaLe or municipal lnance ollces ol Lhe leqal enLiLy's head
ollce locaLion and cerLilcaLe ol qood sLandinq wiLh respecL Lo social securiLy and as reqards deposiLs
relaLed Lo Lhe UnemploymenL CompensaLion Fund {FC1S)
1onnaqe cerLilcaLe
Desiqn specilcaLions ol Lhe ship and descripLive memorial
ANTAQ is entitled to request other documents that it deems necessary.
ForeiqnlreiqhLed vessels wiLh laq suspension can be reqisLered under RLB il some specilc condiLions are
met, as described in section 1.4 above.
As menLioned in secLion 2.6, Brazilianlaqqed vessels musL necessarily have Brazilians in Lhe posiLions ol
captain and engine room head engineer and also have Brazilians comprising two-thirds of the crew, though
vessels enrolled in REB are only required to have Brazilians in the positions of captain and engine room head
engineer.
Laws Nos. 7652/88, 977^/98 and 9^32/97, which qovern shippinq reqisLraLion, do noL menLion any
inLernaLional convenLions. However, ArLicle 27 ol Law No. 10233/01 esLablishes LhaL AN1AO shall have
the competence to authorize Brazilian companies to perform deepwater and coastal maritime services as
well as Lo provide mariLime and porL supporL services. 1he leqislaLion relerred Lo also speciles LhaL AN1AO
is responsible for the involvement of Brazil with international maritime entities as well as in conventions,
agreements and treaties regarding water transport, and for overseeing the compliance of Brazilian and
foreign deepwater maritime companies with treaties, conventions, agreements and other international
covenants to which Brazil is bound.
5.3. SpeciaI requirements/ruIes reIatin tc reistraticn
In addition to the requirements presented in items 5.3.1 and 5.3.2, shipping companies wishing to operate
in Brazil are obliged to comply with free competition principles. ANTAQ is responsible for preventing any
practice that may be harmful to competition, as well as abuse of economic power. They are furthermore
obliqed Lo perlorm auLhorized waLer carriaqe or supporL services, by complyinq wiLh Lhe operaLionspecilc
characteristics, relevant rules and regulations, so as always to meet the requirements related to regularity,
conLinuiLy, ellciency, securiLy, public inLeresL and preservaLion ol Lhe environmenL. AddiLionally, Lhe
companies can only operate vessels that are supported by a comprehensive general liability insurance policy
in force.
5.4.1 Countries considered tax havens under Brazilian law
For Brazilian purposes, tax havens are those countries or jurisdictions that do not impose taxes on income
or in which income is taxed at a rate lower than 20% or, also, whose internal legislation imposes secrecy as
regards the shareholding structure of legal entities or their ownership.
1he paymenL ol services, inLeresLs, charLer, royalLies and renL by Brazilian companies Lo benelciaries
domiciled in the countries listed below is subject to WHT at the rate of 25%:
American Samoa, American Virgin Islands, Andorra, Anguilla, Antigua and Barbuda, Aruba, Ascension
Island, Bahamas, Bahrain, Barbados, Belize, Bermuda, British Virgin Islands, Brunei, Campione dItalia,
Cayman Island, Channel Islands, Cook Islands, Costa Rica, Cyprus, Djibouti, Dominica, French Polynesia,
Gibraltar, Grenada, Hong Kong, Isle of Man, Labuan, Lebanon, Liberia, Liechtenstein, Kiribati, Macao,
Madeira, Maldives, Marshall Islands, Mauritius, Monaco, Montserrat, Nauru, Netherlands Antilles, Niue,
Norfolk Island, Oman, Panama, Pitcairn Islands, Qeshm Island, Saint Helena, Saint Kitts-Nevis, Saint
Lucia, Saint Pierre and Miquelon, St. Vincent and the Grenadines, Samoa, San Marino, Seychelles,
Singapore, Solomon Islands, Swaziland, Switzerland*, Tonga, Tristan of Cunha, Turks and Caicos Islands,
United Arab Emirates, Vanuatu.
* The effects that may derive from the inclusion of Switzerland on the Brazilian Black List are suspended, as
of 24 June 2010, by the Brazilian IRS Executive Act # 11/2010.
In addition to the 25% WHT, Brazilian transfer pricing rules are applicable whenever a transaction is carried
out with a country considered a tax haven.
1here is also specilc LreaLmenL on Lhin capiLalizaLion {see secLion 5.^.3) and corporaLe income Laxes
deductibility (see section 5.4.4.) when the transaction is carried out with a country considered a tax haven.
5.4.2 Jurisdiction considered as a Privileged Tax Regime
Law 11.727/08 inLroduced ArLicles 2Â inLo Law 9.^30/96 and brouqhL Lhe Privileqed 1ax Reqime {P1R)
concept to the Brazilian Tax System.
A P1R is delned as any Lax reqime where one or more ol Lhe lollowinq is presenL:
lncome is noL Laxed or Lhe maximum income Lax raLe is less Lhan 207
1ax advanLaqes are qranLed Lo nonresidenLs wiLhouL an obliqaLion ol havinq subsLanLive economic acLiviLy
in the country
1ax advanLaqes are qranLed Lo nonresidenLs condiLioned on Lhe absence ol conducLion ol subsLanLive
economic activity in the country
lncome qeneraLed abroad is noL Laxed or Lhe maximum income Lax raLe is less Lhan 207
lnlormaLion on Lhe company's owners, ownership ol asseLs or riqhLs or economic LransacLions perlormed
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is conldenLial
In order to determine which jurisdictions should be considered PTRs, the Brazilian IRS enacted the
NormaLive lnsLrucLion # 1037/2010, which inLroduced a lisL ol enLiLies in |urisdicLions LhaL are
considered P1Rs {Crey LisL).
* The effects that may derive from the inclusion of the Dutch holding company and the Spanish ETVEs on the
Brazilian Grey List are suspended, respectively, as of 24 June 2010, by the Brazilian IRS Executive Act #
10/2010 and, as of 30 November 2010, by the Brazilian SRF Executive Act # 22/2010.
Brazilian transfer pricing rules are applicable whenever a transaction is carried out with a country considered
a tax haven and more restrictive thin capitalization rules (see section 5.4.4) are applicable.
5.4.3 Thin capitalization rules
Thin capitalization rules were introduced into the Brazilian corporate income tax system to apply to inbound
and/or ouLbound LransacLions perlormed eiLher wiLh relaLed parLies or wiLh |urisdicLions classiled as lowLax
jurisdiction or under a PTR.
Under such rules, irrespecLive ol wheLher Lhe inLercompany loans are complianL wiLh Lhe qeneral rules
governing the deduction of expenses and Brazilian transfer pricing rules, interest expenses arising from
lnancinq arranqemenLs execuLed wiLh a relaLed parLy are only deducLible il Lhe relaLed Brazilian borrower
does not have a debt-to-equity ratio greater than 2:1. Any excess interest is not deductible for corporate
income tax purposes.
AddiLionally, inLeresL expenses derivinq lrom lnancinq arranqemenLs execuLed wiLh a conLracLinq parLy
esLablished in a lowLax |urisdicLion or under a benelcial Lax reqime, irrespecLive ol wheLher relaLed or noL
to the Brazilian borrower, are only deductible if the debt-to-equity ratio of the Brazilian borrower does not
exceed 0.3:1.
5.4.4 Effective benehciary
Any payment made, directly or indirectly, to an individual or company resident in a low-tax jurisdiction or
under a benelcial Lax reqime is noL deducLible lor income Lax purposes, unless Lhe lollowinq requiremenLs
are met:
ldenLilcaLion ol Lhe ellecLive benelciary ol Lhe income
Lvidence ol Lhe operaLinq capaciLy ol Lhe recipienL
SupporLinq documenLaLion reqardinq Lhe price paid lor riqhLs, qoods and services
FurLher, ellecLive benelciaries will be deemed Lo be Lhose enLiLies Lo which Lhe income can be aLLribuLed noL
created with the sole purpose of avoiding taxes.
The Uruguaian legal entities organized as a 5ociedades Financeiras de Inverso {5ahs)
The Danish holding company without substantial economic activity
The Dutch holding company without substantial economic activity*
The legal entities organized as an international trading company (ITC)
The Hungarian legal entities organized as an offshore or Korltolt Felelssg Trsasg
(KFT)
The US legal entity organized as a limited liability company (LLC), owned by non-US
residents, which are not subject to tax in the USA
The Spanish legal entities organized as an Entidad de Tenencia de Valores Extranjeros
(ETVEs)*
The legal entities organized in Malta as an ITC or an International Holding Company (IHC)
5.4.5 International conventions
Brazil has signed navigation agreements with the following countries:
Algeria, Argentina, Bulgaria, Chile, China, Denmark, European Union, France, Germany, Italy, Japan,
Lebanon, Norway, Peru, Poland, Portugal, Romania, Russian Federation, Sweden, United States of
America, Uruguay, Venezuela.
It is important to highlight that the agreements with Italy, Japan, Sweden, Norway and Denmark only
esLablish a communicaLion/consulLaLion channel beLween auLhoriLies Lo clarily qeneral naviqaLion issues.
1he aqreemenL wiLh Lhe Luropean Union {LU) only esLablishes LhaL LU members and Brazil will seek lor
mutual satisfactory solutions relating to maritime transportation. The agreement with Peru only covers
LransporLaLion services wiLhin inland waLerways. And Lhe aqreemenL wiLh Lhe UniLed SLaLes ol America
establishes the basis for the development of bilateral relations for maritime transportation.
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Canada
1. Tax
Foreign shipping companies (including foreign subsidiaries of Canadian corporations) may be exempt from
LaxaLion in Canada {pursuanL Lo a LreaLy or under Paraqraph 81 [1| [c| ol Lhe lncome 1ax AcL [Lhe AcL|) lor
income derived lrom Lhe operaLion ol a ship in inLernaLional Lrallc, il Lhe counLry where LhaL person resides
grants substantially similar relief for the same year to a person resident in Canada.
Canadian corporations engaged in shipping are subject to tax in Canada on their worldwide income.
1.2 Tax depreciation regime
DepreciaLion included in Lhe person's lnancial sLaLemenLs is added back, and Lax depreciaLion aL prescribed
rates is deducted for tax purposes, beginning when the asset is available for use. A new vessel (including
lurniLure, lLLinqs, radio communicaLion equipmenL and oLher equipmenL aLLached LhereLo), consLrucLed
and registered in Canada, which has never been used for any purpose before it is acquired, is included in
a separate class with a prescribed annual depreciation rate of 33.33% of the capital cost (16.66% for the
year of acquisition). For most vessels constructed outside Canada, an annual tax depreciation rate of 15%
(7.5% for the year of acquisition) generally applies to the remaining non-depreciated capital cost. Where a
nonresident person commences or ceases to use a vessel wholly within Canadas domestic trade, a deemed
acquisition or disposition of the vessel generally takes place at fair market value.
Seafarers who are residents of Canada are subject to tax in Canada on their worldwide income. The fair value
of rations and quarters may be excluded from the seafarers income for the period when the vessel is at sea
for a period of not less than 36 hours. Whether time on board a ship in port would be included in the term at
sea depends on the circumstances.
Individuals who are residents of the province of Quebec, work as seafarers, are engaged in the international
LransporLaLion ol qoods, hold an eliqibiliLy cerLilcaLe issued by Lhe MinisLer ol 1ransporL, and carry on duLies
on a ship operated by a resident of Canada (or a foreign subsidiary of such person) may deduct, for Quebec
provincial income tax purposes, an amount equal to 75% of the remuneration received from this shipowner
for the period the seafarer works on such ship.
Canada has concluded Lax LreaLies wiLh more Lhan 80 counLries. MosL LreaLies have a special arLicle
dealing with international shipping. The basis for taxation under the treaties is generally based on the
place of residence. Canada by and large applies the common law test of central management and control
to determine residence. However, Canadian domestic law contains an important exception for foreign-
incorporated international shipping corporations (including foreign subsidiaries of Canadian persons) that
meet certain conditions. Subsection 250(6) of the Act provides that a corporation that is formed under the
laws ol a counLry oLher Lhan Canada and carries on an inLernaLional shippinq business LhaL meeLs speciled
tests is deemed to be resident in its country of incorporation and not to be resident in Canada. The key
requiremenLs Lo be saLisled are:
1he corporaLion's principal business in Lhe LaxaLion year musL consisL ol Lhe operaLion ol ships LhaL are
used by Lhe corporaLion primarily in LransporLinq passenqers or qoods in inLernaLional Lrallc.
All or subsLanLially all ol Lhe corporaLion's qross revenue lor Lhe year musL be derived lrom iLs
international shipping business.
Accordinqly, iL is possible LhaL a corporaLion lormed ouLside Canada and carryinq on qualiled inLernaLional
shipping operations could employ all of its management and operational personnel in Canada without being
considered to be a resident of Canada.
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1.5 Freight taxes
No freight taxes are levied in Canada. Charges for pilotage, harbor dues, berthage, towage, wharfage and
other port charges vary according to the location.
1. Specihed vesseI reistraticn tax benehts fcr the shipcwner
A new vessel consLrucLed and reqisLered in Canada may be eliqible lor Lhe benelLs ol acceleraLed Lax
depreciation rates in Canada as described in section 1.2 above.
1.7 Shipbuilding business in Quebec
The province of Quebec has a refundable tax credit for the construction or conversion of vessels for a
taxation year of a corporation that carries on a shipbuilding business in Quebec, corresponding to an amount
ol up Lo 37.57 ol qualiled consLrucLion or conversion expendiLures incurred durinq Lhe year Lo consLrucL or
convert an eligible vessel. The tax credit cannot exceed an amount of up to 18.75% of the cost of constructing
or converting the vessel. The rate of the tax credit, as well as the ceiling based on the cost of construction
or conversion, varies dependinq on wheLher Lhe vessel is a proLoLype or Lhe lrsL, second or Lhird uniL ol Lhe
same series. To be eligible for the credit, a vessel must be built or converted in Quebec as part of a project for
which Lhe MinisLry ol Reqional and Lconomic DevelopmenL has issued a cerLilcaLe conlrminq Lhe vessel will
have a gross tonnage of at least 50 tons.
1.8 Tariffs and duties
Canada imposes a tariff and import duty on foreign-made ships brought into Canada for domestic use.
Typically vessels, including drilling platforms and rigs, attract a duty rate ranging from 20% to 25% when
imported into Canada. However, when the vessel is not available in Canada, it may be possible to obtain
duty relief on a temporary basis. On a standard pre-approved temporary vessel importation (basically for a
maximum period of 12 months), the duties can be calculated and remitted on a monthly basis (including
qoods and services Lax [CS1|) calculaLed on 1/120 ol Lhe value ol Lhe vessel. ln order lor Lhe 1/120
duLy reliel Lo apply, a wriLLen applicaLion musL be made Lo Canada CusLoms {on CoasLinq 1rade License
Application Form C-47) prior to the vessel arriving in Canada.
On 23 September 2010, a remission order was passed granting relief from custom duties on certain vessels,
including ferry boats of a length of 129 meters or more, tankers and cargo vessels (freighters, container
vessels, self-unloaders, car carriers or bulk unloaders) imported into Canada on or after 1 January 2010.
The duty relief is intended to promote the replacement of aging vessels and to modernize Canadas shipping
services. 1his reliel is indelniLe.
Finally, under a Mobile Ollshore Drillinq UniLs {MODUs) Remission Order, il a drillinq uniL qualiles as an
MODU {e.q., a drillinq plaLlorm, a |ackup, a drill ship or a semisubmersible classiled aL 8905.20.10 or
8905.90.10) and meets certain other conditions, full duty relief can be obtained where an application is
llled wiLh Canada CusLoms. 1he condiLions include:
1he MODU is used only in drillinq acLiviLy lor exploraLion, delineaLion or developmenL ol Lhe ollshore
project.
1he MODU is Lemporarily imporLed inLo Canada durinq Lhe period commencinq on or alLer
^ May 200^ lor exploraLion, delineaLion or developmenL acLiviLies and endinq on or belore ^ May 201^.
1he imporLer lles such evidence as may be required Lo deLermine eliqibiliLy lor Lhe remission.
1he claim lor remission is made prior Lo ^ May 2016 {e.q., duLy reliel may be obLained reLroacLively).
2. Human capital
2.1 Formalities for hiring personnel and workplace safety
1he MariLime Labour SLandards, as seL ouL in ParL 3 ol Lhe Canada Shippinq AcL 2001 {CSA 2001), qovern
the hiring of personnel for commercial maritime activities on Canadian vessels operating worldwide, as well
as on commercial vessels operating in Canadian waters. These standards describe, in detail, labor agreements
that are required for crew hired on vessels with unlimited or international voyages and, to a certain extent, on
vessels of 100 gross tonnage or more.
The Safe Working Practices Regulations of the CSA 2001 further describe practices that commercial ships
must follow to maintain a safe environment.
Beinq a siqnaLory Lo Lhe lnLernaLional MariLime OrqanizaLion's SLandards ol 1raininq CerLilcaLion and
WaLchkeepinq {S1CW) 1995 ConvenLion, 1ransporL Canada Marine SaleLy is required Lo implemenL a
qualiLy assurance sysLem lor Lhe cerLilcaLion and Lraininq ol Canadian sealarers, includinq meeLinq Lraininq
sLandards, obLaininq Lhe requisiLe cerLilcaLes ol compeLence and passinq required examinaLions.
1he Canada Labour Code applies Lo crew members ol all Canadian vessels. 1he CSA 2001 Sale Workinq
Practices Regulations apply to anyone employed in any working area associated with any ship in Canada or on
any Canadian ship outside Canada.
1he Marine OccupaLional SaleLy and HealLh RequlaLions, which are parL ol Lhe Canada Labour Code, apply Lo
the following:
Personnel employed on ships reqisLered in Canada
Personnel employed on uncommissioned ships ol Her Ma|esLy in Lhe riqhL ol Canada
Personnel employed in Lhe loadinq or unloadinq ol ships
In July 2010, Transport Canada announced the implementation of new regulations for the marine sector to
lurLher proLecL Lhe healLh and saleLy ol workers. 1hese requlaLions replace Lhe exisLinq Marine OccupaLional
SaleLy and HealLh RequlaLions, which came inLo lorce under ParL ll ol Lhe Canada Labour Code in 1987.
Harmonizing the new regulations with the Canada Occupational Health and Safety Regulations, the
regulatory changes are aimed at standardizing the level of health and safety protection for workers both off
board and on board.
2.3 Regulations for employing personnel
ln addiLion Lo ParL ll ol Lhe Canada Labour Code {Labour SLandards), which requlaLes employmenL in Canada
in qeneral and in iLs shippinq indusLry as a whole, Lhe Marine Personnel RequlaLions {MPR) ol Lhe CSA 2001
requlaLe cerLilcaLions, crewinq and labor sLandards. OLher applicable requlaLions and quidelines include:
1he RequlaLions RespecLinq Hours ol Work ol Lmployees Lnqaqed in Shippinq on Lhe WesL CoasL ol
Canada and LasL CoasL and CreaL Lakes Shippinq Lmployees Hours ol Work RequlaLions, which deal wiLh
standard hours of work and overtime in the East Coast, Central and West Coast shipping industry.
Minimum waqe is esLablished in each province and LerriLory.
FurLher inlormaLion is available in Canada Shippinq AcL and RequlaLions Marine Personnel RequlaLions,
SOR/2007115.
1he Ceneral PiloLaqe RequlaLions, recenLly amended in April 2012, delnes marine medical examinaLion
standards for seafearers in Canada.
The Canadian marine sector employed approximately 29,000 people in 2011.
1he Canada Labour Code is Lhe basis lor Lhe Canadian CovernmenL's labor relaLions sLraLeqy. Civen
that shipbuilding and marine industry has a strong manufacturing component, most of it falls within the
jurisdiction of provincial governments. The federal government has the authority over industries of an extra-
provincial or international character, such as the railways, bus operations, trucking, pipelines, ferries, tunnels,
bridges and canals, and shipping and related services (e.g., long-shoring).
Canadian shipbuilding unions include:
FederaLion de la MeLallurqie
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Canadian AuLo Workers' Union
BC Ferry and Marine Workers' Union
Shipyard Ceneral Workers' FederaLion ol BriLish Columbia
lnLernaLional Lonqshore and Warehouse Union ol Canada
With few exceptions, every person in Canada over the age of 18 years and earning a salary must contribute
to the Canada Pension Plan. The employee and the employer each contribute half of the amount. Canadians
working in Quebec contribute to the Quebec Pension Plan.
Canada's publicly lunded healLh care sysLem enLails 10 provincial and 3 LerriLorial healLh insurance plans.
1his Medicare sysLem provides access Lo universal and comprehensive coveraqe lor medically required
hospital and physician services.
A corporation is the most commonly used legal structure for shipping activities. Canadian corporations are
subject to the maximum combined federal and provincial or territorial tax rates, which can vary from 25%
to 31% of taxable (net) income for the 2012 calendar year. A Canadian corporation that primarily operates
ships typically allocates income to those provinces where it has a permanent establishment using a port-call-
tonnage and salaries allocation formula. Nonresident corporations conducting business in Canada through a
branch are taxable at the full corporate rate on their net business income earned in Canada. Additionally, they
must pay an additional tax of 25% on after-tax income, subject to an allowance for investment in Canadian
property. This branch tax may be reduced by treaty.
In general, dividends paid by one Canadian corporation to another are tax-free. Dividends paid by a Canadian
corporation to a foreign shareholder are typically subject to a 25% withholding tax rate, which may be
reduced by a tax treaty.
1here are none LhaL are specilc Lo Lhe shippinq indusLry.
The public sector has undertaken the following initiatives:
SLrucLured Financinq FaciliLy {SFF) lor Canadian shipbuildinq and indusLrial marine indusLry:
- SFF is a market-based tool administered by Industry Canada that is intended to address some of
Lhe compeLiLive qaps beLween Canadian and loreiqn shipyards. 1he lveyear proqram, insLiLuLed in
2001, was designed to stimulate economic activity in the Canadian shipbuilding industry by providing
lnancial assisLance Lo buyers and lessees ol CanadianbuilL ships. A recenL noLilcaLion sLaLes LhaL boaL
consLrucLion or modilcaLions should be compleLed and delivered by Lhe shipyards no laLer Lhan 31
March 2013.
- SFF is focused on leveraging market opportunities, promoting investments to complement Canadian
competences in the areas of those opportunities and assisting innovation in key technologies.
SFF responds Lo requesLs lrom Lhe indusLry Lo modily Lax requlaLions Lo permiL Lhe use ol specilc Lax
provisions in situations where Canadian vessels are sold to leasing companies rather than to operators.
SFF provides an equivalenL benelL Lo Lhe purchasers ol CanadianbuilL ships in such circumsLances,
including buyers and lessees, and is an alternative to the accelerated capital cost provision in the tax
regulations.
- To be eligible, an applicant can be a purchaser or lessee of a vessel or offshore marine structure. An
applicanL can propose LhaL Lhe conLribuLion lor lnancinq supporL is provided Lo a recipienL who can be a
purchaser, lender or lessor.
SFF provides lnancial supporL in Lhe lorm ol a buydown ol lnancinq cosLs. SupporL can be provided
lor up Lo 157 ol Lhe purchase price paid Lo a Canadian shipyard lor Lhe consLrucLion or modilcaLion ol
an eligible vessel or offshore marine structure. Financial support is a non-repayable contribution and is
subject to the following limitations:
1he buydown ol inLeresL or leasinq cosLs cannoL exceed 757 ol Lhe LoLal inLeresL or leasinq cosLs.
ll Lhe vessel or ollshore marine sLrucLure is meanL Lo be exporLed, and a lxedraLe loan has been used
Lo lnance Lhe acquisiLion or modilcaLion, Lhe inLeresL raLe ol Lhe loan cannoL normally be bouqhL down
below Lhe Commercial lnLeresL Relerence RaLe {ClRR) as delned by Lhe OrqanisaLion lor Lconomic Co
operation and Development (OECD).
- To receive SFF support, the applicant must waive the right to the accelerated capital cost allowance
(ACCA). Income tax regulations will be revised to this effect.
ln addiLion Lo Lhe SFF, Lhe lollowinq iniLiaLives are also in place:
ScienLilc Research and Lconomic DevelopmenL Lax crediLs are available Lhrouqh Lhe Canadian CusLoms
and Revenue Agency.
- The National Research Council of Canada works to increase the countrys competitiveness in the
growing ocean and marine technologies sector. The organization provides expertise, innovative solutions
and technologies in ocean engineering. Research and services support a wide range of Canadian and
international projects spanning from high-performance naval vessel operations to offshore oil and gas
exploration.
1he Ferry Services ConLribuLion Proqram, sLarLed in 19^1, provides lnancial assisLance lor inLerprovincial
ferry transportation in Atlantic Canada and Eastern Quebec. Transport Canada owns four ferry vessels and
six shore facilities. These are leased to operators for a nominal amount. This program helps to ensure a safe,
reliable and affordable transportation system and provides funding to private operators for ferry operations
and Lhe mainLenance ol 1ransporL Canada's asseLs. 1he proqram is seL Lo expire on 31 March 201^.
In addition, Transport Canada provides an annual grant to the Province of British Columbia in accordance with
an aqreemenL siqned in 1977. CranL value, iniLially CS8 million, was increased Lo CS26.9 million in 201011.
Accordinq Lo Lhe Canadian CovernmenL, marine LransporLaLion, which is an environmenLally lriendly
mode of transportation, can complement Canadas environmental objectives. In many circumstances, the
marine mode is widely recoqnized as havinq environmenLal benelLs in Lerms ol reduced emissions and luel
ellciency.
Since 1999, Transport Canada has been providing funding support for the promotion of Intelligent
Transportation Systems projects and research in Canada. Intelligent Transportation Systems are a broad
range of information and communication technologies used to make transportation systems safer and more
ellcienL and environmenLally lriendly wiLhin Lhe exisLinq inlrasLrucLure. In the Intelligent Transportation
Systems Plan for Canada: En Route to Intelligent Mobility {1999), Lhe CovernmenL ol Canada seL ouL a
strategy for the development and deployment of intelligent transportation systems across urban and rural
Canada. Federal funding is provided under the Strategic Highway Infrastructure Program (SHIP).
ln January 2012, CovernmenL ol Canada launched Lhe Shore Power 1echnoloqy lor PorLs Proqram. 1he
C$27.2-million contribution program aims to install shore power in order to reduce air emissions from ships.
1his proqram lollowed 1ransporL Canada's successlul Marine Shore Power Proqram inLroduced in 2007.
4.4 !ssues with Byin the Canadian Ba
SecLion 6^ {1) ol Lhe Canada Shippinq AcL 2001, ParL 2 sLaLes: "A Canadian vessel has Lhe riqhL Lo ly Lhe
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Canadian laq."
Co||at|on to hy tne Canac|an ha
The master of a Canadian vessel, other than the one registered in the small vessel register, needs to make
sure LhaL a vessel lies Lhe Canadian laq in Lhe lollowinq circumsLances:
a. When siqnaled Lo do so by a Canadian CovernmenL vessel or a vessel under Lhe command ol Lhe Canadian
Forces
b. When entering or leaving, or while moored at or anchored in a port
Exception
The Chief Registrar may, on application, suspend the registration of a Canadian vessel in respect to the right
Lo ly Lhe Canadian laq il Lhe vessel is shown on Lhe reqisLry ol a loreiqn sLaLe as a bareboaLcharLered vessel.
No changes in shipping subsidy legislation are expected in the near future.
The CSA 2001 is an updated version of the Canada Shipping Act, which dates back more than 100 years.
CSA 2001 and its associated revisions came into effect in July 2007. It is the principal legislation that
governs the activities of Canadian vessels in all waters, and of all vessels in Canadian waters. The act has
been simpliled by:
lncludinq delniLions only when Lhe ordinary dicLionary meaninq has been narrowed down or expanded
Removinq Lechnical deLails lrom Lhe AcL Lo simplily Lhe leqislaLive lramework Lhese deLails are placed in
regulations, standards or other documents
Usinq lanquaqe LhaL is clearer and much easier Lo undersLand
Movinq all liabiliLy provisions Lo Lhe Marine LiabiliLy AcL
References to the Canada Shipping Act in this document are sourced from the 2001 version.
Port Divestiture Program
1he PorL DivesLiLure Proqram {PDP) was inLroduced in 1996 as parL ol Lhe CovernmenL ol Canada's ellorLs
Lo modernize Lhe counLry's marine sysLem. 1he PDP iniLiaLive is manaqed by 1ransporL Canada. Under
PDP guidelines, Transport Canada administers the transfer of ownership and operations of its regional
or local porLs Lo local communiLies. 1his resulLs in a more ellcienL and ellecLive porL sysLem wiLh local
accounLabiliLy. CreaLer auLonomy would enable porLs Lo apply more ellecLive business principles while
promoting employment and economic growth. Once ports have been transferred, Transport Canada ends
its operational role, which includes directly enforcing regulations, collecting user fees and monitoring port
operations. Originally a six-year program, the PDP has received multiple extensions and is now scheduled to
end in March 201^. 1he CovernmenL ol Canada has divesLed ^88 porLs since 1996, resulLinq in savinqs ol
more than C$470 million to Canadian taxpayers. Economic Action Plan 2012 has proposed C$27.3 million
over Lhe Lwo years {2012201^) lor divesLiLure ol reqional porL laciliLies and onqoinq operaLions ol lederally
owned ports.
5.1 Infrastructure
5.1.1 Major ports
1. Under Lhe NaLional Marine Policy, porLs are classiled inLo Lhe lollowinq Lhree caLeqories: Canada PorL
Authorities (CPAs) (federal agency ports), of which there are 18 (inclusion of the Port of Oshawa in
February 2012, which was under Harbour Commission until last year)
2. Regional and local ports, of which there are 41
3. Remote ports, of which there are 26
1he domesLic marine secLor can be classiled under lour qeoqraphical reqions Lhe Pacilc wesL coasL
reqion; Lhe CreaL Lakes/SL. Lawrence; Lhe ALlanLic reqion, and Lhe norLhern reqion. 1he naLional porLs
system includes the 17 Canada Port Authorities, listed below, along with the Port of Oshawa, which used
to be a Harbour Commission port till February 2012, and operated under the Harbour Commissions Act
ol 196^. ln May 2009, Canada's 1ransporL MinisLer John Baird announced his inLenLion Lo creaLe a CPA
Lo operaLe Lhe PorL ol Oshawa. SLraLeqically locaLed aL Lhe easLern edqe ol Lhe CreaLer 1oronLo area, Lhe
port serves industries with specialized needs dependant on reliable, cost-effective water transportation.
Furthermore, in July 2010, the federal government announced its plans of investing C$10.2 million to
improve the Port of Oshawa.
Additionally, there are 239 ports that were formerly operated by Transport Canada and have been divested;
of these, 66 are federal ports, 42 provincial and 131 local ports.
1he LoLal Lrallc handled aL all Lhe porLs increased by 107 year over year Lo reach ^50 million Lons in 2010,
while Lrallc handled aL CPA porLs increased by 1^7 year over year Lo reach 268.6 million Lons in 2010.
The chart below outlines the geographies of the 17* CPAs and 1 Harbour Commission port and their tonnage
Lrallc as reporLed in Lhe annual Transportation in Canada 2011 report.
* On 1 January 2008, the Fraser River, North Fraser and Vancouver Port Authorities were merged into one
port authority, the Vancouver Fraser Port Authority, or in its marketed name, Port Metro Vancouver.
Note: the Transportation in Canada 2011 annual report was published in June 2012.
The following services are available at most ports operated by CPAs:
SLevedorinq
SLoraqe
Bunkerinq
1uqboaLs
1ruckinq
Repairs and mainLenance
Cranes
Divers
DirLy ballasL
PeLroleum producLs bunkerinq
Fish olloadinq operaLors
West Coast Central East Coast/Quebec/
(all in British Columbia) (all in Ontario) maritime provinces
Hamilton (11.4) Belledune, NB (2.1)
Oshawa (Harbour Halifax, NS (10.2)
Nanaimo (1.3) Commission) (0.283) Montreal, QC (24.8)
Thunder Bay (6.8) Quebec City, QC (24.6)
Port Alberni (1.0) Toronto (1.5) Saguenay, QC (0.4)
Prince Rupert (15) Windsor (5.3) St. John, NB (30.6)
Metro Vancouver* (104.7) St. Johns, NL (1.5)
Sept-les, QC (24.6)
Trois-Rivires, QC (2.9)
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Medical services
Fresh waLer
Ship chandler lrms {supply provisioninq)
1ransporLaLion and rail connecLions
As many of these services are provided by contractors and not by the port, it is important to contact the port
to verify whether all the services are currently available. A listing of CPAs contact information can be found in
Lhe AssociaLion ol Canadian PorL AuLhoriLies {ACPA) Membership DirecLory.
5.1.2.1 Additional information relating to Port Metro Vancouver
PorL MeLro Vancouver is responsible lor Lhe operaLion and developmenL ol Lhe asseLs and |urisdicLions ol Lhe
combined Fraser River Port Authority, North Fraser Port Authority and Vancouver Port Authority.
PorL MeLro Vancouver is a lnancially sellsullcienL corporaLion, esLablished by Lhe qovernmenL in January
2008 pursuanL Lo Lhe Canada Marine AcL and accounLable Lo Lhe Federal MinisLer ol 1ransporL. lL is qoverned
by a board of directors that represent the government and industry, is able to make decisions on business
plans and capital spending, focused on the needs of port users.
PorL MeLro Vancouver is Canada's larqesL porL, Lradinq CS75 billion {t50.2 billion) in qoods wiLh more Lhan
160 Lradinq economies. lL covers nearly 600km ol coasLline lrom PoinL RoberLs aL Lhe USCanada border,
along the southern shore of Burrard Inlet, up Indian Arm and the north shore of Burrard Inlet, and from the
mouLh ol Lhe Fraser River, easLward Lo Fraser Valley, norLh alonq Lhe PiLL River Lo PiLL Lake, and includes Lhe
north and middle arms of Fraser River.
1he porL is Lhe mosL diversiled in NorLh America, wiLh 28 deepsea marine carqo Lerminals, 2 inLernaLional
cruise Lerminals and several domesLic shorL sea shippinq Lerminals. lL ollers ellcienL access Lo rail, road and
air connections. The port also offers integrated services for the automobile and coastal forest industries and
serves as a hub for the Vancouver-Alaska cruise industry.
5.1.2.2 Additional information relating to the Port of Montral
1he PorL ol MonLreal is an inLernaLional porL LhaL is linked Lo more Lhan 80 counLries around Lhe world. lL
handles approximaLely 30 million Lons ol hiqhly diversiled carqo annually. lL is a member ol a selecL club ol
porLs LhaL handle more Lhan 1 million 20looL equivalenL uniLs or conLainers {1LUs) in a year.
The port is located in the most industrialized region on the continent and serves approximately 100 million
Canadian and American consumers. This has led to the establishment of manufacturing centers along its
waLer, rail and road neLwork. ApproximaLely hall ol Lhe porL's conLainerized carqo Lrallc is concenLraLed in
Lhe Canadian markeL, mainly Lo Ouebec and OnLario. 1he oLher hall is LransporLed Lo or lrom Lhe US markeLs,
mainly Lhe MidwesL {lllinois, Michiqan, MinnesoLa, Wisconsin and Ohio) and Lhe NorLheasL {New Lnqland and
New York State).
1he PorL ol MonLreal has Lhe lollowinq modern laciliLies Lo handle all Lypes ol carqo:
Four modern conLainer Lerminals
Larqe, open areas lor handlinq dry bulk, includinq a Lerminal aL ConLrecoeur, approximaLely ^0km
downsLream lrom MonLreal
1wo mulLipurpose Lerminals
FilLeen LransiL sheds lor nonconLainerized qeneral carqo and dry bulk
A qrain Lerminal wiLh sLoraqe capaciLy ol 260,000 Lons
BerLhs lor peLroleum producLs and oLher liquid bulk
A railway neLwork wiLh more Lhan 100km ol Lrack servinq almosL every berLh
A passenqer Lerminal lor cruise ships
Cranes wiLh heavylilL capaciLies
Special ramps lor rollon and rolloll carqo
There is also on-site access to repair, bunkering, towing, mooring and other essential services.
5.1.3 Transportation close to major ports
Canadas major ports are linked to the road and rail system, while some ports also provide access to major
airporLs {e.q., Vancouver, 1oronLo, MonLreal, Halilax, SL. John's).
5.2 Maritime education
Ma|or mariLime educaLional insLiLuLions in Canada include:
BriLish Columbia lnsLiLuLe ol 1echnoloqy {BCl1) Pacilc Marine 1raininq Campus
Camosun Colleqe {VicLoria)
1he Canadian CoasL Cuard Colleqe {Nova ScoLia)
Ceorqian Colleqe, Owen Sound Campus {OnLario)
L'insLiLuL MariLime du Ouebec
1he Marine CenLre, Holland Colleqe, Prince Ldward lsland
Marine lnsLiLuLe {aka Fisheries and Marine lnsLiLuLe ol Memorial UniversiLy ol Newloundland)
Nova ScoLia CommuniLy Colleqe
ln June 2011, Lhe CovernmenL ol Canada Lranslerred Lwo marine Lraininq simulaLors Lo Lhe Fisheries and
Marine lnsLiLuLe ol Memorial UniversiLy ol Newloundland, and in OcLober 2011 anoLher Lwo simulaLors were
Lranslerred Lo L'insLiLuL MariLime du Ouebec. Newloundland and Ouebec also received lederal lundinq worLh
C$1,233,253 and C$1,233,253, respectively, to modernize the simulators.
Canada was one ol Lhe member counLries ol Lhe lnLernaLional MariLime OrqanizaLion {lMO), which
was instrumental in implementing requirements for safety management systems on all ships trading
internationally. The systems were mandated for Canadian international shipping through the Safety
ManaqemenL RequlaLions, which inLroduced Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code in 1998 and
expanded the scope of its application in 2002. Transport Canada has reported some success in promoting the
volunLary adopLion ol Lhe lSM Code by domesLic shippinq companies. lL has also developed quidance maLerial
lor small passenqer vessels operaLinq inLernaLionally, qiven LhaL a lullblown lSM Code would noL be leasible
in such cases.
5.3.2 Implementation of Vessel Pollution and Dangerous Chemicals Regulations
In April 2012, Transport Canada enacted Vessel Pollution and Dangerous Chemicals Regulations to eliminate
the discharge of vessel-source pollutants into the marine environment and promote the safe operation of
chemical Lankers. 1hese requlaLions will supporL Lhe CovernmenL ol Canada in meeLinq iLs inLernaLional
obligations in the area of marine environmental protection. The regulations repeal and replace the previous
Regulations for the Prevention of Pollution from Ships and for Dangerous Chemicals and Pollutant Discharge
Reporting Regulations, 1995.
5.3.3 !mpIementaticn cf identihcaticn and trackin reuIaticns
ln November 2010, 1ransporL Canada implemenLed Lhe LonqRanqe ldenLilcaLion and 1rackinq ol Vessels
Regulations to further improve safety and security at sea. The new regulations are expected to help in
tracking Canadian vessels that make international trips and monitor foreign vessels up to 1,000 nautical
miles off Canadas coasts. These regulations apply to Canadian passenger vessels with more than 12
passengers and to Canadian international cargo vessels, including high-speed craft and tugs of more than
300 gross tonnage.
5.3.4 !mpIementaticn cf hre and bcat driIIs reuIaticns
ln May 2010, 1ransporL Canada announced Lhe implemenLaLion ol Fire and BoaL Drills RequlaLions Lo
enhance passenger safety. These regulations mandate that an accurate count of persons on board a vessel
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should be available for search and rescue workers. They also require passengers and crew to know when to
abandon a vessel and how Lo reacL salely and ellcienLly Lo an onboard emerqency.
5.3.5 Implementation of domestic ferry security regulations
In December 2009, Transport Canada announced the implementation of its Domestic Ferries Security
Regulations to increase the level of protection of 18 domestic ferry routes and 29 ferry facilities across the
country. These new regulations establish a framework for detecting security threats and taking preventive
measures.
5.3.6 Safety rules pertaining to manning
All vessels LhaL require an inspecLion cerLilcaLe, as idenLiled in Lhe Vessel CerLilcaLes RequlaLions, musL
have a Sale Manninq DocumenL {SMD). 1his mandaLes minimum sale crewinq levels lor Lhe vessel and is
valid lor a maximum ol lve years alLer Lhe day ol iLs issue. DeLails abouL SMD can be lound in Lhe Marine
Personnel Regulations.
Annex Vl ol MARPOL, RequlaLions lor Lhe PrevenLion ol Air PolluLion lrom Ships, include lMO requiremenLs
for air emissions, covering topics such as ozone-depleting substances, nitrogen oxide emissions from new
diesel enqines and Lhe sullur conLenL ol luel oil. 1hese inLernaLional requlaLions came inLo lorce in May 2005.
SecLion 658 ol ParL XV ol Lhe CSA 2001 has Lhe auLhoriLy Lo implemenL MARPOL requiremenLs.
1he US and Canada recenLly applied Lo Lhe lMO Lo become an emissionconLrol area {LCA). 1he combined
US and Canadian LCA will sLreLch 200 nauLical miles around Lhe coasLline ol boLh Lhe counLries. ln OcLober
2011, Canada siqned a proLocol aL lMO Lo help ensure proper compensaLion lor vicLims ol marine polluLion
and penalizing polluters.
ln OcLober 2009, Lhe Canadian CovernmenL raLiled Lhe SupplemenLary Fund ProLocol ol 2003 Lo Lhe
1992 lnLernaLional Oil PolluLion CompensaLion Fund and Lhe lnLernaLional ConvenLion on Civil LiabiliLy lor
Bunker Oil Pollution Damage, 2001 (Bunkers Convention), which came into force on 2 January 2010.
1heses convenLions siqnilcanLly enhanced Lhe exisLinq liabiliLy and compensaLion reqimes lor polluLion
damage from ships.
In October 2011, the Navigation Safety Regulations under CSA, which implements provisions and standards
for navigation equipment for the safety of life at sea and protection of the marine environment, has replaced
certain sections on voyage data recorders (VDRs). VDRs are now required for all new passenger vessels of
500 gross tonnage or more and new cargo vessels of 3,000 gross tonnage or more that are not engaged
solely on inland voyages.
ln November 2011, BallasL WaLer ConLrol and ManaqemenL RequlaLions were updaLed Lo conLrol invasive
species and pathogens from entering waters under Canadian jurisdiction. These regulations have replaced
BallasL WaLer ConLrol and ManaqemenL RequlaLions made under Lhe previous CSA.
In October 2012, amendments were introduced to the Navigable Waters Protection Act, which allows
for the building of bridges and other works that might interfere with navigation. The amendments would
help reduce delays in seekinq approvals lor consLrucLion ol bridqes and oLher works. ln March 2013,
CovernmenL amended Lhe 1ransporLaLion ol Danqerous Coods RequlaLions Lo provide qreaLer clarilcaLions
on requirements for certain goods.
5.4 Key federal investments in marine sector
ln July 2012, Lhe CovernmenL ol Canada announced addiLional lundinq lor Lhe BoaLinq SaleLy Class
Contribution Program. The renewed program, now called the Boating Safety Contribution Program
{BSCP), will receive up Lo S500,000 lundinq lrom CovernmenL ol Canada in lscal year 20131^ and up Lo
CS975,000 annually sLarLinq lrom lscal year 201^15.
ln March 2012, Lhe CovernmenL ol Canada announced iLs invesLmenL plans lor modernizinq Lhe PorL ol
MonLreal and in Lhe SL. Lawrence naviqaLion sysLem. Similar plans were announced earlier durinq Lhe year lor
Port of Saguenay and Port of Sept-les.
ln March 2011, Lhe Canadian CovernmenL announced CS1.5 million worLh ol lundinq lor consLrucLion ol new
transportation infrastructure at the Port of Belledune. This will support the construction of a new facility that
will enable the layout and production of pre-assembled steel units for various projects.
ln SepLember 2010, Lhe Canadian CovernmenL announced iLs plans ol invesLinq CS2.5 million in Lhe Prince
Rupert Port Authoritys Fairview Terminal project to provide shore power capacity to container ships through
an elecLric cable manaqemenL sysLem. Prince RuperL will be Lhe lrsL Canadian porL Lo oller shore power
for container ships. Furthermore, the project is expected to reduce local greenhouse gas emissions by up
to 4,000 tonnes and criteria air contaminants by 160 tonnes annually by shutting down the engines of
container ships and connecting them to the ports electrical grid while docked.
ln July 2010, Lhe Canadian CovernmenL invesLed CS521 million Lo reviLalize Marine ALlanLic lnc. 1his
included Lhe renewal ol iLs leeL and shore laciliLies. 1he company plans Lo invesL CS8^ million annually over
Lhe nexL lve years Lo upqrade Lerminal and porL inlrasLrucLure, includinq Lhe consLrucLion ol a Lerminal
building in North Sydney.
In June 2010, Canada Transport announced its plans to invest between C$8million and C$10 million to
rebuild berLh No. 1 aL Lhe La 1abaLiere wharl. FurLher, Lhe pro|ecL will enLail an environmenLal assessmenL
under the Canadian Environmental Assessment Act.
5.5 Registration
ReqisLraLion provides a leqal LiLle and cerLain benelLs such as a unique name and an ollcial number.
ReqisLraLion also allows Lhe use ol Lhe vessel as securiLy lor a marine morLqaqe. Under Lhe CSA 2001, all non
pleasure craft (small commercial vessels) licensed by Transport Canada under the Small Commercial Vessel
Licensinq SysLem are required Lo be reqisLered wiLh Lhe deparLmenL's Small Vessel ReqisLer.
All pleasure or commercial vessels weighing more than 15 gross tonnage must be registered. Furthermore,
Part 2, Section 46 of the CSA 2001 states that a vessel must be registered if:
a) It is not a pleasure craft.
b) lL is wholly owned by qualiled persons.
c) It is not registered, listed or otherwise recorded in a foreign state.
ln March 2011, Lhe CovernmenL ol Canada announced LhaL owners ol humanpowered vessels, such as
canoes, kayaks and small sailing vessels, as well as of small vessels with motors less than 7.5kw (10hp) are
not required to register their craft with Transport Canada.
ln mosL cases, a Canadian musL reqisLer Lhe vessel. 1o be qualiled, a person needs Lo meeL one or boLh ol Lhe
following criteria:
A Canadian ciLizen or a permanenL residenL wiLhin Lhe meaninq ol SubsecLion 2 {1) ol Lhe lmmiqraLion
and Refugee Protection Act
A corporaLion incorporaLed under Lhe laws ol Canada or a province
5.5.2 Ship registration procedures
Per the CSA 2001, Part 2, Section 51:
An application for registration, listing or recording of a vessel must be made in the form and manner, include
Lhe inlormaLion and be accompanied by Lhe documenLs speciled by Lhe Chiel ReqisLrar."
ln addiLion Lo Lhe speciled inlormaLion and documenLs, Lhe Chiel ReqisLrar may require an applicanL Lo
provide evidence, including declarations, which the Chief Registrar considers necessary to establish that a
vessel is required or entitled to be registered, or is entitled to be listed or recorded.
Once all Lhe requiremenLs have been meL, Lhe vessel is reqisLered and a cerLilcaLe ol reqisLry is issued. 1his
cerLilcaLe musL be on board aL all Limes durinq Lhe vessel's operaLion lor idenLilcaLion purposes. ll Lhe vessel
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is less Lhan or equal Lo 15 qross Lonnaqe, Lhe owner can choose Lo reqisLer Lhe vessel Lo obLain Lhe benelLs ol
registration, but this is not mandatory.
ReqisLraLion lorms are available aL any PorL ol ReqisLry ollce or lrom Lhe 1ransporL Canada websiLe, aL Lhe
lollowinq URL: www.Lc.qc.ca/enq/marinesaleLy/oepvesselreqreqisLraLionmenu2311.hLm
A loreiqnreqisLered, bareboaLcharLered vessel may apply Lo ly Lhe Canadian laq while appearinq on Lhe
register of a foreign country.
5.5.4 Requirements fcr cfhcers and crew servin cn vesseIs
Presentation of documents
The master of a Canadian vessel will need to make sure that each person employed on board presents all
Canadian maritime documents required under Part 3 of the CSA 2001 for that the particular position.
Cert|hcates
Lvery person employed on Lhe board ol a Canadian vessel in a posiLion where a cerLilcaLe is required under
Lhis parL ol Lhe CSA 2001 will need Lo hold Lhe cerLilcaLe and comply wiLh iLs Lerms and condiLions.
Eligibility
Only a Canadian citizen or a permanent resident within the meaning of Subsection 2 (1) of the Immigration
and Reluqee ProLecLion AcL may hold a CerLilcaLe ol CompeLency, wiLh excepLions made lor holders ol
equivalenL cerLilcaLes lrom loreiqn counLries, whose cerLilcaLes may be recoqnized.
5.5.5 Special requirements and rules relating to registration
1here are more requiremenLs, lorms and procedures relaLed Lo ship reqisLraLion. More inlormaLion can be
lound in Lhe Canada Shippinq AcL 2001 and on Lhe Vessel ReqisLraLion Ollce websiLe {www.Lc.qc.ca/enq/
marinesaleLy/oepvesselreqreqisLraLionmenu2311.hLm).
5.6 Consulted resources
Human capital
"Marine Personnel RequlaLions," Canada Shippinq AcL 2001, ParL 3, Canada Department of Justice
website, hLLp://laws.|usLice.qc.ca/en/SOR2007115, accessed 7 January 2013.
"Canada Labour Code MariLime OccupaLional HealLh and SaleLy RequlaLions," Department of Justice
Canada website, hLLp://lawslois.|usLice.qc.ca/enq/requlaLions/SOR2010120/index.hLml, accessed 7
January 2013.
"AcLs and requlaLions," Transport Canada website, hLLp://www.Lc.qc.ca/enq/acLsrequlaLions/menu.hLm,
accessed 7 January 2013.
"lnLernaLional ConvenLion on Lhe CerLilcaLion ol Sealarers," Transport Canada website, hLLp://www.
Lc.qc.ca/enq/marinesaleLy/mpspLraininqexaminaLioncerLilcaLionsLcwinLernaLional2^7.hLm,
"1he LxaminaLion and CerLilcaLion ol Sealarers, Revision 5, July 2007," Transport Canada website,
www.Lc.qc.ca/publicaLions/en/Lp2293/pdl/hr/Lp22932e.pdl, accessed 7 January 2013.
"PamphleL 2 Labour SLandards Minimum Waqes," Human Resource and Social Development Canada
website, www.hrsdc.qc.ca/enq/labour/employmenL_sLandards/publicaLions/minimum_waqes.shLml,
Canada Labour Code, Department of Justice Canada website, hLLp://laws.|usLice.qc.ca/enq/L2/index.
html, accessed 7 January 2013.
"lssues & advocacy," Chamber of Marine Commerce website, www.cmcccm.com/issues.php, accessed 7
January 2013.
"SecLors, shipbuildinq," CAW websiLe, www.caw.ca/en/secLorsshipbuildinq.hLm, accessed 7 January
2013.
"SecLors, waLer LransporLaLion," CAW website, www.caw.ca/en/secLorswaLer.hLm, accessed 7 January
2013.
"Canada Pension Plan," Service Canada website, hLLp://www.servicecanada.qc.ca/enq/isp/cpp/cppLoc.
shtml, accessed 7 January 2013.
"HealLh Care SysLem," Health Canada website, www.hcsc.qc.ca/hcssss/indexenq.php, accessed 7
January 2013.
Corporate structure
"Canada," Ernst & Young 2012 Worldwide Corporate Tax Guide, hLLp://www.ey.com/PublicaLion/
vwLUAsseLs/2012worldwidecorporaLeLaxquide/SFlLL/2012worldwidecorporaLeLaxquide.pdl?bcsi_
scan_debb0e326e6a7dd8=0&bcsi_scan_llename=2012worldwidecorporaLeLaxquide.pdl, accessed 8
January 2012.
Grants and incentives
"Shipbuildinq and indusLrial marine indusLry, SLrucLured Finance FaciliLy," Industry Canada website, www.
ic.qc.ca/epic/siLe/simcnmi.nsl/en/h_uv00002e.hLml, accessed 9 January December 2013 .
"Shipbuildinq and indusLrial marine indusLry, SFF proqram eliqibiliLy quide," Industry Canada website,
www.ic.qc.ca/epic/siLe/simcnmi.nsl/en/uv00003e.hLml, accessed 9 January 2013.
"LnvironmenLal proqrams," Transport Canada website, hLLp://www.Lc.qc.ca/enq/proqrams/environmenL
programs-index.htm accessed 9 January 2013.
"Canada Shippinq AcL 2001, ParL 2 SecLion 6^ {1) RiqhLs and ObliqaLions," Canada Department of
Justice website, hLLp://lawslois.|usLice.qc.ca/enq/acLs/C10.15/paqe2.hLml, accessed 9 January 2013.
"Ferry Services ConLribuLion Proqram," Transport Canada website, www.Lc.qc.ca/enq/proqrams/lerry
services-contribution-program-menu2362.htm, accessed 9 January 2013.
"lnLelliqenL 1ransporLaLion SysLems" Transport Canada website, www.Lc.qc.ca/enq/innovaLion/iLsmenu.
htm, accessed 9 January 2013.
"PublicaLions," Statistics Canada website, hLLp://www5.sLaLcan.qc.ca/sub|ecLsu|eL/resulLresulLaL.acLion?
pid=^006&id=^010&lanq=enq&Lype=OLC&paqeNum=1&more=0, accessed 9 January 2013.
General information
"Canada Shippinq AcL 2001 backqrounder," Transport Canada website, hLLp://www.Lc.qc.ca/enq/
mediaroom/backqroundersb05m005e1881.hLm, accessed 9 January 2013.
"1ransporLaLion in Canada 2011 " Transport Canada website, hLLp://www.Lc.qc.ca/media/documenLs/
policy/1ransporLaLion_in_Canada_2011.pdl, accessed 9 January 2013.
"1ransporLaLion in Canada 201, lisL ol addendum Lable and lqures," 1ransporL Canada websiLe,
hLLp://www.Lc.qc.ca/media/documenLs/policy/SLaLsAddend2011enq.pdl, accessed 9 January
2013.
"AirporL and porL proqrams: porLs links Lo Canada porL auLhoriLies," Transport Canada website,
www.Lc.qc.ca/enq/proqrams/porLscpalinks1109.hLm, accessed 9 January 2013.
"PorL MeLro Vancouver 2009 Annual ReporL," Port Metro Vancouver website, www.
porLmeLrovancouver.com/Libraries/ABOU1_News_Press_Releases/2009_Annual_ReporL.slb.ashx,
May 2010.
"PorL overview," Port Metro Vancouver website, www.porLmeLrovancouver.com/abouL/porLoverview.
aspx, accessed 9 January 2013.
"PorL ol MonLreal," PorL ol MonLreal websiLe,hLLp://www.porLmonLreal.com/lles/PDF/porLen
chillres/APM_Fiches1echnique_HR_MOD_HM_ANC.pdl?bcsi_scan_debb0e326e6a7dd8=0&bcsi_
scan_llename=APM_Fiches1echnique_HR_MOD_HM_ANC.pdl, accessed 9 January 2013.
"Marine schools," 1ransporL Canada websiLe, www.Lc.qc.ca/enq/marinesaleLy/mpspLraininq
examinaLioncerLilcaLionschools1053.hLm, accessed 9 January 2013.
Adam CorbeLL London, "Reliel as US and Canada make emissions requesL," Tradewinds, 3 April 2009,
via Dow Jones Factiva.
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"RPP 20092010: SecLion ll Analysis ol Proqram AcLiviLies by SLraLeqic OuLcome," Treasury Board
of Canada Secretariat website, www.LbsscL.qc.ca/rpp/20092010/insL/moL/moL02enq.asp, accessed
9 January 2013.
"Backqrounder: Canada Shippinq AcL 2001: Larqe Commercial Vessels," Transport Canada website,
www.Lc.qc.ca/enq/mediaroom/backqroundersb07m0082117.hLm, accessed 9 January 2013.
"ReqisLraLion ol Nonpleasure CralL {Small Commercial Vessels) in Lhe 'Small Vessel ReqisLer.,'"
Transport Canada website, www.Lc.qc.ca/enq/marinesaleLy/LpLp1^658menu1753.hLm, accessed 9
January 2013.
"Vessel reqisLraLion ollce," Transport Canada website, www.Lc.qc.ca/enq/marinesaleLy/oepvesselreq
registration-menu-2311.htm, accessed 9 January 2013.
"Procedures lor reqisLraLion in Canada," Transport Canada website, www.Lc.qc.ca/enq/marinesaleLy/
oep-vesselreg-registration-procedures-103.htm, accessed 9 January 2013.
"CovernmenL ol Canada announces lonqranqe vessel Lrackinq measures will lurLher improve
safety and security at sea, Transport Canada website, www.Lc.qc.ca/enq/mediaroom/releases2010
h124e-6159.htm, accessed 15 November 2010.
"CovernmenL ol Canada lunds qreen porL pro|ecL in Prince RuperL," Transport Canada website, www.
Lc.qc.ca/enq/mediaroom/releases2010h103e6078.hLm, accessed 15 November 2010.
"CovernmenL ol Canada announces invesLmenL Lo improve Lhe PorL ol Oshawa," Transport
Canada website, www.Lc.qc.ca/enq/mediaroom/releases2010h086e6033.hLm, accessed 15
November 2010.
"CovernmenL ol Canada invesLs over hall a billion dollars in Lhe reviLalizaLion ol Marine ALlanLic lnc.,"
1ransporL Canada websiLe, www.Lc.qc.ca/enq/mediaroom/releases2010h083e6027.hLm, accessed
15 November 2010.
"CovernmenL ol Canada will rebuild berLh No. 1 aL La 1abaLiere wharl," Transport Canada website,
www.Lc.qc.ca/enq/mediaroom/releases2010q001e6002.hLm, accessed 15 November 2010.
"1he CovernmenL ol Canada inLroduces new requlaLions lor small vessels," Transport Canada website,
www.Lc.qc.ca/enq/mediaroom/releases2010h05ê5918.hLm, accessed 15 November 2010.
"CovernmenL ol Canada inLroduces new requlaLions Lo proLecL passenqers and crew aboard vessels,"
Transport Canada website, www.Lc.qc.ca/enq/mediaroom/releases2010h053e5916.hLm, accessed
15 November 2010.
"Canada announces news procedures lor domesLic lerries lor deLecLinq and prevenLinq securiLy
threats, Transport Canada website, www.Lc.qc.ca/enq/mediaroom/releases2009h179e5776.hLm,
accessed 15 November 2010.
"Canada works Lo cuL polluLion lrom shippinq and improve saleLy sLandards lor workers," Transport
Canada website, www.Lc.qc.ca/enq/mediaroom/releases2009qc025e5712.hLm, accessed 15
November 2010.
"Canada raLiles new requlaLions Lo improve marine worker saleLy," Canada News CenLre, hLLp://
news.qc.ca/web/arLicleenq.do?crLr.s|1D=&mLhd=Lp&crLr.mnLhndVl=&nid=5^^559, 30 June 2010.
"CovernmenL ol Canada donaLes marine simulaLors Lo Newloundland and Labrador," Transport
Canada website, www.Lc.qc.ca/enq/mediaroom/releases2011h0^ê6367.hLm, accessed 2 January
2012.
"CovernmenL ol Canada donaLes Lwo marine simulaLors Lo Ouebec," Transport Canada website, www.
Lc.qc.ca/enq/mediaroom/releases2011h097e6^78.hLm, accessed 2 January 2012.
"CovernmenL ol Canada announces chanqes Lo reqisLraLion requiremenLs lor humanpowered
vessels, small moLorboaLs," 1ransporL Canada websiLe, www.Lc.qc.ca/enq/mediaroom/releases2011
h027e-6303.htm, accessed 2 January 2012.
"1he CovernmenL ol Canada announces new invesLmenL in LransporLaLion inlrasLrucLure," Transport
Canada website, www.Lc.qc.ca/enq/mediaroom/releases2011h02ê6291.hLm, accessed 2 January
2012.
"Canada siqns imporLanL mariLime convenLion Lo proLecL Lhe environmenL," Transport Canada website,
www.Lc.qc.ca/enq/mediaroom/releases2011h098e6^88.hLm, accessed 2 January 2012.
"Harper qovernmenL invesLs in Canadian porLs," Transport Canada website, hLLp://www.Lc.qc.ca/enq/
mediaroom/release2012h00ê6622.hLm, accessed 22 January 2013.
"Harper qovernmenL Lranslers Lhe porL ol CeorqeLown Lo benelL Lhe local economy," Transport
Canada website, hLLp://www.Lc.qc.ca/enq/mediaroom/releases2012a002e6736.hLm, accessed 22
January 2013.
"Harper qovernmenL invesLs in Canadian porLs," Transport Canada website, hLLp://www.Lc.qc.ca/enq/
mediaroom/release2012h00ê6622.hLm, accessed 22 January 2013.
"Vessel PolluLion and Danqerous Chemicals RequlaLions," Transport Canada website, hLLp://www.
qazeLLe.qc.ca/rppr/p2/2012/20120^11/hLml/sordors69enq.hLml, accessed 22 January 2013.
"CovernmenL ol Canada inLroduces naviqaLion law amendmenLs," Transport Canada website, hLLp://
www.Lc.qc.ca/enq/mediaroom/releases2012h110e6908.hLm, accessed 22 January 2013.
"AdopLed amendmenLs Lo Lhe Clear Lanquaqe RequlaLions," Transport Canada website, hLLp://www.
Lc.qc.ca/enq/Ldq/clearmodilcaLionsadopLed90.hLm, accessed 22 January 2013.
"Harper qovernmenL sLrenqLhens commiLmenL Lo boaLinq saleLy," Transport Canada website, hLLp://
www.Lc.qc.ca/enq/mediaroom/releases2012h078e6790.hLm, accessed 22 January 2013.
"Harper qovernmenL announces |obcreaLinq invesLmenLs lor Lhe PorL ol MonLreal and Lhe SL.
Lawrence," Transport Canada website, hLLp://www.Lc.qc.ca/enq/mediaroom/releases2012
h022e-6664.htm, accessed 22 January 2013.
"PM announces |obcreaLinq invesLmenLs in Lhe PorL ol Saquenay," Transport Canada website, hLLp://
www.Lc.qc.ca/enq/mediaroom/release2012qc001e6613.hLm, accessed 22 January 2013.
"Harper qovernmenL announces |obcreaLinq invesLmenLs in Lhe PorL ol SepLles," Transport Canada
website, hLLp://www.Lc.qc.ca/enq/mediaroom/releases2012h009e6637.hLm, accessed 22 January
2013.
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1. Tax
Corporate income tax
Foreiqn shippinq companies LhaL operaLe in inLernaLional Lrallc may be liable lor corporaLe income Lax
(CIT) at 25% on net earnings sourced from China (the Peoples Republic of China; PRC), which is deemed
to be 5% of the gross revenue derived from the carriage of passengers, cargo or mail from international
Lrallc oriqinaLinq lrom China, resulLinq in an ellecLive Cl1 raLe ol 1.257 {i.e., 57 257). 1he Laxable qross
revenue includes ticket charges, overweight luggage charges, catering service charges, insurance, service
fee, entertainment charges, base freight charges and various surcharges. Transportation charges paid to
subcontracting transportation companies cannot be deducted from gross revenue. The entity may be exempt
from CIT if the foreign shipping company is resident in a jurisdiction that has signed a double tax treaty or
another international convention with mainland China.
Enterprises registered locally and engaged in shipping business are subject to CIT in China on their worldwide
income. The statutory tax rate is 25%. The amended CIT law, effective 1 January 2008, has revised the
previously geographic- and ownership-based preference system (for instance, a reduced tax rate or tax
holidays were available to foreign-invested shipping businesses in terms similar to manufacturing enterprises)
into an industry-based one. So far, no industry-based tax preferences have been announced for the shipping
industry under the revised CIT law. As a transitional arrangement, shipping enterprises registered in China
belore 17 March 2007 and wiLh unexpired Lax prelerenLial LreaLmenLs under Lhe Lwo superseded Cl1 laws
were entitled to gradually phase in from a low tax rate to the statutory tax rate of 25% from 2008 until 2012
with, if applicable, a continuation of tax holidays until expiry.
Effective from 15 December 2008, income derived by shipping enterprises from Taiwan (hereinafter
generally referred to as TSEs) from cross-strait direct marine navigation is exempt from CIT provided
LhaL Lhe 1SL obLains relevanL permiL lrom Lhe Chinese MinisLry ol 1ransporLaLion and separaLely books Lhe
relevant revenue, costs and expenditure.
Business tax
Cross revenue lrom Lhe provision ol waLer LransporL in mainland China by a Laxable person {includinq
foreign enterprises and foreign investment enterprises) is chargeable to business tax (BT) at a rate of 3%.
BT taxable gross revenue includes the same items as that of CIT except that any transportation charges paid
to subcontracting transportation companies are deductible from gross turnover. Prior to 1 January 2009,
the determination of whether a BT-taxable service is provided in mainland China was based on a traditional
territorial source or place of supply concept. This has been changed to the location of either the service
provider or service recipienL since 1 January 2009. Under Lhe revised B1 rules, all Lhe Laxable revenue
of a shipping enterprise registered in China is subject to BT regardless of where the service is performed.
Likewise, LheoreLically, a loreiqn shippinq enLerprise providinq service Lo a Chinese residenL is also sub|ecL Lo
BT on all such revenue regardless of where the service is performed. However, in the latter case, it remains
Lo be clariled how, or wheLher, Lhe Chinese Lax auLhoriLies will enlorce Lhe collecLion ol such B1 when Lhe
foreign shipping enterprise is under no obligation to identify the resident status of its service recipients.
Despite the above, it is clearly stipulated that a foreign shipping company which transports passengers
or cargos embarking from a Chinese port should be subject to BT at 3% on its taxable gross revenue. The
company may be exempt from BT if it is resident in a jurisdiction that has signed a bilateral treaty with
mainland China with relevant indirect tax exemption clauses.
Civen LhaL dillerenL permuLaLions ol Lhe locaLion ol Lhe service provider and service recipienL would qive
rise to different BT implications, international shipping business operators should carefully manage their
operations and assess relevant BT exposure in China.
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Effective from 15 December 2008, revenue derived by a TSE from the provision of cross-strait direct water
transport is exempt from BT.
Value added tax
LllecLive lrom 1 January 2012, Shanqhai {municipal) was selecLed as Lhe lrsL ciLy lor Lhe value added Lax
(VAT) pilot program. As of 31 December 2012, Beijing (municipal), Anhui Province, Jiangsu Province,
Fu|ian Province, Cuanqdonq Province, 1ian|in {municipal), Zhe|ianq Province and Hubei Province also sLarLed
VAT pilot program.
Under Lhe VA1 piloL proqram, provision ol waLer LransporLaLion wiLhin mainland China should be charqeable
to VAT. Similar to the revised BT taxable rules, whether a service is subject to VAT depends on whether the
service provider or the recipient is located within mainland China. Payers are obliged to withhold VAT on
payments to foreign enterprises for VAT subject services.
VAT general taxpayers engaged in transportation activities are subject to a tax rate of 11%, with input VAT
creditable against output VAT. Enterprises with annual taxable revenue below CNY5 million may elect to be
VAT small-scale taxpayers (with exceptions). VAT small-scale taxpayers are subject to a collection rate of 3%
on their taxable revenue with no input VAT credit allowed.
NonresidenL enLerprises or individuals who provide inLernaLional Lrallc services Lo Chinese cusLomers in piloL
locations are subject to VAT at 3% with no input VAT credit allowed, unless exempted under the applicable
LreaLy. VA1 should be wiLhheld by Lhe Chinese cusLomers. Please see SecLion 1.^ below lor Lhe delniLion ol
inLernaLional Lrallc services. FreiqhL aqency services and shippinq aqency services are sub|ecL Lo VA1 aL 67.
Local levies
Starting 1 December 2010, foreign invested enterprises, foreign enterprises and foreign individuals are liable
to pay City Construction Tax (CCT) and Education Surcharges (ES), for which only domestic enterprises
and Chinese nationals were liable in the past. CCT and ES are all taxed based on indirect taxes (including
VA1, B1 and C1) acLually paid. AnoLher local levy, Local LducaLion Surcharqes {LLS), is also imposed on all
companies and individuals based on indirecL Laxes acLually paid by Lhem. 1he ellecLive daLe ol imposinq LLS
depends on the regulations of the local governments.
1he relevanL CC1, LS and LLS raLes are lisLed below:
Dividends {disLribuLed prolLs) repaLriaLed Lo loreiqn invesLors are sub|ecL Lo a wiLhholdinq Lax ol 107 aL
the time when the investee company makes the dividend declaration. However, the tax rate may be further
reduced by treaty relief.
1.3 Tax rates for seafarers
China does noL have specilc Lax rules lor sealarers. ln qeneral, loreiqners sLayinq in China are LreaLed
as residents if their physical presence in China has lasted for more than one year, though in practice they
are normally taxed only on income from Chinese sources. Individual income tax applies to both Chinese
citizens and foreigners. Employment income is taxed at progressive rates ranging from 3% to 45%, while
invesLmenL income is Laxed aL a laL raLe ol 207. 1he raLes applicable Lo business income derived by
Levy basis Levy rate Effective date
CCT 1%, 5% or 7% 1 December 2010
ES VAT, BT and CT paid 3% Same as above
LES 2% Depends on the requirement of
the local government
individuals range from 5% to 35%.
LisL ol Lax LreaLy |urisdicLions:
Albania, Algeria, Armenia, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus,
Belgium, Bosnia and Herzegovina, Botswana, Brazil, Brunei, Bulgaria, Canada, Croatia, Cuba, Cyprus,
Czech Republic, Denmark, Ecuador, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong
Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kuwait,
Kyrgyzstan, Laos, Latvia, Lithuania, Luxembourg, Macau, Macedonia, Malaysia, Malta, Mauritius, Mexico,
Moldova, Mongolia, Montenegro, Morocco, Nepal, Netherlands, New Zealand, Nigeria, Norway, Oman,
Pakistan, Papua New Guinea, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia,
Serbia, Seychelles, Singapore, Slovak Republic, Slovenia, South Africa, South Korea (ROK), Spain, Sri
Lanka, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Turkey,
Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela,
Vietnam, Zambia.
China has enLered inLo many bilaLeral aqreemenLs wiLh respecL Lo inLernaLional shippinq. More Lhan 60
separate agreements deal with international shipping, and most of the double tax avoidance treaties contain
a clause with respect to the taxation of international transportation. In some cases, the agreement contains
a clause LhaL income and prolLs lrom Lhe operaLion ol ships in inLernaLional Lrallc are liable lor indirecL Lax
(i.e., BT or VAT) and income tax only in the jurisdictions in which the place of effective management of the
business of the enterprise is located or the jurisdiction in which the enterprise operating the ships is resident
{e.q., in Lhe LreaLies wiLh Demark and Lhe UniLed SLaLes, respecLively). ln oLher cases, a mosLlavorednaLion
treatment is granted (e.g., in the treaties with Indonesia and some Eastern European countries).
China delnes "income derived lrom inLernaLional LransporL" lor purposes ol Chinese Lax LreaLies as "income
from the carriage of passengers or cargo by ship or aircraft, including income from business operations
closely related to or auxiliary to international transport. Such auxiliary business operations include the
following activities:
Leasinq a ship or aircralL on charLer {lully equipped, manned and supplied)
Sellinq passenqer LickeLs on behall ol oLher LransporLaLion enLerprises
OperaLinq a bus service connecLinq a Lown wiLh iLs airporL Lo Lhe passenqers
1ransporLinq qoods by Lruck connecLinq a depoL wiLh a porL or airporL or providinq LransporLaLion lrom a
port or airport to a buyer or arranging direct delivery to buyers
1he leasinq ol conLainers by enLerprises enqaqed in inLernaLional LransporL by ship and aircralL provided
that the leasing activity is ancillary to the international transport or incidental
OperaLinq a hoLel business only lor purposes ol providinq LransiL passenqers wiLh overniqhL
accommodation
In addition to the above, income from international transport activities carried out by enterprises whose main
business is not international transportation is also considered income derived from international transport
for Chinese tax treaty purpose.
Approval should be obtained from Chinese tax authorities to enjoy preferential tax treatment under applicable
treaties.
1.5 Residence
The CIT law stipulates that a company incorporated outside China but having effective management in China
shall be considered a tax resident in China.
ArLicle ^ ol Lhe Cl1 Law lmplemenLaLion Rules delnes ellecLive manaqemenL as Lhe "overall manaqemenL and
conLrol ol Lhe producLion, business, employees, lnance and asseLs ol a company in subsLance." 1he manaqemenL
and conLrol should be in subsLance raLher Lhan in lorm mere rubbersLampinq acLiviLies do noL counL.
The Chinese tax authority has yet to issue guidelines on the relevant criteria for recognizing foreign
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companies as resident companies under the effective management concept. Pending the issue of such
further guidance, whether a foreign company is considered a tax resident of China is dependent on the facts
and circumstances of each case.
1.6 Freight taxes
China levies a vessel tonnage tariff on any vessels that sail from overseas to Chinese ports.
According to the Provisional Regulations of the Peoples Republic of China on Vessel Tonnage Dues issued
by the State Council, a tariff shall be levied on an incoming vessel from the date of its declaration of entry at
a raLe ranqinq lrom CNY 1.5 per Lon Lo CNY 31.8 per Lon accordinq Lo Lhe classilcaLion and LoLal Lonnaqe
ol Lhe vessel and Lhe Lime period ol Lhe vessel in Lhe Chinese porL. Moreover, Lhe Lonnaqe ol a vessel LhaL is
registered in or belongs to a foreign country, which has entered into a treaty or agreement with the Peoples
Republic of China for mutual preferential treatment of tonnages or fees levied on vessels, shall be levied at a
preferential rate.
It is not necessary for vessels that have paid tonnage tariffs to pay Vessel and Vehicle Tax to the Chinese tax
authorities.
1.7 SpeciaI vesseI reistraticn benehts fcr the shipcwner
1here are no special vessel reqisLraLion benelLs lor Lhe shipowner.
2. Human capital
Chinese shipowners and charterers must follow the requirements set forth in the Seafarer Regulations of
the Peoples Republic of China in addition to complying with the Chinese labor laws for hiring seafarers. The
regulations stipulate that foreign seafarers working on Chinese vessels must be in possession of work
permiLs issued by relevanL Chinese auLhoriLies, sealarer cerLilcaLes issued by Lhe MinisLry ol 1ransporL and
idenLilcaLion documenLs issued by Lheir home counLries.
2.2 National labor law and labor contract law
The labor laws govern the labor relationship between employers and crew members within the boundaries of
the Peoples Republic of China.
China requires agreements to be reached between employees and employers to establish labor relationships
and specily Lhe riqhLs, inLeresLs and obliqaLions ol each parLy. Labor conLracLs shall be concluded in wriLLen
form and contain the following clauses:
Name, locaLion and leqal represenLaLive or Lhe key responsible person ol Lhe employinq uniL
Name, address and residenL idenLiLy card number or number ol oLher valid idenLiLy documenL ol Lhe
employee
1ime limiL ol Lhe labor conLracL
Job specilcaLions and place ol work
Workinq hours and resL days
RemuneraLion
Social securiLy insurance
Labor proLecLion, labor condiLions and proLecLion aqainsL occupaLional harm
AparL lrom Lhe mandaLory clauses speciled above, Lhe parLies can include in Lheir labor conLracLs oLher
contents agreed upon through consultation.
The employees of an enterprise may, as one party, conclude a collective labor contract with the enterprise
as another party on remunerations, working hours, rest and leave days, labor safety and hygiene, insurance,
welfare treatment and other matters.
The draft of the collective contract shall be submitted to the employees representative assembly or all
employees for deliberation and adoption.
Collective contracts shall be concluded between the trade union on behalf of the employees and the
employer. ln an enLerprise LhaL has noL yeL seL up a Lrade union, a union ollcial shall quide represenLaLives
selected by the employees to conclude the contract with the employer.
Term of contract
1he Lerm ol a labor conLracL may be lxed, open or assiqnmenLspecilc.
An open labor contract shall be concluded between the employee and the employer under any of the
following circumstances:
a. The employee has worked for the employer for more than 10 consecutive years.
b. When Lhe employer implemenLs Lhe labor conLracL sysLem lor Lhe lrsL Lime, Lhe employee had worked
for the employer for more than 10 consecutive years and has less than 10 years before reaching the
statutory retirement age.
c. A labor conLracL wiLh lxed Lerm has already been concluded Lwice.
An open contract is deemed to have been awarded to an employee if no employment contract is concluded
with him or her after working for the employer for one full year.
Minimum wage and other compulsory payments
1he employer may lx Lhe waqe level and mode ol paymenL aL iLs own discreLion and in accordance wiLh Lhe
law, sub|ecL Lo meeLinq minimum waqe sLandards lxed by local qovernmenLs aL Lhe provincial level.
Leave entitlements
Employees are entitled to the following statutory holidays:
New Year's Day
Sprinq FesLival {i.e., Chinese New Year)
lnLernaLional Labor Day
NaLional Day
OLher holidays sLipulaLed by Lhe SLaLe Council {Lhese include Chinq Minq FesLival [i.e., Lomb sweepinq
day|; Duanwu FesLival [i.e., Draqon BoaL FesLival|; and Lhe MidAuLumn FesLival)
Working hours
Statutory working hours are 8 hours per day and not more than 44 hours per week. Employers must also
ensure that employees have one day off per week. Departure from these standards requires approval from
Lhe MinisLry ol Labor.
The standards for overtime payment are:
Normal day 1507
ResL day 2007
SLaLuLory holiday 3007
National and health insurance
Employers must participate in the state social security system and pay social security contributions in
accordance wiLh Lhe law Lo cover Lhe employee's enLiLlemenL Lo social benelLs, includinq:
ReLiremenL
Diseases or in|uries
DisabiliLy durinq work or conLracLinq occupaLional diseases
UnemploymenL
MaLerniLy
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China concluded a muLual aqreemenL wiLh Cermany and SouLh Korea {ROK) on social insurance, which
came inLo ellecL on ^ April 2002 and 23 May 2002, respecLively. Accordinq Lo Lhe muLual aqreemenLs,
qualilyinq Cerman and Korean employees may parLicipaLe in Lhe Chinese social securiLy schemes upon
application with the local competent authorities.
2.5 Mannin advantaes/disadvantaes cf Byin the Chinese Ba
1he lyinq ol Lhe Chinese laq brinqs wiLh iL Lhe advanLaqes and disadvanLaqes ol Chinese law, parLicularly
employment law.
Accordinq Lo Lhe CaLaloque lor Lhe Cuidance ol Foreiqn lnvesLmenL issued by Lhe SLaLe DevelopmenL and
Reform Commission, there are restrictions on foreign investors participation in direct investment in the
shipping industry, as summarized below:
Foreiqn invesLmenL in shippinq aqencies is allowed sub|ecL Lo Lhe Chinese invesLors' ownership beinq noL
less than 51%.
Foreiqn invesLmenL in ocean shippinq Lally services is allowed in Lhe lorm ol equiLy |oinL venLures or
contractual joint ventures only.
Foreiqn invesLmenL in inland waLerway LransporLs or inLernaLional LransporLs ol passenqers or carqos by
vessels is allowed subject to the Chinese investors ownership being not less than 51%.
Except for freight forwarding agencies, the above restrictions effectively mean foreign investors in the
shipping industry cannot operate as wholly owned companies in China.
The standard income tax rate for foreign investment shipping companies is 25%.
No special incentives are available to shipping companies and the shipbuilding industry.
Locally reqisLered enLerprises enqaqed in Lhe consLrucLion ol harbor, wharl and oLher sLrucLures lor
naviqaLion are enLiLled Lo, sLarLinq lrom Lhe lrsL revenue qeneraLinq period, a Lax holiday ol Lhreeyear
exempLion lrom Cl1 lollowed by a Lhreeyear 507 reducLion in Lhe Cl1 raLe. A Laxpayer qualiled lor Lhe above
incentive should start the above tax holiday from year 2008, if it is still in an accumulated tax loss position by
31 December 2007.
Chinese companies LhaL purchase qualilyinq environmenLproLecLinq or waLer/enerqyconservinq equipmenL
are eligible to enjoy a tax credit of 10% of the purchase price in the year of purchase. Excess tax credit can be
carried lorward lor lve years. However, a disposal or leasinq ouL ol Lhe said equipmenL wiLhin lve years will
mean a clawback of the tax credit accordingly.
4.3 Advantaes and disadvantaes cf Byin the Chinese Ba
ln principle, Lhere are no advanLaqes or disadvanLaqes connecLed wiLh lyinq Lhe Chinese laq.
No changes are anticipated in the near future.
5.1 Infrastructure
5.1.1 Major ports
Ma|or China porLs' LhrouqhpuL in 2012
{1LU '000)
Source: 2012 China Ports Statistic.
The port of Shanghai is situated at the middle of the 18,000 km-long Chinese coastline, where
Lhe YanqLze River, known as "Lhe Colden WaLerway," lows inLo Lhe sea. lL is Lhe leadinq porL in Lhe
T-shaped waterway network composed by the Yangtze River and the coastline, and is also Chinas
largest comprehensive port and one of the countrys most important gateways for foreign trade. It
faces toward the northern and southern coastal seas of China and the oceans of the world, and is
linked with the Yangtze River and the inland waterways of the Yangtze River Valley region, such as the
Jiangsu, Zhejiang and Anhui provinces. Expressways and state-level highways connect the port to the
national highway network and thus to all regions of the country. Thus the port enjoys an advantageous
geographical location, favorable natural conditions, vast economically developed hinterlands, and
complete inland distribution infrastructure and facilities.
The following support facilities are readily available:
Dockinq
SLoraqe
China has many international airports. The airports close to the major ports are:
Ranking Port 2012
1 Shanghai 32,529
2 Shenzhen 23,000
3 Ningbo-Zhoushan 15,000
4 Qingdao 14,600
5 Guangzhou 14,500
6 Tianjin 12,300
7 Dalian 8,000
8 Xiamen 7,217
9 Lianyungang 5,020
10 Yingkou 4,851
Shanghai Hong Qiao International Airport
Pudong International Airport
Shenzhen Shenzhen International Airport
Guangzhou Guangzhou Baiyun International Airport
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Other international airports in China include:
1wo Lypes ol sysLems lor MariLime LducaLion and 1raininq {ML1) exisL in China: Hiqher MariLime LducaLion
and VocaLional MariLime LducaLion. 1he lrsL is aL universiLy level, a louryear course leadinq Lo a deqree; Lhe
second is a vocational type of education at either colleges or training centers. Students educated and trained
Lhrouqh eiLher sysLem can obLain Lhe hiqhesL CerLilcaLe ol CompeLence {COC) lor ollcers, i.e., MasLer or
Chief Engineer COC.
China is one ol Lhe ma|or ML1 counLries. Accordinq Lo Lhe MinisLry ol 1ransporL {MO1) and Lhe viceminisLer
ol MO1, Cao Honqlenq, Lhere are 15 universiLies providinq hiqher mariLime educaLion and more Lhan 70
colleges and training centers providing vocational maritime education. The universities and colleges enroll
more than 18,000 new students every year.
The most famous higher-level institutions are:
Dalian MariLime UniversiLy {DMU)
Jimei UniversiLy {MariLime Colleqe)
Ninqbo UniversiLy {Marine Colleqe)
Shanqhai MariLime UniversiLy {SMU)
Wuhan PolyLechnic UniversiLy {Marine and lnland WaLer Colleqe)
Amonq Lhe lve ML1 universiLies, DMU is Lhe only key mariLime insLiLuLion under Lhe MinisLry ol
CommunicaLions; Lwo oLhers come wiLhin Lhe responsibiliLy ol Lhe MinisLry ol LducaLion and Lhe remainder is
administered by local governments.
In vocational maritime education, the vocational maritime institutions are divided into three levels:
higher vocational colleges, intermediate vocational schools and maritime technical schools. The most
lamous vocaLional insLiLuLions are Lhe Oinqdao Ocean Shippinq Mariners Colleqe and Lhe Zhuhai
NaviqaLion School. 1he Oinqdao Ocean Shippinq Mariners Colleqe is allliaLed wiLh and operaLed by
China Ocean Shipping Companies (the COCSO group). This is one of the institutions for higher-level
adult education.
The entrance to different levels of maritime institutions is based on the grades that students obtain in the
National College Entrance Examination (NCEE). Students with higher grades are admitted to universities
while oLhers pursue ML1 aL vocaLional insLiLuLions.
Beijing Beijing Capital International Airport
Fuzhou Fuzhou Changle International Airport
Hong Kong Hong Kong International Airport
Macau Macau International Airport
Nanjing Nanjing Lukou International Airport
Xiamen Xiamen Gaoqi International Airport
Zhuhai Zhuhai Airport
5.2.1 Implementation of the International Safety Management Code
1he ma|oriLy ol Lhe shippinq companies have implemenLed Lhe lnLernaLional SaleLy ManaqemenL {lSM)
Code on board Lheir vessels. 1he lSM Code provides an inLernaLional sLandard lor Lhe sale manaqemenL and
operaLion ol ships and lor polluLion prevenLion. 1he purpose ol lSM Code is:
1o ensure saleLy aL sea
1o prevenL human in|ury or loss ol lile
1o avoid damaqe Lo Lhe environmenL and Lo Lhe ship
SOLAS {Lhe lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea) adopLed Lhe lSM Code in 199^ and
incorporaLed iL inLo chapLer lX. By 1998, much ol Lhe commercial shippinq communiLy was required Lo be in
compliance wiLh Lhe lSM Code. By 2002, almosL all ol Lhe inLernaLional shippinq communiLy was required Lo
comply wiLh Lhe lSM Code.
Such compliance requires LhaL each ship class have a workinq SaleLy ManaqemenL SysLem {SMS). Lach SMS
consists of the following elements:
CommiLmenL lrom Lop manaqemenL
A 1op 1ier Policy Manual
A Procedures Manual LhaL documenLs whaL is done on board Lhe ship
Procedures lor conducLinq boLh inLernal and exLernal audiLs Lo ensure Lhe ship is doinq whaL is
documenLed in Lhe Procedures Manual
A DesiqnaLed Person Lo serve as Lhe link beLween Lhe ships and shore sLall
A sysLem lor idenLilyinq where acLual pracLices do noL meeL Lhose LhaL are documenLed and lor
implementing associated corrective action
Reqular manaqemenL reviews
ln China, Lhe MariLime SaleLy AdminisLraLion ol Lhe People's Republic ol China {MSA) supervised Lhe
manaqerial process ol shipexamininq insLiLuLions, compleLed Lhe cerLilcaLe approval auLhorized Lo ship
examininq insLiLuLions in marine areas, and mainLained LhaL surveyors musL be cerLiled and responsible lor
faults. Thirteen hundred international voyage ships owned by 170 companies have been brought into the
manaqemenL sysLem ol lSM requlaLions. 1he SMS has been conducLed naLionwide wiLh some ship enLerprises
having already established the system.
5.2.2 Safety rules related to ISM
Rules on AudiL and CerLilcaLe ol Shippinq Company SaleLy ManaqemenL SysLem
Cuideline on Lhe AudiL ol Company SaleLy ManaqemenL SysLem
Cuidelines on PorL SLaLe ConLrol lor Compliance wiLh lSM Code
1he Rules on Lhe AudiLor's OualilcaLion ol Company SMS
1he Rules on AudiLor ManaqemenL ol Company SMS
5.2.3 Special rules, regulations, laws and measures regarding the environment
LnvironmenLal ProLecLion Law ol Lhe People's Republic ol China
Law ol Lhe People's Republic ol China on Lhe PrevenLion and ConLrol ol WaLer PolluLion
1he Law ol Lhe People's Republic ol China on Lhe PrevenLion and ConLrol ol ALmospheric PolluLion
1he Law ol PorL ol Lhe People's Republic ol China
LnvironmenLal lmpacL AssessmenL Law ol People's Republic ol China
RequlaLions on Sale ManaqemenL ol Lhe Danqerous Chemicals ol Lhe People's Republic ol China
RequlaLions on PrevenLion ol PolluLion lrom Ships aL Sea ol Lhe People's Republic ol China
RequlaLions on PrevenLion ol PolluLion lrom Ships' DemoliLion ol Lhe People's Republic ol China
RequlaLions on LnvironmenLal ProLecLion lrom Marine PeLroleum LxploraLion and LxploiLaLion ol Lhe
Peoples Republic of China
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1he AcL ol SaleLy Supervision ol Ships Carryinq Danqerous Coods ol Lhe People's Republic ol China
Rules on Danqerous Coods' DeclaraLion lor Lhe Ships Carryinq Foreiqn 1rade Carqo ol Lhe People's
Republic of China
1he AcL on Lhe ManaqemenL ol Danqerous Coods in PorLs ol Lhe People's Republic ol China
Rules on lnvesLiqaLion ol Marine PolluLion AccidenL lrom Ships
Rules on Marine PolluLion AccidenL lnvesLiqaLion Ollcers
5.2.4 Special rules, regulations, laws and measures regarding safety
MariLime 1rallc SaleLy Law ol Lhe People's Republic ol China
Marine LnvironmenL ProLecLion Law ol Lhe People's Republic ol China
PorL Law ol Lhe People's Republic ol China
FronLier HealLh and OuaranLine Law ol Lhe People's Republic ol China
AdminisLraLive License Law ol Lhe People's Republic ol China
5.3 Registration
The following ships shall be registered in accordance with the provisions of these regulations:
Ships owned by ciLizens ol Lhe PRC whose residences or principal places ol business are locaLed wiLhin Lhe
territory thereof
Ships owned by enLerprises wiLh leqal person sLaLus esLablished under Lhe laws ol Lhe PRC and whose
principal places of business are located within the territory thereof (provided that foreign investment is
involved, the proportion of registered capital contributed by Chinese investors shall not be less than 50%)
Service ships ol Lhe qovernmenL ol Lhe PRC and ships owned by insLiLuLions wiLh leqal person sLaLus
OLher ships whose reqisLraLion is deemed necessary by Lhe compeLenL auLhoriLy ol harbor
superinLendence ol Lhe PRC. MiliLary ships, lshery ships and sporLs cralL shall be reqisLered in compliance
with the provisions of the relevant laws and regulations.
Sailinq ships are allowed Lo ly Lhe naLional laq ol Lhe PRC alLer beinq reqisLered and qranLed naLionaliLy. No
ship may ly Lhe naLional laq ol Lhe PRC wiLhouL beinq reqisLered durinq naviqaLion.
A ship shall not have dual nationality. A ship registered abroad shall not be granted Chinese nationality unless
its former registration of nationality has already been suspended or deleted.
The acquisition, transference or extinction of the ownership of a ship shall be registered at the ship
registration administration; no acquisition, transference or extinction of the ships ownership shall be effective
as against a third party unless registered. Where a ship is jointly owned by two or more legal persons or
individuals, the joint ownership thereof shall be registered at the ship registration administration. The joint
ownership of the ship shall not be effective against a third party unless registered.
The establishment, transference or extinction of ship mortgage or bareboat chartering shall be registered at
the ship registration administration. No mortgage or bareboat chartering shall be effective as against a third
party unless registered.
Ships of Chinese nationality shall be manned by Chinese citizens. If it is necessary to recruit foreign seafarers,
their employment shall be approved by the competent authority of transport and communications under the
State Council. Seafarers on board ships of Chinese nationality who are required to possess COCs shall hold
the appropriate COCs issued by the PRC.
The harbor superintendence administration of the PRC is the competent authority in charge of registration of
ships. The harbor superintendence administrations at various ports are the proper agencies conducting the
registration of ships (hereinafter referred to as the ship registration administration). The scope of authority
Lhereol shall be delned by Lhe harbor superinLendence adminisLraLion ol Lhe PRC.
The port where a ship is registered shall be the port of registry of the ship. The owner of a ship may choose
a port closer to his residence or his principal place of business as the port of registry, but he is not allowed to
choose two or more ports as the port of registry.
Each ship shall have only one name. The name of a ship shall be checked and approved by the ship
registration administration at its port of registry. A ships name shall not be the same as any of those that
have already been registered, neither in wording nor in pronunciation.
The ship registration administration shall establish a register of ships. The register of ships shall be accessible
to thos having an interest therein.
With respect to a state-owned ship operated by an enterprise owned by the whole people having a legal
person status granted by the State, the provisions of these regulations concerning the ship owner shall be
applicable to that legal person.
A shipowner applying for registration of the ownership of a ship shall present the ship registration
administration at the port of registry with documents evidencing his legal status, and submit the originals and
copies of the documents evidencing his ownership over the ship and the technical information thereof. For
the registration of ownership of a ship purchased, the following documents shall be submitted:
1he seller's invoice, sales conLracL and delivery documenL
A documenL issued by Lhe ship reqisLraLion auLhoriLy aL Lhe oriqinal porL ol reqisLry cerLilyinq Lhe deleLion
of ownership
DocumenLs evidencinq LhaL Lhe ship is noL under morLqaqe or LhaL Lhe morLqaqees aqree Lo Lhe
transference of the mortgaged ship
For the registration of ownership of a newly built ship, the contract of ship construction and
the delivery document shall be submitted. For the registration of ownership of a ship under
construction, the contract of ship construction shall be submitted. For the registration of
ownership of a ship built by oneself for ones own use, a document evidencing the procurement
of ownership shall be submitted. For the registration of ownership of a ship procured through
heritage, presentation, auction under legal process or court judgment, a document with
appropriate legal effect evidencing the ships ownership shall be submitted.
1he ship reqisLraLion adminisLraLion, havinq examined and veriled Lhe applicaLion lor reqisLraLion ol
ownership, shall issue to the shipowner whose application meets the requirements of these Regulations the
CerLilcaLe ol ReqisLraLion ol Ship's Ownership wiLhin seven days alLer Lhe daLe ol receipL ol Lhe applicaLion,
whereupon an ollcial reqisLraLion number shall be assiqned Lo Lhe reqisLered ship and Lhe lollowinq
particulars shall be recorded in the Register of Ships:
1he ship's name and iLs call siqn
1he porL ol reqisLry, ollcial reqisLraLion number and idenLilcaLion mark ol Lhe ship
1he name and address ol Lhe shipowner and name ol iLs leqal represenLaLive
AccruemenL
1he daLe on which Lhe ship's ownership was reqisLered
1he name ol Lhe shipbuilder, and Lime and place ol buildinq
1he value ol Lhe ship, maLerial ol ship's hull and ship's main Lechnical daLa
1he oriqinal name and porL ol reqisLry ol Lhe ship and Lhe daLe ol deleLion or suspension ol iLs oriqinal
registration
lnlormaLion abouL |oinL ownership il Lhe ship is owned by Lwo or more owners
1he name and address ol bareboaL charLerer or ship operaLor, and Lhe name ol iLs leqal represenLaLive, il
the shipowner is not the one who operates or actually controls the ship
lnlormaLion on Lhe esLablishmenL ol morLqaqe, il any
The ship registration administration shall inform the shipowner in writing of any noncompliance of his or her
application with these regulations within seven days after the date of receipt of the application.
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Where a ship is bareboat chartered overseas, the shipowner shall apply to the ship registration administration
aL Lhe porL ol reqisLry lor reqisLraLion ol Lhe bareboaL charLer by submiLLinq Lhe documenLs speciled in
ArLicle 26 ol RequlaLions ol Lhe People's Republic ol China Coverninq Lhe ReqisLraLion ol Ships {RROS).
AlLer Lhe applicaLion has been examined and veriled Lo be in compliance wiLh Lhe requiremenLs ol Lhese
regulations, the ship registration administration shall suspend or delete the nationality of the ship in
accordance wiLh ArLicle ^2 ol RROS and issue Lo Lhe applicanL Lhe CerLilcaLe ol ReqisLraLion ol BareboaL
Charter in duplicate.
Where a ship is bareboat chartered from overseas, the charterer shall choose the port of registry for the ship
according to Article 9 of RROS and apply, prior to the commencement of the charter, to the ship registration
administration for registration of the bareboat charter by submitting the following documents:
1he oriqinal and a copy ol Lhe bareboaL charLer parLy
1he ship's valid Lechnical cerLilcaLes issued by an auLhorized orqanizaLion lor ship survey
A cerLilcaLe issued by Lhe ship reqisLraLion auLhoriLy ol Lhe lormer porL ol reqisLry Lo Lhe ellecL LhaL Lhe
former nationality of the ship has been suspended or deleted, or that the former nationality of the ship
will be suspended or deleted immediately when the new registration is effected
In conclusion, there are no special rules regarding parallel registration compared with other countries.
5.3.4 Seaman registration
Follow AdminisLraLive Measures lor Lhe ReqisLraLion ol Seamen ol Lhe PRC.
1he lorms ol Lhe ReqisLer ol Ships, Lhe CerLilcaLe ol Ship's NaLionaliLy, Lhe Provisional CerLilcaLe ol Ship's
NaLionaliLy, Lhe CerLilcaLe ol ReqisLraLion ol Ship's Ownership, Lhe CerLilcaLe ol ReqisLraLion ol Ship's
MorLqaqe, Lhe CerLilcaLe ol ReqisLraLion ol BareboaL CharLer, Lhe applicaLions and oLher cerLilcaLes shall be
solely formulated by the Harbor Superintendence Administration of the PRC.
1he MSA is a qovernmenL aqency LhaL coordinaLes mariLime search and rescue in Lhe LerriLorial waLers ol Lhe
PRC. 1he MSA is parL ol Lhe MO1. 1he MSA's ma|or luncLions include:
DralLinq and implemenLinq quidance, policies, requlaLions and Lechnoloqical codes and sLandards in naLional
water safety supervision, marine pollution prevention, facilities check, navigational aids and other relevant
lelds ol LransporLaLion
Comprehensive supervision ol waLer saleLy and prevenLion ol marine polluLion, inspecLion ol Lhe ship's
safety conditions and safety management system of water transport enterprises
5.5 Bibliography
MinisLry ol 1ransporLaLion
MariLime SaleLy AdminisLraLion ol PRC
Policy on Lhe Relorms and lmprovemenLs ol MariLime LducaLion in China {Zhaolin Wu, Dalian MariLime
UniversiLy, 2000)
2008 China MariLime and Road 1ransporLaLion Annual ReporL
RequlaLions ol Lhe People's Republic ol China Coverninq Lhe ReqisLraLion ol Ships
FacLiva
Curaao
1. Tax
1.1 Prcht tax reimes
Curaao has six tax regimes for shipping companies:
1. Shipping companies taxed on the basis of tonnage
2. Shippinq companies LhaL are sub|ecL Lo Lhe reqular onshore prolL Lax reqime
3. Onshore shipping companies that apply the so-called 80-20 regulation
4. Shipping companies with an offshore tax status
5. {Croup) crewinq companies wiLh a cosLplus rulinq
6. 1ransparenL company new opporLuniLies lor shippinq indusLry Lo hold mobile asseLs
1.1.1 Shipping companies taxed on the basis of tonnage
Introduction
An inLeresLinq aspecL ol Lhe Curaao Lonnaqe Lax laciliLy is Lhe very broad delniLion ol qualilyinq ships. ln
principle, a Curaao corporaLe Laxpayer LhaL holds "anyLhinq LhaL loaLs or has loaLed" ouLside Lhe LerriLorial
waters of Curaao is eligible for application of the tonnage tax regime. Thus, specialized ships, such as survey,
lshinq, cablelayinq and dredqinq ships, LuqboaLs and {oil) riqs, all qualily lor Lonnaqebased LaxaLion in
Curaao. FurLhermore, ships are admissible irrespecLive ol Lhe laq Lhey ly.
Curaao levies neither a capital tax on capital contributions nor a dividend withholding tax on dividend
distributions.
Who can apply the tonnage tax regime?
All companies LhaL derive prolLs lrom usinq ships in inLernaLional waLers can apply lor Lhe Curaao Lonnaqe
tax regime, provided that the place of effective management of the company is established in Curaao.
The following shipping activities are admissible:
1he ownership or coownership ol ships {includinq ships charLered ouL on a bareboaLcharLer basis)
BareboaL charLerinq ol ships
Manaqinq ol ships on behall ol a Lhird parLy
1ime or voyaqe charLerinq
AcLiviLies relaLed Lo Lhe exploiLaLion ol ships
Calculation of the tonnage tax burden
1he Lonnaqe Lax laciliLy allows shippinq companies Lo calculaLe Lheir Laxable prolLs on Lhe basis ol a speciled
lcLional prolL LhaL depends on Lhe neL Lonnaqe ol Lhe ship insLead ol Lhe acLual commercial prolLs. 1he
annual lcLional Laxable prolL per ship is calculaLed on Lhe basis ol Lhe lollowinq slidinq scale.
ll a company manaqes ships on behall ol Lhird parLies, Lhe lxed Laxable prolL per neL Lon per ship should
amount to 10% of the amounts mentioned above.
1he resulLinq noLional Laxable prolL should be Laxed aqainsL Lhe sLandard Curaao prolL Lax raLe ol 27.57,
wiLh a minimum Lax liabiliLy ol abouL USD562. ll a manaqemenL company applies Lhe Lonnaqe Lax reqime, Lhe
Total net tonnage Fixed taxable proht per net ton
Up Lo 10,000 ANC2.00 {USD3.56)
1
10,00125,000 ANC1.35 {USD2.^0)
Over 25,000 ANC0.60 {USD1.07)
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minimum Lax liabiliLy should amounL Lo abouL USD281.
Example:
A ship wiLh a neL Lonnaqe ol 15,000 owned or charLered by a company will be Laxed ANC7,356.25 {= 27.57
[10,000 ANC2.00 + 5,000 ANC1.35|). A Curaao manaqemenL company ol Lhe same ship will be
Laxed ANC735.63.
1.1.2 Shippin ccmpanies that are subject tc the reuIar cnshcre prcht tax reime
Shippinq acLiviLies LhaL are perlormed Lhrouqh a reqular onshore company are sub|ecL Lo Lhe reqular prolL
Lax reqime. 1he Laxable income is sub|ecL Lo a prolL Lax raLe ol 27.57. Under Lhis Lax reqime, shippinq
companies can apply the following tax incentives:
AcceleraLed depreciaLion
lnvesLmenL allowance
Survey provision and a provision lor sellinsurance
1ax loss carrylorward
Besides the deduction of regular depreciation expenses for tax purposes, a one-time accelerated depreciation
can be applied for one-third of the acquisition price of the ship (or book value if the taxpayer chooses not to
apply the accelerated depreciation in the year of acquisition). The accelerated depreciation is arbitrary and
may be used at the convenience of the company.
Investment allowance
1he invesLmenL allowance is an incenLive LhaL allows lor a lcLional Lax deducLion in addiLion Lo Lhe
(accelerated) depreciation. The investment allowance amounts to 8% of the investment and is applicable for
a period of two succeeding years after acquisition or rebuilding of the ship.
Deductible formation of provisions
1he survey provision is under condiLions LaxdeducLible.
Tax loss carry-forward
Tax losses can be carried forward for 10 years.
1.1.3 Shipping companies that apply the so-called 80-20 regulation
Onshore shippinq companies can elecL Lo be Laxed accordinq Lo Lhe 8020 requlaLion. Under Lhe 8020
regulation, 80% of the income derived from outside Curaao is taxed against a 2.75% tax rate and the
remaining 20% is taxed against the regular rate of 27.5%. This leads to an effective tax rate of 7.70% on
income derived outside Curaao.
Please noLe LhaL all oLher {nonshippinq) prolLs realized in Curaao will be Laxed aqainsL Lhe reqular prolL
tax rate of 27.5%.
Companies that apply the 80-20 regulation can also apply the tax incentives for onshore companies as
described above. However, in addiLion Lo Lhe reqular Lax loss carrylorward ol 10 years, Lax losses lor Lhe lrsL
6 lscal years ol companies applyinq Lhe 8020 requlaLion can be carried lorward indelniLely.
1.1.4 Shipping companies with an offshore tax status
Up Lo and includinq Lhe year 2001, Curaao {Lhen parL ol Lhe NeLherlands AnLilles) had Lhe socalled
offshore tax regime. The regime was abolished in 2002. However, under the transitional rules of the new
ProlL 1ax Ordinance, qualilyinq ollshore companies in exisLence as per 31 January 2001 can conLinue Lo
apply the offshore tax regime until the year 2019.
1
P|ease note tnat a hxec currency excnane rate |s rescr|oec oy tne 1ax /utnor|t|es for tne excnane of US co||ars
into ANG. In this case, 1ANG = USD1.78. Please note that at the end of a calendar year, the average exchange rate
to be used for the currency exchange of ANG into euros for the previous year is determined by the Tax Authorities.
Offshore companies are not engaged in business or transactions with residents of Curaao. These companies
can obLain a Lax rulinq on Lhe basis ol which income is Laxed aL Lhe prolL Lax raLes ol 2.^7 Lo 37, and capiLal
gains on the shipping activities are tax-exempt.
1.1.5 (Group) crewing companies with a cost plus tax ruling
Next to the above-mentioned opportunities for shipping companies, facilities are available to perform
{qroup) crewinq acLiviLies. Based on a socalled cosLplus Lax rulinq LhaL could be obLained wiLh Lhe Curaao
1ax AuLhoriLies Lhe prolL ol a company is deLermined as a percenLaqe ol Lhe {qeneral) expenses ol Lhe
company insLead ol Lhe acLual realized income. ln pracLice, Lhe prolL is seL aL 57 Lo 107 ol Lhe operaLional
cosLs. 1he lcLional income should be Laxed aqainsL Lhe prolL Lax raLe ol 27.57. 1he cosLplus Lax rulinq is
applicable on support and auxiliary activities, such as administrative services, commercials and marketing
services and re-invoicing. In addition, the auxiliary services must have limited or no risk.
Example:
1he income ol a {qroup) crewinq company amounLs Lo USD 900,000. 1he qeneral expenses ol Lhe
company amounL Lo USD100,000. ll Lhe company applies Lhe cosLplus Lax rulinq, Lhe Laxable income ol Lhe
company should be USD5,000 {57 USD100,000). 1he prolL Lax liabiliLy should be USD1,375 {27.57
USD5,000).
1.1.6 Transparent company
A LransparenL company can be aLLracLive inLernaLionally Lo hold lnancial or mobile asseLs, such as ships,
aircralLs and machinery wiLhouL LaxaLion ol prolL in Curaao. For Curaao Lax purposes, Lhe LransparenL
company could also be used for group tax consolidation for (existing) companies as an alternative to the
socalled lscal uniLy.
A Curaao transparent company is a Curaao limited liability company that requests for Curaao tax purposes
to be treated as if it is a partnership, while maintaining its legal characteristics. As a consequence of applying
for tax transparency, the company will be disregarded for Curaao tax purposes, and all the income and
assets are directly allocated to its partners (read: shareholders). The taxable basis for Curaao tax purposes
is therefore determined at the level of the partners, and in the absence of partners that are tax residents
of Curaao, there should also be a taxable basis in Curaao if the activities of the transparent company
constitute a permanent establishment in Curaao.
1.2 ScciaI security ccntributicns and inccme/wae tax fcr seafarers
1he social securiLy conLribuLion and income/waqe Lax consequences lor sealarers depend on Lhe place
of residency of the seafarers. The place of residency is determined based on the underlying facts and
circumstances. For example, the registering of a ship in Curaao, i.e., a ship that has Curaao as its
homeporL and LhaL sails under Lhe Curaao laq, is relevanL Lo deLermine Lhe place ol Lhe residency ol Lhe
seafarers of that ship.
For the seafarers that are nonresidents of Curaao, the following should apply.
For nonresidenL sealarers who exercise shippinq acLiviLies ouLside Curaao, no income/waqe Lax and social
contribution should be due in Curaao. For the nonresident seafarers who exercise shipping activities within
Curaao, Lheir income could, in principle, be sub|ecL Lo income/waqe Lax and social conLribuLion in Curaao,
unless an exemption applies.
If the seafarers are residents of Curaao and they exercise shipping activities in Curaao, their income from
Lhe shippinq acLiviLies {and Lheir worldwide income lrom oLher Laxable sources) could be sub|ecL Lo income/
wage tax and social contributions in Curaao.
Please note that as of 1 February 2013, a basic health insurance system was introduced in Curaao. This
insurance should be applicable under cerLain condiLions lor residenLs and also lor nonresidenLs who
2
This includes companies that provide manning services, i.e., providing ship crews to ships.
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exercise their employment in Curaao and are subject to wage tax in Curaao. Consequently, seafarers who
perform shipping activities in Curaao should in principle also be subject to the basic health insurance, unless
an exemption applies.
2. Human capital
ln principle, lor ships lyinq Lhe laq ol Lhe DuLch Kinqdom, shippinq labor law requires a DuLch capLain.
However, exemptions from the requirement to employ a Dutch captain are common practice. For other
personnel, no nationality requirements apply. Each employee on a Curaao ship requires a seafarers book
and an endorsement of recognition that must be obtained from the authorities. In addition, a non-Dutch
captain requires a dispensation.
Under Lhe Shippinq AcL, each ship lyinq Lhe laq ol Lhe DuLch Kinqdom needs Lo have a manninq cerLilcaLe
{sale manninq cerLilcaLe) issued by Lhe chiel ol Lhe NaviqaLion lnspecLion. 1his manninq cerLilcaLe
speciles Lhe minimum number ol crew members and Lheir duLies on board Lhe ship {besides Lhe capLain
and the shipowner).
1he manaqer ol Lhe ship has Lo lle an applicaLion lor a manninq cerLilcaLe wiLh Lhe chiel ol Lhe NaviqaLion
lnspecLion lor each ship. A crew policy lor Lhe specilc ship has Lo be enclosed wiLh Lhe applicaLion. 1his crew
policy is a proposal by the ship manager and consists of the desired minimum number of crew members
{besides Lhe capLain) wiLh Lheir specilc duLies. ll, in Lhe opinion ol Lhe chiel ol Lhe NaviqaLion lnspecLion, Lhe
above-mentioned proposal does not fully meet the required conditions, the chief has the authority to form a
crew on board the ship.
A ship has Lo be manned accordinq Lo Lhe manninq cerLilcaLe. LxempLions are qranLed under some
conditions.
There is no obligation to have a collective labor agreement.
2.4 Manning issues of registering a ship in Curaao
As mentioned in section 1.2, the registering of a ship in Curaao, i.e., a ship that has Curaao as its homeport
and LhaL sails under Lhe Curaao laq is relevanL Lo deLermine Lhe place ol Lhe residency ol Lhe sealarers ol
that ship.
For determining the place of residency of the seafarers, a ship that has Curaao as its homeport and the sails
under Lhe Curaao laq is considered Lo be parL ol Curaao.
3.1 Legal structure for shipping activities
MosL companies operaLe as a public limiLed liabiliLy company or Naamloze VennooLschap {NV). 1he liabiliLy
of the shareholders of a NV is limited to their interest in the share capital of the NV.
ProlL disLribuLions by Curaao companies are noL sub|ecL Lo wiLhholdinq Lax. Dividends received by
companies in Curaao lrom qualilyinq share inLeresLs are in principle 1007 exempL lrom prolL Lax. NoL only
are dividends received by a residenL company lrom a qualilyinq shareholdinq exempL lrom prolL Lax, buL also
capital gains on the disposal of a qualifying shareholding. However, on dividend income received from a low-
taxed portfolio investment company, a reduced participation exemption rate of 63% applies.
There are no subsidies available.
5.1 Infrastructure
5.1.1 Major ports
The major port in Curaao is in Willemstad.
AlLer RoLLerdam, WillemsLad ranks as Lhe second larqesL porL ol Lhe DuLch Kinqdom. Moreover, Curaao has
three very deep ports where ships of any size and depth can moor.
SLoraqe
Dockinq {shelLered deepsea bays)
Cranes lor every size ol ship
The international airport of Curaao is located at a driving distance of less than 10 minutes from the
seaports.
1he loreiqn classilcaLion bureau Lloyd's ReqisLer also has a represenLaLive in Curaao.
Although Curaao banks do not have specialized shipping desks, the Curaao branches of well-established
international banks are equipped to deal with shipping companies.
In Curaao, the Dutch Caribbean Training Center offers maritime safety training and port and shipping
education.
All shippinq companies have implemenLed Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code on board
Lheir ships. A larqe number ol shippinq companies and ship manaqemenL companies are also cerLiled in
accordance with International Organization for Standardization (ISO) 9000 standards.
5.2.2 International Ship and Port Security Code
The International Ship and Port Security (ISPS) Code, which contains measures adopted by the
lnLernaLional MariLime OrqanizaLion {lMO) relaLinq Lo Lhe securiLy ol ships and porL laciliLies, is mandaLory
for all ships as of 1 July 2004. As of this date, every ship must have the International Ship Security
CerLilcaLe {lSSC). A securiLy cerLilcaLe is valid lor lve years, and endorsemenL has Lo Lake place beLween
the second and third year.
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5.3 Registration
Ships reqisLered in Curaao ly Lhe DuLch laq {red, whiLe and blue) buL are sub|ecL Lo Lhe |urisdicLion ol
Curaao. The Netherlands is an internationally well-respected seagoing nation regarded by the industry as
having high safety standards.
FurLhermore, Lhe ship musL have a qross Lonnaqe {C1) ol aL leasL 20C1, and Lhe ship musL obLain Curaao
nationality.
To obtain Curaao nationality, the ship must be owned by a person or limited liability company with the
naLionaliLy ol one ol Lhe Luropean Union {LU) Member SLaLes or LhaL ol Curaao. 1he owner ol Lhe ship
must have a representative in Curaao who is authorized to represent the ship, the crew and the cargo. The
shares of a Curaao limited liability company may be held by foreigners of any nationality provided that the
acLinq manaqinq direcLor is ol DuLch {or anoLher LU) naLionaliLy.
The registration of oceangoing ships requires the owner to present:
A documenL evidencinq ownership {lor insLance, a bill ol sale)
A declaraLion LhaL Lhe ship is a Curaao ship {Lhe naLionaliLy declaraLion)
An inLernaLional Lonnaqe cerLilcaLe
A cerLilcaLe ol deleLion lrom Lhe lormer reqisLer, il any
OLher requiremenLs, such as arLicles ol associaLion
If all the required documents are available and presented correctly by the shipowner, the registration in the
Register of Shipowners can be completed within a few days.
Curaao law provides both for bareboat in and bareboat out registration.
Cyprus
1. Tax
The tonnage tax regime of Cyprus is available to any owner, charterer or ship manager who owns, charters or
manages a qualifying vessel in a qualifying shipping activity. The tonnage tax is calculated on the net tonnage
of the vessel according to the range of bands and rates prescribed in the legislation.
A qualilyinq vessel is any seaqoinq vessel cerLiled under applicable inLernaLional rules and requlaLions and
reqisLered in Lhe ship reqisLry ol any member ol Lhe lnLernaLional MariLime OrqanizaLion and Lhe lnLernaLional
Labour OrqanizaLion, which is recoqnized by Cyprus.
Qualifying shipping activity is any commercial activity that constitutes maritime transport, crew management
or technical management.
Shipowners
The owner of Cyprus-registered qualifying vessels automatically falls within the scope of tonnage tax. Cyprus
LaxresidenL companies LhaL own qualilyinq vessels reqisLered in Lhe Luropean Union {LU) or Luropean
Economic Area (EEA) may opt to be taxed under the tonnage tax system. Cyprus tax-resident companies
LhaL own a leeL ol boLh LU and nonLUreqisLered vessels musL comply wiLh cerLain requiremenLs Lo qualily
for the option to be taxed under the tonnage tax system.
Charterers
Any charterer who charters a qualifying ship under bareboat, time or voyage charter is eligible to opt for the
tonnage tax system, provided certain requirements are met.
Ship managers
A ship manager who provides crew or technical ship management services is eligible to opt for the tonnage
Lax sysLem, provided iL saLisles cerLain criLeria.
Option to remain in the tonnage tax system
Any shipowner, charterer or ship manager opting for the tonnage tax system must remain in the system for
10 years.
Taxation
Shipowners, charterers and ship managers who come under the tonnage tax system are exempt from Cypriot
corporaLe and oLher LaxaLion on Lheir prolLs lrom a qualiled shippinq acLiviLy {includinq inLeresL earned on
lunds used as workinq capiLal), on dividends paid direcLly or indirecLly ouL ol such prolLs, and on qains lrom
the sale of shares in a shipping company or the sale of vessels.
The rates of tonnage tax for ship managers are 25% of the above rates.
Wages of seafarers are exempt from tax in Cyprus.
Tonnage tax rates
From 0 to 1.000 units of net tonnage, for every 100 units 36.50
For every additional 100 units of net tonnage from 1.001 to 10.000 units 31.03
For every additional 100 units of net tonnage in excess of 40.000 units 7.30
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Cyprus has tax treaties with the following countries:
Armenia, Austria, Belarus, Belgium, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, France,
Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Lebanon, Malta, Mauritius, Moldova, Montenegro*,
Norway, Poland, Qatar, Romania, Russian Federation, San Marino, Serbia*, Seychelles, Singapore, Slovak,
Republic**, Slovenia , South Africa, Sweden, Syria, Thailand, Ukraine***, United Kingdom, United States
of America.
* The old treaty between Cyprus and Yugoslavia applies.
** The old treaty between Cyprus and the Czechoslovak Socialist Republic applies.
*** The old treaty between Cyprus and the USSR applies.
A number ol Lax LreaLies provide lor Lhe place ol ellecLive manaqemenL ol Lhe shippinq company Lo benelL
under the treaty.
Cyprus has also siqned a number ol bilaLeral AqreemenLs on MerchanL Shippinq.
1.4 Freight taxes
Cyprus does not levy any freight taxes.
1here are no Lax reqisLraLion benelLs.
1he Lonnaqe Lax sysLem ol Cyprus has been siqnilcanLly amended in 2010. No ma|or chanqes are expecLed
in legislation in the near future.
1.7 Yacht scheme
In an effort to encourage the use of Cyprus as a host jurisdiction for yachts for private use, the government
has introduced a yacht leasing regime.
The main characteristics are:
Combined ellecLive valueadded Lax {VA1)/income Lax raLe ol approximaLely ^.67
Lessor musL be a CyprioLreqisLered company and lessee may be any individual or leqal person reqardless
of their residence.
VA1 and income Lax advanced rulinqs are required.
2. Human capital
All employees musL hold a valid and recoqnized cerLilcaLe ol compeLence lor Lhe posL Lhey hold on board.
The manning of Cypriot ships is regulated by law and regulations enacted in Cyprus. Cyprus has also
adopLed many ol Lhe lnLernaLional MariLime Labor ConvenLions {includinq ConvenLion No. 1^7).
Cyprus will soon proceed wiLh Lhe raLilcaLion ol Lhe ConvenLion. CollecLive labor union aqreemenLs
may apply as well.
The master of a Cypriot ship is required to enter into an employment agreement with the shipowner, and
every seafarer on board must enter into an agreement with the master. Such agreements may make
reference to the Cyprus Collective Agreement.
There is no obligation to apply any collective labor agreement. However, the shipowners associations have
concluded collecLive labor aqreemenLs wiLh Lhe Cyprus Workers' ConlederaLion, which is allliaLed wiLh Lhe
International Transport Workers Federation (ITF).
Cyprus has LreaLies wiLh AusLralia, AusLria, Canada, Czech Republic, LqypL, Creece, NeLherlands, Serbia,
Slovak Republic, SwiLzerland and Lhe UK.
2.5 Mannin issues with Byin the Cyprict Ba
As CyprioL sealarers are noL available in larqe numbers Lo man vessels, Lhe auLhoriLies allow vessels lyinq
Lhe Cyprus laq Lo be manned by sealarers lrom many oLher counLries who hold a compeLence cerLilcaLe
recognized by Cyprus.
The most commonly used structure for shipping activities is a limited liability company.
1here is no LaxaLion ol prolL disLribuLion Lo Lhe shareholders.
Cyprus does not have any subsidies for shipping companies.
There are no investment incentives other than tax incentives.
4.4 !ssues with Byin the Cyprict Ba
1here are no issues reqardinq subsidies and qranLs connecLed wiLh lyinq Lhe CyprioL laq.
No major changes are expected in the legislation regarding subsidies for shipping in the near future.
5.1 Infrastructure
5.1.1 Major ports
Larnaca
Limassol
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Larnaca lnLernaLional AirporL is locaLed abouL 6km lrom Larnaca porL and abouL ^5km lrom Limassol porL.
Paphos lnLernaLional AirporL is locaLed abouL 60km lrom Limassol porL.
Ship manaqemenL companies
MariLime educaLion is provided by Lhe HanseaLic Marine School {Limassol) and Lhe Cyprus 1echnical
UniversiLy {Limassol).
All shippinq companies have implemenLed Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code on board Lheir
vessels. A large number of shipping companies and all ship management companies also have International
OrqanizaLion lor SLandardizaLion {lSO) 9000 cerLilcaLion.
Cyprus does not have a lengthy and comprehensive body of safety regulations regarding manning.
Cyprus is parLy Lo all inLernaLional convenLions on saleLy and Lhe environmenL. 1he Cyprus CovernmenL
sLronqly supporLs Lhe Cyprus Marine LnvironmenL ProLecLion AssociaLion {CYMLPA), which acLively
promotes clean seas.
5.3 Registration
Vessels of any size and type may be registered in the Cyprus Register of Ships or the Special Book of Parallel
Registration as long as they comply with the provisions contained in the merchant shipping legislation and
Lhe circulars ol DeparLmenL ol MerchanL Shippinq:
A vessel may be reqisLered under Lhe CyprioL laq il:
More Lhan 507 ol Lhe share ol Lhe ship is owned by {i) CyprioL ciLizens or {ii) ciLizens ol oLher LU
Member SLaLes {who have appoinLed an auLhorized represenLaLive in Cyprus).
Or
- The share of the ship is 100% owned by (i) a company incorporated in Cyprus or (ii) a company
incorporaLed in anoLher LU Member SLaLe {which has appoinLed an auLhorized represenLaLive in Cyprus
or Lhe manaqemenL ol Lhe ship is enLrusLed Lo a CyprioL or LU ship manaqemenL company havinq iLs
place ol business in Cyprus) or {iii) by a company esLablished ouLside Cyprus or Lhe LU conLrolled by
ciLizens ol Cyprus or ciLizens ol LU Member SLaLes {which have appoinLed an auLhorized represenLaLive in
Cyprus or Lhe manaqemenL ol Lhe ship is enLrusLed Lo a CyprioL or LU ship manaqemenL company havinq
its place of business in Cyprus).
Carqo vessels and LuqboaLs ol up Lo 15 years old and passenqer vessels ol up Lo 30 years old may be
registered, provided they undergo an entry inspection that is completed with satisfactory results. Vessels
exceeding this age may be registered, provided inspections are completed with satisfactory results and
cerLain oLher condiLions are saLisled.
The vessel can have a provisional registration followed by a permanent registration. To effect the provisional
registration, certain information and documentation must be provided, including details of the ship and the
classilcaLion socieLy, as well as documenLaLion concerninq Lhe incorporaLion ol Lhe company, iLs direcLors
and shareholders. The maximum period for provisional registration is six months, with the possibility of a
three-month extension. At the time of provisional registration, the vessel must be at a port so that it can be
surveyed and cerLiled on behall ol Lhe Cyprus CovernmenL. 1he provisional reqisLraLion can be ellecLed aL
Limassol or aL any diplomaLic mission or consular posL ol Cyprus.
PermanenL reqisLraLion can be ellecLed by providinq cerLain cerLilcaLes concerninq Lhe vessel and payinq Lhe
appropriate fees.
Parallel registration (bareboat) is allowed under Cypriot law, provided that the other country allows parallel
reqisLraLion. CerLain requiremenLs musL be lulllled, and speciled documenLaLion musL be provided.
Sale manninq requiremenLs lor vessels depend on Lhe qross Lonnaqe ol Lhe vessel. Ollcers and crew musL
hold a cerLilcaLe ol compeLence lor Lhe posL Lhey hold, which may be issued by one ol counLries recoqnized
by Cyprus.
Cyprus is a conLracLinq parLy Lo all lnLernaLional ConvenLions seL up by Lhe lnLernaLional MariLime
OrqanizaLion and a number ol lnLernaLional MariLime Labor ConvenLions.
5.3.6 Mortgages
MorLqaqes on vessels under Lhe CyprioL laq musL be reqisLered wiLh Lhe ReqisLrar ol Cyprus Ships, and in Lhe
case of a vessel belonging to a Cypriot company, must also be registered with the Registrar of Companies.
Fees for the registration of a mortgage are 3.4 cents on every ton up to 10,000 gross tonnage and at the rate
of 1.7 cents on every ton in excess of 10,000 gross tonnage.
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Denmark
1. Tax
Companies operating as shipping companies are, basically, taxed according to the general rules as they apply
Lo Danish companies. Under cerLain circumsLances, shippinq companies can elecL LaxaLion under Lhe special
tonnage tax regime.
1.1.1 Ordinary corporate income tax
As a rule, a company registered in Denmark is liable for tax on its worldwide income. However, income from
a foreign permanent establishment and foreign real property is exempt from Danish tax liability, unless the
company has elecLed inLernaLional |oinL LaxaLion. ln LhaL case, income lrom all loreiqnallliaLed companies is
included in the Danish joint taxation, which comprises all subsidiaries, permanent establishments and foreign
real property owned by the Danish company and, if relevant, a foreign parent company and other foreign-
allliaLed companies. JoinL LaxaLion ol all DanishallliaLed companies, permanenL esLablishmenLs in Denmark
and Danish real property is compulsory (territorial joint taxation).
Foreign companies whose place of effective management is situated in Denmark will be considered liable for
tax in Denmark.
A company Laxed accordinq Lo Lhe qeneral rules musL sLaLe Laxable income based on Lhe prolLs and losses ol
the company.
Furthermore, companies can depreciate their assets for tax purposes. Operating equipment and ships
are depreciated according to the reducing balance method. The current depreciation rate for operating
equipment is 25% maximum. For ships it is 19% maximum (2013), but the rate will be gradually reduced
to 15% by 2016. However, for ships with a gross tonnage of at least 20 tons which are used for commercial
transportation of cargo or passengers, the depreciation rate is 12%. Buildings can be depreciated using the
sLraiqhLline meLhod by ^7 ol Lhe acquisiLion cosL. Ollce premises are, however, noL deducLible unless used in
conjunction with premises eligible for depreciation.
The taxable income is taxed at a rate of 25%.
1.1.2 Tonnage taxation
Conditions
A company operaLinq as a shippinq company can as an alLernaLive Lo Lhe above ordinary corporaLe
income LaxaLion choose Lo be Laxed under Lhe Danish Lonnaqe Lax reqime. 1he choice Lo do so, or vice
versa, is binding for a 10-year period. After this period of time, a new decision can be made for another
10-year period.
If the tonnage tax system is opted for, the tonnage tax rules automatically apply to all ships and other assets
connected with or conducive to the shipping activity of the company. The choice regarding tonnage taxation
applies Lo all allliaLed companies meeLinq Lhe requiremenLs. 1he audiLor musL make a sLaLemenL Lo Lhis
effect in the tax return.
It is a requirement for tonnage taxation that the ships have a gross tonnage of at least 20 gross register tons
{CR1) and LhaL Lhey are sLraLeqically and commercially operaLed lrom Denmark.
Flag requirement
Denmark has implemenLed Lhe Luropean Union {LU) or Luropean Lconomic Area {LLA) laq requiremenLs.
Under Lhese rules, iL is a condiLion lor Lonnaqe LaxaLion LhaL Lhe shippinq company reLain or increase Lhe
percenLaqe ol Lhe qross Lonnaqe {only vessels owned by Lhe shippinq company) reqisLered in an LU or LLA
country (average valuation over the income year).
However, Lhis laqqinq condiLion does noL apply il Lhe percenLaqe ol Lhe owned qross Lonnaqe reqisLered in an
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LU or LLA counLry ol all shippinq companies LhaL qualily lor LaxaLion under Lhe Danish Lonnaqe Lax sysLem
has noL declined {averaqe valuaLion over Lhe income year). FurLhermore, Lhe laqqinq condiLion does noL
apply il Lhe percenLaqe ol Lhe owned qross Lonnaqe LhaL qualiles lor LaxaLion under Lhe Danish Lonnaqe Lax
reqime reqisLered in an LU or LLA counLry amounLs Lo aL leasL 607 {averaqe valuaLion over Lhe income year)
of the total gross tonnage of the shipping company in question.
For allliaLed shippinq companies, Lhe laqqinq condiLion applies Lo all ol Lhe qroup companies as a whole.
ll Lhe above laq requiremenL is noL meL, Lhe income lrom Lhe exceedinq owned qross Lonnaqe will be Laxed
under normal corporate income tax rules.
Taxation
Income from commercial transportation of passengers and goods is eligible for tonnage taxation. Activities
of an auxiliary nature may also be subject to tonnage tax. The European Commission has decided to allow
Denmark to apply the tonnage tax regime for seagoing ships to cable-laying and dredging companies.
1he Laxable income under Lhe Lonnaqe Lax reqime is noL compuLed based on Lhe prolLs and losses ol Lhe
company. Instead, the taxable income is determined for each vessel at the following basic amount per 100
neL Lons {N1) per day, irrespecLive ol wheLher Lhe vessel is in Lrallc or noL:
(Rates applicable in 2013)
It is not possible to deduct expenses or depreciate (for tax purposes) ships and operating equipment subject
to tonnage taxation.
Capital gains realized at the disposal of vessels under tonnage tax are exempt from tax, provided that the
vessel is included under tonnage tax on 1 January 2007 or later.
A credit is available for foreign freight tax under certain conditions.
Ships owned by the shipping company, but chartered on a time-charter basis, can only be included in the
Lonnaqe LaxaLion scheme il Lhe lessee uLilizes Lhe ship lor a qualiled purpose, i.e., a shippinq purpose
qualiled under Lhe Lonnaqe LaxaLion sysLem.
Ships owned by the shipping company but chartered on a bareboat charter basis can only be included if the
reason for leasing the vessel is temporary excess capacity and if the vessel is leased for a period of maximum
three years. The auditor must make a statement to this effect in the tax return.
NeL lnancial income is Laxed under Lhe ordinary Lax rules. NeL lnancial expenses are deducLible under Lhe
ordinary tax rules but subject to restrictions on tax deductibility.
Restrictions on chartered vessels
Vessels hired on a bareboat charter are regarded as own ships for tonnage tax purposes. This also applies to
vessels hired on a time charter provided that the charter is concluded for a period of at least one year and not
more than seven years, and the lessee is granted a call option to acquire the vessel at the fair market value at
the time of the call option.
Moreover, il Lhe qross Lonnaqe available lrom hired vessels noL qualilyinq as owned ships exceeds Lhe qross
tonnage from owned ships by four times, the excess tonnage is taxed under ordinary corporate tax law. The
plan is to increase the threshold to 10 times, subject to European Commission approval.
Total net tonnage Income per day per 100 tons in DKK
(approximates in )
Up Lo 1,000 DKK8.97 {t1.2)
1,00110,000 DKK6.^^ {t0.9)
10,00125,000 DKK3.85 {t0.5)
Above 25,000 DKK2.53 {t0.3)
Entering the tonnage tax regime
When switching from ordinary taxation to tonnage taxation, the taxable balance on tonnage activities must
be calculated. This tax base is added to certain balances (the transitional balances). Subsequent acquisitions
of ships, among other things, concerning tonnage activity are added to other balances (settlement
balances). Both the transitional balances and the settlement balances are reduced by 12% per year, without,
however, any amounts being deductible for tax purposes (the reduction percentage equals the maximum
depreciation rate if the tonnage taxation is opted out of). On the sale of a ship, the sales price is deducted
from the balance to which the vessel relates. Negative balances are, in principle, subject to tax, but can be
settled by new acquisitions or a positive balance on the other balance.
Shipping management companies
Shippinq manaqemenL companies may choose Lo benelL lrom Lhe Danish Lonnaqe Lax reqime. 1hey are
delned as companies LhaL solely conducL Lechnical and/or crew manaqemenL reqardinq ships. BoLh Danish
shippinq manaqemenL companies and shippinq manaqemenL companies residenL in oLher LU Member SLaLes
with a permanent establishment in Denmark may qualify for inclusion in the Danish tonnage tax regime. It is a
condiLion ol qualilcaLion LhaL Lhe shippinq manaqemenL company ol Lhe shipowner has underLaken compleLe
responsibility regarding the operations of the vessel and all liabilities according to the International Safety
ManaqemenL {lSM) Code. FurLhermore, Lhe qeneral condiLions {Lhe LU or LLA reqisLraLion requiremenL,
minimum size ol vessels, sLraLeqic and commercial manaqemenL lrom wiLhin an LU Member SLaLe) LhaL
musL be saLisled by shippinq companies in order Lo qualily lor Danish Lonnaqe Lax also apply Lo shippinq
management companies.
Tonnage income and ordinary income, if any, make up the total taxable income of the company, which is
taxed at the standard corporate tax rate of 25%.
1.2.1 Resident seafarers
Resident seafarers who are employed on board Danish vessels are, in principle, taxed as Danish residents.
However, sealarers on board Danish and loreiqn vessels ouLside inbound Lrallc are enLiLled Lo a special
annual deducLion ol DKK56,900 {approximaLely t7,600).
Additionally, resident seafarers who are employed on board Danish vessels registered in the Danish
lnLernaLional Shippinq ReqisLry {Dansk lnLernaLional SkibsreqisLer [DlS|) are exempL lrom Danish Lax on
income earned on board. Consequently, if seafarers only have income earned on board a vessel registered in
the DIS, they are fully exempt from Danish income tax. In addition to the tax exemption, the seafarers receive
a cash allowance as compensation for the ordinary tax deductions, for example, for interest expenses.
1.2.2 Nonresident seafarers
NonresidenL sealarers workinq on board Danish vessels ouLside inbound Lrallc are Laxed aL a laL raLe ol
35.6%, and certain social contributions are included. No deductions are allowed.
Nonresident seafarers who are employed on board vessels registered in the DIS are fully exempt from Danish
tax.
Denmark has concluded more than 80 tax treaties. The majority of these are based on the OECD model
treaty for the avoidance of double taxation.
Civen LhaL ArLicle 8 ol Lhe OLCD model LreaLy sLaLes LhaL prolLs ol a shippinq company are Laxable only in Lhe
state in which its place of effective management is situated, the place of effective management of a shipping
company is crucial.
FurLhermore, Denmark has concluded double Lax LreaLies, which are limiLed Lo prolLs derived lrom Lhe
operaLion ol ships or aircralL in inLernaLional Lrallc.
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1.4 Freight taxes
There are no freight taxes in Denmark.
Apart from the above concerning the DIS and the tax exemption for crew members, registration of a vessel in
Denmark will noL enLail any special corporaLe Lax benelLs lor Lhe shipowner.
1.6 Major tax law changes anticipated in 2013
No major change in Danish tax law in relation to shipping companies is anticipated in 2013.
1.7 Indirect tax
1he supply and Lhe leasinq ol seaqoinq vessels noL leisure boaLs wiLh a qross reqisLer Lonnaqe ol lve Lons
or more are zero-rated for the purposes of value-added tax (VAT). Repair and maintenance services to these
vessels and the goods used for the repairs and maintenance are also exempt from VAT.
Furthermore, the supply of goods (e.g., necessary equipment to be used on board) and services to outbound
seagoing vessels are, in most cases, zero-rated. Services related to the cargo transported by these outbound
seaqoinq vessels {e.q., loadinq/unloadinq) are also zeroraLed in mosL cases.
Zero rating also applies to the transport of goods to or from the EU.
1ransporL wiLhin Lhe LU supplied Lo a business esLablished in a Member SLaLe oLher Lhan Lhe supplier is
subject to reverse charge.
VAT exemption applies to passenger transport carried out with seagoing vessels. However, for inbound ferry
services, only the passenger transport itself is exempt from VAT. The accompanying means of transport is
considered transport of goods subject to VAT.
1.7.1 Recovery of Danish VAT incurred on costs
In principle, foreign businesses can recover Danish VAT incurred on costs, but only to the extent that VAT can
be deducted by businesses registered for VAT in Denmark.
2. Human capital
2.1 Formalities and regulations for employing personnel
The formalities and regulations that have to be met when applying for a job on board the vessel depend on
the nature of the job. In general, the following documents are required:
A medical cerLilcaLe
A discharqe book
A conLracL ol employmenL wiLh a shippinq company
A conLracL ol employmenL wiLh a vessel
Cert|hcates of cometence
As a main rule, sealarers musL have a cerLilcaLe ol compeLence issued by Lhe Danish MariLime AuLhoriLy,
which provides holders opportunities for performing different jobs on board vessels, depending on their
qualilcaLions.
Foreiqn sealarers wishinq Lo apply lor a Danish laq sLaLe endorsemenL {recoqniLion cerLilcaLe) will have Lo
contact a Danish shipping company or its representative in their own country.
An applicaLion Lo Lhe Danish MariLime AuLhoriLy lor a recoqniLion cerLilcaLe will need Lo be endorsed by such
a company indicating a promise of engagement on board the companys vessel.
When contacting the Danish shipping company or its representative, seafarers will need to present their
cerLilcaLes ol compeLence in Lhe oriqinal lorm and prool ol idenLiLy {passporL or sealarer's discharqe book),
along with proof of completed maritime education and training and seagoing service.
2.2 Collective labor law
Collective agreements between shipowner organizations and trade unions exist. The agreements cover such
areas as days off, working hours, employment and termination, sick leave and maternity leave, and strike,
lock-out and blockade.
2.3 Treaties regarding social security contributions
Accordinq Lo LU RequlaLion 883/200^, Lhe qeneral rule is LhaL a sealarer workinq aboard a vessel lyinq
Lhe laq ol an LU counLry should be insured in LhaL counLry. AddiLionally, Denmark has enLered inLo bilaLeral
social securiLy aqreemenLs wiLh counLries ouLside Lhe LU, and mosL ol Lhese aqreemenLs include clauses on
seafarers.
2.4 Mannin issues with Byin the Danish Ba
Denmark has strict safety requirements for crewing. Additionally, as mentioned under section 1.2 above,
vessels lyinq Lhe Danish laq may have Lhe possibiliLy ol beinq reqisLered wiLh Lhe DlS, which implies lower
salary costs due to the special tax rules for the seafarers on board these vessels.
The most commonly used legal structures for shipping companies are the public limited liability company
(Aktieselskab [A/S|) or Lhe privaLe limiLed liabiliLy company {Anpartsselskab [ApS|). LimiLed liabiliLy
companies are subject to corporate income tax at a rate of 25%.
LimiLed liabiliLy companies enqaqed in shippinq acLiviLies may apply lor LaxaLion accordinq Lo Lhe Lonnaqe Lax
regime. (See section 1.1.2 above.)
Partnerships and limited liability partnerships (pools) are also common legal structures for shipping
activities. Such partnerships are transparent for Danish tax purposes. Instead, the partners are taxed
proportionally.
As a starting point, dividends are subject to withholding tax at a rate of 27%. However, this rate may be
reduced under domesLic law and lor dividends paid Lo nonresidenLs accordinq Lo Lax LreaLies.
As a starting point, no withholding tax is imposed on dividends paid to foreign companies if either of the
lollowinq requiremenLs is saLisled:
1he shares in Lhe Danish company qualily as Subsidiary Shares {i.e., company residenL in LU/LLA or
double tax treaty country owning directly at least 10% of the share capital of the Danish company):
no wiLhholdinq Lax is imposed il Lhe wiLhholdinq Lax is reduced accordinq Lo Lhe LU ParenLSubsidiary
DirecLive {90/^35/LLC) or a double Lax LreaLy.
When Lhe shares in Lhe Danish company do noL qualily as Subsidiary Shares: no wiLhholdinq Lax is
imposed il Lhe loreiqn company is residenL in Lhe LU/LLA and Lhe shares qualily as Croup Shares {i.e.,
direct or indirect control of more than 50% of the voting rights or control by other means) and provided
LhaL Lhe wiLhholdinq Lax should have been reduced il Lhe shares had lulllled Lhe condiLions lor beinq
Subsidiary Shares.
However, dividend distributions carried out on or after 1 January 2013 will be subject to withholding tax
if the dividend is distributed from a Danish subsidiary to a foreign company and the distribution is deemed
a re-distribution of dividends, which the Danish company has itself received from a more than 10%-owned
company in anoLher loreiqn |urisdicLion and Lhe Danish company cannoL be considered Lhe benelcial owner
of the dividend received.
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No tax incentives are available.
5.1 Infrastructure
5.1.1 Major ports
Aarhus
Copenhaqen
Lsb|erq
Fredericia
Kalundborq
MosL supporL laciliLies are available aL Lhese porLs.
Airports are located close to the major ports.
All supporting facilities for the shipping industry are readily available in Denmark (i.e., banks with a shipping
desk, consulLinq lrms specializinq in shippinq, mariLime law services).
The major maritime educational institutions are:
MarsLal NaviqaLionsskole
MAR1LC {MariLime 1raininq and LducaLion CenLre)
SlMAC {Svendborq lnLernaLional MariLime Academy)
5.2.1 Implementation of the ISM Code
1he lSM Code has been implemenLed lor ships ol 500 CR1 or more.
The safety rules regarding manning are strict.
5.3 Registration
Two registration regimes exist for ships in Denmark.
Danish Ordinary Register of Shipping
Passenqer ships in domesLic shippinq, lshinq vessels and leisure boaLs ol 20 CR1 or more are reqisLered wiLh
Lhe Danish Ordinary ReqisLer ol Shippinq. 1he shipowner musL be a Danish ciLizen or an LU or LLA ciLizen.
Danish International Register of Shipping (DIS)
Ships ol 20 CR1 or more may reqisLer wiLh Lhe DlS. However, Lhe ships cannoL be warships, lshinq vessels,
boulder dredgers or leisure boats. Ships registered with the DIS cannot transport passengers between
Danish ports.
The following are eligible for registration with the DIS:
Danish ciLizens, Danish parLnerships and Danish companies
LU or LLA ciLizens, LU or LLA parLnerships, and LU or LLA companies
All loreiqn owners have Lo have a permanenL economic allliaLion wiLh Denmark i.e., every owner
must register an agency, a branch or a subsidiary company in Denmark and the ship must be effectively
administered, controlled and directed from the relevant agency, branch or subsidiary company through either
a Danish citizen, a citizen from a country that is a member of the European Communities or a person with a
Danish place of residence.
Ships reqisLered wiLh Lhe DlS are enLiLled Lo ly Lhe Danish laq and shall be sub|ecL Lo Danish law.
See also section 1.2 for favorable tax treatment of seafarers employed on board vessels registered in DIS.
5.4 Links to relevant websites
hLLp://www.dma.dk {Danish MariLime AuLhoriLy)
hLLp://www.shipowners.dk {Danish Shipowners' AssociaLion)
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Dominican Republic
1. Tax
The tax rate is 29% over the net income generated from a Dominican Republic source.
For its part, corporate income tax for foreign transportation entities carrying out services from the Dominican
Republic (i.e., shipping or aircraft) will be determined based on a presumed income. The Dominican Tax Code
establishes, regarding this matter, that it will be presumed that Dominican Republic-sourced income obtained
by foreign transportation companies on operations carried out from the Dominican Republic to other
countries will be equivalent to 10% of the total gross income received from fares for passengers and cargo.
Deductible expenses
As a general rule, deductible expenses from the gross taxable income are allowed when incurred with the sole
purpose of maintaining and obtaining such income.
Withholding taxes
All payments made abroad on income from Dominican Republic sources are subject to a 29% withholding tax.
Remarks:
WiLhholdinqs in Lhe Dominican Republic will be valued over Lhe LoLal amounL ol Lhe paymenL abroad.
ln a case where Lhe benelciary is a Canadian enLiLy, Lhe wiLhholdinq Lax would be reduced Lo 187 {reler Lo
Canadian treaty to avoid double taxation).
lnLeresL paymenLs arisinq lrom loans conLracLed wiLh individuals or enLiLies abroad are sub|ecL Lo a107
withholding tax instead of 29%.
In accordance with the Dominican Tax Code, when the law establishes presumptions regarding the net income
obtained by a certain kind of entity (e.g., transportation entities), the taxable base for the calculation of the
applicable withholding will be the rate established for said presumption. In the case of foreign transportation
entities, for operations carried out from the Dominican Republic to other countries, the presumption is that
10% of the total gross income received from tickets and cargo fares will be considered Dominican Republic
source income, and therefore will be subject to a 29% withholding over their gross income, an equivalent of
2.9% over their net income.
Value added tax
1he applicable 1ax on Lhe 1ransler ol lndusLrialized Coods and Services {l1BlS lor Lhe Spanish acronym) raLe
in the Dominican Republic is 18%. Pursuant to the Dominican Tax Code, the ITBIS applies to:
1he Lransler ol indusLrialized qoods
1he imporLaLion ol indusLrialized qoods
1he renderinq ol services
In general terms, air and maritime transportation services for individuals and merchandise within the
Dominican Republic territory are levied with the ITBIS. In addition, air or maritime transportation services
of individuals from Dominican Republic to abroad or vice versa, are levied with the ITBIS if the tickets are
acquired in the Dominican Republic, or if acquired abroad and the service initiates in the Dominican Republic.
Notwithstanding the above, pursuant Section 14 of the ITBIS Regulation (Decree 293-11), ground
transportation services for individuals and cargo within the Dominican Republic territory and freight, air or
maritime transportation of goods from Dominican Republic to abroad are ITBIS-exempt.
Excise tax
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Shipping services are exempt from the excise tax obligation.
According to Section 287 of the Dominican Tax Code, the wages paid to seafarers by the company should
be deductible for income tax purposes as long as they are necessary for keeping or maintaining the income
generated. Aside from this, there are no other tax facilities for seafarers in the Dominican Republic.
On 6 August 1976, the Dominican Republic and Canada signed a tax treaty for the avoidance of double
LaxaLion and Lhe prevenLion ol lscal evasion wiLh respecL Lo Laxes on income and on capiLal. CurrenLly, Lhis is
the only tax treaty in force.
A second tax treaty has been agreed between the Dominican Republic and Spain. However, this treaty has not
enLered inLo lorce as iL has noL been raLiled by Lhe NaLional Conqress.
Accordinq Lo ArLicles X, Xl and Xlll ol Lhe Lax LreaLy beLween Lhe Dominican Republic and Canada, Lhe
applicable tax rate for the dividends, interests and capital gains is reduced from 29% to 18%.
Article VIII of the treaty establishes two important issues regarding the tax treatment applicable to shipping
and air transport:
1. For Lhe Laxable |urisdicLion ol income derived lrom Lhe shippinq indusLry, iL esLablishes LhaL "prolLs
derived by an enterprise of a Contracting State from the operation of ships (or aircraft) in international
Lrallc shall be Laxable only in LhaL sLaLe."
2. ProlLs lrom sources wiLhin a ConLracLinq SLaLe derived by an enLerprise ol Lhe oLher ConLracLinq SLaLe
lrom Lhe operaLion ol ships or aircralL in inLernaLional Lrallc may be Laxed in Lhe lrsL menLioned counLry.
This charged tax should not exceed the lesser of:
^7 ol Lhe qross income derived lrom sources in LhaL sLaLe
1he lowesL raLe ol Dominican Republic Lax imposed on such prolLs derived by an enLerprise ol a
third state
On the other hand, once effective, the tax treaty with Spain would establish in accordance with Article VIII
that the charged tax in this case should not exceed 2.5% of the gross income obtained from sources in the
sLaLe beinq charqed Lhe lowesL raLe levied by a LreaLy wiLh a LhirdparLy sLaLe. AddiLionally, Lhe previously
mentioned dispositions will also apply to income derived from the participation in a pool, a joint business or
international operating agency.
Note that the place of effective management regarding taxation of shipping companies is not the main issue
in any of the mentioned tax treaties.
1.4 Freight taxes
There is no special disposition regarding freight taxes in the Dominican Republic. However, for the
determination of the customs tax of imported goods, the cost of the freight (as well as the cost and
insurance) will be added to the taxable base.
CurrenLly, Lhere are no special Lax benelLs lor shipowners. ln Lhe pasL, belore Lhe publicaLion ol Lhe
Dominican 1ax Code, Lhere was a law LhaL requlaLed cerLain Lax benelLs {e.q., exempLions, specially admiLLed
deducLions). NoneLheless, Lhe Dominican 1ax Code overruled said law and lailed Lo esLablish any benelLs in
reLurn, leavinq a leqal void lor Lhe benelLs ol shipowners in Lhe Dominican Republic.
1.6 Major changes to tax law anticipated in the near future
There will not be any major changes in the tax legislation regarding shipping in the near future. However, the
tax treaty signed with Spain may enter into force. The National Congress is also evaluating a bill regarding the
Ceneral CusLom RequlaLion, which will provide a more deLailed requlaLion reqardinq shippinq LransporLaLion.
2. Human capital
2.1 FcrmaIities/reuIaticns fcr empIcyin perscnneI
Taxes on individuals
Local Lax leqislaLion esLablishes Lwo dillerenL possibiliLies lor payinq Laxes lrom income received lrom
Dominican source:
An annual individual income Lax reLurn {Form lR1) due 31 March, or
Payroll wiLhholdinq income Lax lrom monLhly salary and any oLher cash compensaLion, payable Lo Lhe
local Internal Revenue Service within 10 days following the end of the month through the Social Security
System website
As established in Article 296 of the Dominican Tax Code, Dominican Republic-resident employees will be
Laxed aL annual Lax raLes LhaL will be ad|usLed by Lakinq inLo accounL Lhe accumulaLive inlaLion raLe ol Lhe
previous year.
For Lax purposes, Lhose individuals who remain in Lhe counLry lor more Lhan 182 days durinq Lhe lscal
period, continuously or not, are considered Dominican residents (Article 12 of the Dominican Tax Code).
Salary received by foreign employees for their work in the Dominican Republic is subject to income tax since
day one, regardless of where the employer is located or if they receive their salary abroad.
Registration formalities
Entities established in the Dominican Republic should register and formalize all labor contracts in writing
belore Lhe DeparLmenL ol Labor SecreLariaL, accompanied by a copy ol Lhe employee's work visa, as
esLablished in ResoluLion 25/2001 issued by Lhe Labor SecreLariaL.
The registration process should take place within the 15 days following the beginning of the activities. The
employer musL provide Lhe lollowinq inlormaLion Lo Lhe Labor DeparLmenL: salary, name, naLionaliLy, qender,
occupation and identity number.
1his inlormaLion should be lled Lhrouqh cosLlree lorms provided by Lhe Labor SecreLariaL.
Foreign personnel
Accordinq Lo SecLion 135 ol Lhe Labor Code, aL leasL 807 ol Lhe employees ol an enLiLy renderinq services
in the Dominican Republic, including branches of foreign entities, should be Dominican nationals. However,
accordinq Lo SecLion 138 ol Lhe Labor Code, Lhis provision should noL apply Lo:
PosiLions lor adminisLraLion and direcLion ol Lhe enLiLy
1echnical posiLions, il Lhe Labor DeparLmenL preapproves such desiqnaLion
PosiLions in a small lamily business
Foreiqners married Lo Dominican naLionals wiLh more Lhan Lhree years ol inLerrupLed permanency in Lhe
Dominican Republic and more than two years of marriage
Foreiqn employees wiLh Dominican children and more Lhan lve years ol inLerrupLed permanency in Lhe
Dominican Republic
To determine that no Dominican Republic technical employees are duly prepared to substitute for local
workers, Lhe employer should send a leLLer Lo Lhe Labor DeparLmenL requesLinq Lhe auLhorizaLion lor Lhe
foreign employee and detailing the type of work that would be performed.
1he Labor DeparLmenL should approve or decline Lhe requesL wiLhin one monLh.
Christmas bonus
In addition to the ordinary salary, entities should grant an extra salary at the end of the year, which is
commonly known as the Christmas bonus. Employees who have not worked the entire year are also entitled
to the Christmas bonus in proportion to the time they have been working with the entity.
Part|c|at|on on rohts
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Based on SecLion 223 ol Lhe Dominican Labor Code, iL is mandaLory lor leqal enLiLies in Lhe Dominican
Republic Lo qranL a parLicipaLion equivalenL Lo 107 ol iLs annual neL prolLs or dividends Lo all iLs permanenL
employees.
Employees with less than 3 years of service should receive no more than the equivalent of 45 days of salary,
and those employees with more than 3 years of service should not receive more than the equivalent of 60
days of salary.
1he lollowinq enLiLies are exempL lrom Lhis prolL parLicipaLion requiremenL:
AqriculLural, aqroindusLrials, indusLrial and mininq enLiLies durinq Lhe lrsL Lhree years ol operaLion, il is
not previously agreed with the employees
AqriculLural enLiLies whose capiLal does noL exceed RDS1 million
Free Lrade zone benelciaries
Technical education tax (INFOTEP)
A payrollbased conLribuLion is imposed on employees and employers Loward Lhe lnancinq ol a proqram lor
the technical instruction and training of workers. The contribution for employers is 1% of total monthly payroll
and for employees, 0.5% on bonuses received.
Severance payment
Severance payment, due in the case of termination of the labor contract, varies depending on the duration of
Lhe employmenL conLracL as shown below {ArL. 80 DLC). When applicable, any sums owed by Lhe employer
musL be paid wiLhin 10 days ol Lhe LerminaLion ol Lhe conLracL {ArL. 86 DLC). Noncompliance enLails a
penalLy ol one day ol salary lor every day ol delay {ArL. 86.2.2 DLC).
Accordinq Lo Principle lV ol Lhe Labor Code, laws concerninq work are based on a LerriLorial principle, and
such laws should rule on Dominicans and foreigners, except for some exceptions admitted in international
treaties; therefore, its regulations should apply on permanent establishments of foreign entities as long as a
labor relationship takes place in Dominican territory.
Accordinq Lo SecLion 288 ol Lhe Labor Code, labor disposiLions will apply Lo crew members when Lhe work
being provided (object of the labor contract) is provided on board of travel or commercial ships registered
before the port authorities.
Contract term
1he labor conLracL beLween Lhe employer and Lhe crew members involved can be lor a lxed Lerm, indelniLe
time or based on the number of trips.
If the term agreed by the parties involved is limited or unlimited, the contract must establish where the
employees last destination must be.
If the labor contract was agreed in terms of number of trips, then the employer is obliged to return the
Severance payments
Time employed Severance
3 to 6 months 6 days of salary
6 to 12 months 13 days of salary
1 to 5 years 21 days per year
Over 5 years 23 days of salary per year
employee to the port of the place of residence. Additionally, the labor contract agreed in this account cannot
be terminated during the trip (when the vessel is traveling) unless the vessel is registered as Dominican and
in the middle of a trip changes its nationality.
Minimum wage
Local leqislaLion does noL esLablish a special minimum waqe lor shippinq LransporLaLion indusLry, so Lhe
ordinary minimum waqe will apply. However, Lhe Labor Code clearly esLablishes LhaL Lhis waqe {whaLever
amount is determined by the corresponding authorities) can be requested to be paid by the employer in the
currency of the port where the ship will arrive.
According to the National Wage Committee, the minimum wage for workers in 2013 will range from
RDS6,035 Lo RDS9,905 monLhly {averaqe ol USS171.50).
Non-labor days
The captain of the ship determines which days will be considered free of work for each crew member, and the
captain may deny free days if the crew members service is needed for the proper working of the vessel.
Rules regarding working hours
The rules regarding working hours will differ according to the working position held by the employee:
1. Ollcer or a |unior sLall member employed by an inLernaLional coasLer in Lhe deck, enqine and
communication must not exceed:
a) 24 hours for each period of 2 days while the ship is at sea
b) 8 hours per day while the ship is in port
2. Ollcers and members employed on board ships enqaqed aL sea sailinq in Lhe deck, machinery and
communications should not exceed 8 hours per day.
3. Catering department (of a passenger vessel) must not exceed:
a) 10 hours during a period of 14 hours when the ship is at sea and in the days of sailing and arrival and
when the vessel is in port, with passengers are on board
b) 8 hours per day when the vessel is in the port and passengers are not aboard
The working day of the catering department of a ship shall not exceed:
a) 9 hours during a period of 13 hours while the ship is at sea and in the days of arrival and sailing
b) 8 hours during a period of 12 hours when the ship is in port
4. If the Captain of the vessel requires members of its crew to work on the weekly day off, as provided in
ArLicle 306 ol Lhe Labor Code, workinq hours should noL exceed:
a) Time required for the execution of the work for checking or cleaning, with a maximum of two hours
b) Five hours in the case of persons employed in the kitchen or the dining rooms of a passenger vessel
Overtime will be paid according to each hour or fraction incurred in addition to ordinary work. The overtime
incurred should not exceed 68 hours per week and will always be paid a minimum of 135% of what the regular
hour for the corresponding employee ordinarily costs.
Accordinq Lo MariLime Labor RequlaLion, Lhe lollowinq circumsLances should noL be considered overLime:
1. Work that the captain deems necessary or urgent for the safety of the ship, cargo or the persons on board
2. Work required by the Capitan to aid other ships or others in danger
3. Work simulaLion lor lre, rescue and similar Dominican Republic ills
4. Work required for customs formalities, quarantine or other formalities of sanitary nature
5. Extra time required for the normal relieving of the guards
National health insurance/social security
1. Local personnel
All Dominican ciLizens and leqal residenLs have Lhe riqhL Lo be parL ol Lhe naLional social securiLy sysLem. Law
8701 requlaLes and develops Lhe riqhLs and duLies ol ciLizens belore Lhe sLaLe on whaL concerns Lhe lnances
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for the protection of the following risks:
Old aqe
Physical impairmenL
lllness
MoLherhood
Childhood
Labor risk
The table below establishes the percentages that must be contributed by the employer and the employee on
a monthly basis:
This table also applies to foreign employees.
2. Foreign employees
Accordinq Lo SecLion 5 ol Law 8701, loreiqn employees workinq in loreiqn companies esLablished in Lhe
Dominican Republic could be excluded from the social security system if they are already covered by their
home countrys social security system.
Therefore, foreign companies should have the documentation that properly demonstrates that such
employees are covered by their home countrys social security system.
Lmployees should be reqisLered aL Lhe Social SecuriLy 1reasury, as esLablished in Law 8701. 1he llinq ol Lhe
report establishing the withholding and the income tax should be made on a monthly basis through the Social
Security Treasurys webpage.
Labor risks
Labor risks are parL ol Lhe services covered by Lhe social securiLy sysLem. 1he Labor Risk AdminisLraLor is
enLiLled Lo cover damaqes caused durinq labor hours, on Lhe way Lo work and/or due Lo illness relaLed Lo labor
functions.
The employer should comply with the following obligations:
ReqisLer iLs workers
NoLily Lhe employees' salaries and Lheir modilcaLion
RemiL Lhe conLribuLions Lo Lhe Labor Risk AdminisLraLor
In case of a violation of the above, the employer would be liable for all harm caused to the employee, as well
as for other actions that could be presented against the employer.
As esLablished in SecLion 7 ol Law 8701, Lhe Labor Risk AdminisLraLor would deLermine Lhe Larills and
assign each employer the amount of its contribution according to the risk level of the company.
Currently, there is only one totalization agreement regarding social security dispositions with Spain.
2.5 Mannin advantaes/disadvantaes cf Byin the Dcminican RepubIic Ba
1he law does noL esLablish any advanLaqes or disadvanLaqes ol lyinq Lhe Dominican Republic's laq. 1he
Dominican Republic's laq should be raised by Lhe Lime ol arrival aL porL and mainLained unLil iLs deparLure.
1he laq should noL bear iLs coaL ol arms.
Since August 2008 Employer Employee
Pension 7.10% 2.87%
Health 7.09% 3.04%
3.1 Most commonly used legal structure(s) for shipping activities
The most common legal structure for shipping activities is limited liability entities. Refer to section 1.1 for the
average tax rate paid by shipping companies in this structure.
Cashpaid dividends or prolLs remiLLed by a local branch Lo iLs headquarLers abroad have a wiLhholdinq Lax ol
10%, in accordance with Section 308 of the Dominican Tax Code.
Law 1695 ol Foreiqn lnvesLmenL allows Lhe loreiqn invesLor, wiLhouL previous auLhorizaLion lrom Lhe CenLral
Bank, Lhe remiLLance abroad ol Lhe whole capiLal invesLed and Lhe dividend obLained, alLer Lhe lullllmenL ol
the correspondent tax obligations.
ln Lhe Dominican Republic, Lhere are no specilc or qeneral subsides available Lo shippinq companies.
Specilc invesLmenLs incenLives lor shipbuildinq companies or indusLries were once conLemplaLed in local
legislation. As of 1992 with the publication of the Dominican Tax Code, this law was overruled. There
currently are no investment incentives in the Dominican Republic.
Accordinq Lo Law 6^00 LhaL requlaLes Lhe use and proLecLion ol Lhe environmenL and naLural resources,
investments made to protect the environment and the sustainable use of the countrys natural resources
shall be subject to incentives. These incentives may vary depending on the circumstances, but in general they
will consist of partial or total exemptions on certain taxes such as import duties and VAT, as well as shorter
periods of depreciation for income tax deduction purposes.
4.4 Advantaes/disadvantaes cf Byin the Dcminican RepubIic Ba
Flyinq Lhe Dominican laq is a mandaLory acLiviLy LhaL musL be done when a loreiqn vessel enLers Dominican
LerriLory, buL Lhe law qives no advanLaqes or disadvanLaqes lor raisinq Lhe Dominican Republic laq.
There are no current bills or upcoming laws regarding subsides for shipping companies in the near future.
5.1 Infrastructure
5.1.1 Major ports
Location
of airport
Port of Santo Domingo Las Americas
International Airport
(SDQ)
Santo Domingo
Port of San Pedro de
Macors, Dominican
Republic
N/A San Pedro de Macors,
Dominican Republic
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Details of ports
Santo Domingo
Dock depth: 30 meters
Dock width: 455 meters
Dock length: 2,310 meters
Maneuver circle: 320 meLers
Caucedo
Deck length: 622 meters
Containers area: 50 acres
ConLainers capaciLy: around ^0,000 1LUs {lor relriqeraLed conLainers, 336 meLers)
Boca Chica
Dock length: 615 meters
Dock depth: 7.62 meters
San Pedro de Macors, Dominican Republic
Dock lengths:
1. 150 meters
2. 183 meters
3. 262 meters
La Romana
Location
of airport
Port Arroyo Barril Juan Bosch International
Airport (AZS)
or El Catey
Saman
PorL MulLimodal Caucedo Las Americas
(SDQ)
Santo Domingo
Port of Puerto Plata N/A Puerto Plata
PorL ol Manzanillo N/A MonLe CrisLi
PorL ol La Romana La Romana lnLernaLional
AirporL {LRM)
La Romana
Port of Haina Oriental N/A Haina
Port of Cabo Rojo N/A Pedernales
Port of Boca Chica N/A Boca Chica
Port of Barahona Maria MonLez
{BRX)
Barahona
Port of Azua N/A Azua
Saman
Dock length: 229.5 meters
Dock depth: 36 feet
Puerto Plata:
Dock depth 9.16 meters
Maneuverinq circle: ^00 meLers
Haina
Dock length: 3,044 meters
Dock depLh: 2835 leeL
Maneuverinq circle: 300 meLers
Azua
Dock width: 38 meters
Barahona
Dock length:
1. 216 meters
2. 137 meters
3. 160 meters
4. 146 meters
Cabo Rojo:
Manzanillo:
Dock depth: 48 feet
MainLenance and repair laciliLies
Dockinq laciliLies
SLoraqe laciliLies
5.1.3 Airport(s) close to the major port(s)
Refer to Section 5.1.1.
The Dominican Republic Navy is the only institution that provides maritime education for military purposes.
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5.2. Safety and environmental issues
There is no special regulation that allows for the implementation of the International Safety
ManaqemenL {lSM) Code. However, mosL shippinq companies in Lhe Dominican Republic have
commercial relaLions wiLh Lhe US; Lherelore, Lhe implemenLaLion ol saleLy measures in vessels are
looked at more rigorously.
In theory, the safety rules are moderately strict, as law and regulations provide general safety measures that
vessels and maritime transportation devices should follow. However, corresponding authorities often do not
enforce these regulations with appropriate attention, making safety measures in practice less strict that they
should be.
The following are special regulations for safety:
1. Code for the Protection of Vessels and Port Installation ( PBIP)
2. Business Anti-Smuggling Coalition (BASC)
3. Container Security Initiative (CSI)
^. MariLime 1ransporLaLion SecuriLy AcL {M1SA 2002)
Although most of these regulations are international dispositions or, in general, dispositions from other
|urisdicLions, Lhey are applicable in Lhe Dominican Republic because mosL vessels seek Lo comply wiLh US
safety requirements.
5.3 Registration
1here are no special reqisLraLion requiremenLs in Lhe Dominican Republic lor lyinq Lhe counLry's laq.
Vessels arriving to the Dominican Republic should be announced by their freight forwarder, who is in charge
of organizing a vessels arrival and departure.
The freight forwarder will have to inform the Port Authorities about the upcoming vessel (i.e., time of arrival,
date of departure, general information about the vessel).
SubsequenLly, aL Lhe vessel's arrival, Lhe responsible individual will have Lo lle belore Lhe PorL AuLhoriLies a
Registration Form and state the following information:
- Name and ID of the vessels captain
- Name and ID of each crew member
- Detailed information about the good being transported, including description in weight, nature and
quantity, as well as certain information necessary to comply with the countrys anti-money laundering
rules
- Place of departure of the vessel
- Further destination after Dominican Republic
- Owner of the vessel
- Freight forwarder
According to international dispositions, the Dominican Republic is not allowed to issue any kind of local
license for ships. In order to issue any kind of registry, countries must comply with certain international
requiremenLs, which Lhe Dominican Republic has noL lulllled.
There are no regulations that provide for the possibility of parallel registration.
Accordinq Lo local leqislaLion, ollcers and crew servinq on vessels, when reqisLerinq Lhe ship lor iLs arrival,
will be required to provide information and documentation (i.e., marine ID or equivalent) without prejudice
to the nationality of the crew member. The marine ID is considered by local legislation and authorities to be
the ID that proves that the marines technical abilities and knowledge has been approved by the marines local
government.
The Dominican Republic has signed several international conventions regarding maritime regulation such as
FAL 65, SOLAS and ROCRAMCA. 1he Dominican Republic is also a member ol Lhe lnLernaLional MariLime
OrqanizaLion {lMO). However, Lhe Dominican Republic has yeL Lo enacL local requlaLions lor Lhe correcL
applications of the international regulations.
The Dominican Republic has also agreed to a series of bilateral agreements, including the Central America
Free 1rade AqreemenL {CAF1A) siqned wiLh Lhe US and Lhe Caribbean Forum {CARlFORUM) siqned wiLh Lhe
Luropean Union.
Law 60377 requlaLes morLqaqes on any Lype ol ship or vessel. Ship morLqaqes need Lo be reqisLered belore
Lhe PorL AuLhoriLies {i.e., Lhe MinisLry ol SLaLe ol lndusLry and Commerce or Lhe Ceneral DirecLoraLe ol
Commercial Marine).
In general, the law states:
1. Ship mortgage will always be conventional or accorded between the parties.
2. The contract that supports the mortgage will need to include:
a. Name, surname, profession and residence of the debtor
b. Quantity of the credit that constitutes the mortgage (including interests and taxes)
c. Date when payment is due and details of the interests that might apply to the credit
d. Details of the ship (i.e., name, distinctive characteristics, complete description, number and date of
inscription)
e. Value or appreciation of the ship at the moment of the mortgage
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Egypt
1. Tax considerations
1.1. Taxation of shipping companies
Egypts strategic location between Europe, Asia and Africa makes the nation a natural trans-shipment point,
and Egypts vital artery, the Suez Canal, is one of the worlds most important maritime facilities.
MariLime Law 1 ol 1998 was enacLed Lo allow privaLe secLor companies, includinq loreiqn invesLors, Lo
conduct most maritime transport activities, including loading, supplying and ship repair. About 90% of Egypts
foreign trade is shipped via seaborne vessels.
1.2. Egyptian-resident shipping companies
PursuanL Lo Lhe LqypLian lncome 1ax Law No. 91 ol 2005, shippinq companies LhaL are Lax residenL in LqypL
are subject to Egyptian corporate income tax on their worldwide income. The corporate income tax rates in
Egypt are as follows:
1axable incomes up Lo LCP10 million: 207
1axable incomes above LCP10 million: 257
Tax relief may be available for income taxes suffered overseas on income that is also taxed in Egypt, provided
various conditions in compliance with the international tax treaties are met.
1.3. Nonresident shipping companies
A nonresident person carrying out sea transport in Egypt is not subject to Egyptian income tax. The Egyptian
income tax law exempts certain activities performed by nonresidents, including shipping and transportation.
1.4. Sales tax
Shipping services are not subject to sales tax unless the services are provided for local transportation (i.e.,
among the Egyptian local ports) by resident shipping companies. The applicable sales tax rate is 10%.
1.5. Taxation of seafarers
Seafarers employed by resident shipping companies are treated as normal wage earners and subject to salary
income Lax accordinq Lo Lhe LqypLian lncome 1ax Law No. 91 ol 2005.
According to Egyptian domestic law, residents of Egypt are taxable on their worldwide income. Nonresidents
are only taxable on their Egyptian-sourced income.
A person who resides in Egypt for a period exceeding 183 days during a calendar year is deemed to be
resident in Egypt for tax purposes.
As per LqypLian lncome 1ax Law No. 91 ol 2005, all ol whaL is earned by Lhe sealarers due Lo work in LqypL is
subject to salary tax. Individuals resident in Egypt less than 183 days within a calendar year should be subject
to 10% salary tax.
According to Egyptian tax law, salary incomes are taxed as follows:
1he lrsL LCP5,000 per year earned by Laxpayers is exempL lrom salary income Lax.
1herealLer, Lhe lollowinq proqressive salary income Lax raLes apply:
Above LCP5,000 up Lo LCP20,000 107
Above LCP20,000 up Lo LCP^0,000 157
Above LCP^0,000 up Lo LCP10 million 207
Above LCP10 million 257
There is no separate requirement for tax registration of employees. Employee tax registration is done under
Lhe employer's Lax reqisLraLion and lD as Lhe employer is Lhe responsible parLy Lo deducL, remiL and lle Lhe
tax liabilities due.
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Ceneral Lax incenLives available Lo all oLher individual employees, such as deducLions lor social securiLy
contributions and life insurance, are also available to seafarers.
1.6. Tax treaties and place of effective management
Egypt has a network of more than 60 double tax treaties with its main trading and investment partners aimed
at reducing tax impediments to cross-border trade and assisting tax administration. These treaties generally
comply wiLh Lhe OrqanizaLion lor Lconomic CooperaLion and DevelopmenL {OLCD) model LreaLy. Under Lhe
LreaLies, prolLs lrom ships are qenerally Laxable in Lhe counLry where Lhe ship is reqisLered. LqypL currenLly
has treaties with the following countries:
Albania, Algeria, Austria, Bahrain, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, India, Indonesia, Iraq, Italy, Japan, Jordan, Kuwait,
Lebanon, Libya, Malaysia, Malta, Morocco, Netherlands, Norway, Pakistan, Palestine, Poland, Romania,
Russian Federation, Serbia and Montenegro, Singapore, South Africa, South Korea, Spain, Sudan, Sweden,
Switzerland, Syria, Tunisia, Turkey, Ukraine, United Arab Emirates, the United Kingdom, the United States,
Yemen and Yugoslavia.
LqypL has siqned double Lax LreaLies wiLh Armenia, Banqladesh, lreland, KazakhsLan, Monqolia, Oman, Seneqal,
Seychelles, Lhe Slovak Republic, Sri Lanka, 1anzania, 1hailand, Uqanda and VieLnam, buL Lhese LreaLies have noL
yeL been raLiled. 1ax LreaLy neqoLiaLions are under way wiLh Conqo, Macedonia and NorLh Korea.
The place of effective management determines a countrys primary right under most double tax agreements
Lo Lax shippinq companies' prolLs lrom inLernaLional operaLions. 1he prolLs ol inLernaLional shippinq
companies LhaL Lrade in many sLaLes should be Laxed in only one ol Lhe sLaLes Lhe place where Lhe ellecLive
management of the company is.
Egypt views a place where effective management resides, i.e., where the headquarters are located, as the
place where at least two of the following take place:
Daily manaqemenL decisions are made
Board or direcLors meeLinqs are held
AL leasL 507 ol Lhe board members or Lhe direcLors live Lhere
1he parLners or sLockholders whose shares exceed hall Lhe capiLal or Lhe voLinq riqhLs live Lhere
1.7 Freight taxes
Egypt does not have a freight tax regime.
Several laws were issued Lo amend cerLain provisions ol Laxes and were published in Lhe Ollcial CazeLLe on
6 December 2012. As the enactment of these laws has been suspended, the effect of such amendments will
noL be relecLed unLil a lnal resoluLion is issued.
2. Human capital
Foreiqners are allowed Lo work in LqypL by a work permiL qranLed by Lhe MinisLry ol Manpower and
Emigration on a case-by-case basis. A work permit is usually granted for one year. The work permit must
be renewed annually lor a maximum Lhree years unless receivinq excepLional approval lrom Lhe MinisLry
ol Manpower and LmiqraLion. 1he renewal ol Lhe work permiL usually Lakes lrom 5 Lo 12 workinq days
depending on the foreign employees nationality.
Shipping companies in Egypt must meet the required localization rules applicable to the ratio of staff engaged
in Egypt employment. The number of foreign nationals working in an entity may not exceed 10% of the
enLiLy's worklorce, and Lhe enLiLy has Lo obLain a preapproval lrom Lhe MinisLry ol Manpower and LmiqraLion
for the number of foreign nationals to be employed in Egypt.
2.2 National labor
1he sealarers servinq on board LqypLian ships are qoverned by Lhe LqypLian AuLhoriLy lor MariLime {Lhe
AuLhoriLy). 1he AuLhoriLy seLs Lhe prolessional requiremenLs and provides work permiLs lor masLers, ollcers,
engineers, boilers and seafarers. This includes issuing and renewing marine passports, marine work licenses
on board LqypLian and loreiqn ships and special cerLilcaLes Lo reLired marine army ollcers, as well as LesLinq
masLers and naviqaLion ollcers ol merchanL ships and senior marine enqineers.
2.3 Social security contributions
Both the Egyptian employee (seafarer) and the employer are liable to pay social insurance contribution.
It is the employers responsibility to withhold and account for all social insurance contributions due. The
employers contribution is deductible for corporate tax purposes, while employee contributions are deductible
from gross salary.
The applicable rates for Egyptian employees are as follows:
In practice, foreigners employed in Egypt are not subject to social security contributions, provided they remain
within the social security legislation of their home country. However, foreign executives, such as the branch
manager or directors whose names are stated as authorized directors on the commercial register of a limited
liability company, are subject to social security contributions, regardless of whether they live or work in Egypt.
3. Corporate structures for shipping activities
3.1 Most commonly used legal structures
The most commonly used legal structures for shipping companies are joint stock companies, limited liability
companies and branches. NonresidenL companies wiLh a specilc conLracL Lo implemenL preler Lo seL up a
branch for their business in Egypt.
Egypt does not impose any form of dividend withholding tax.
4.1 Advantaes/disadvantaes cf Byin the Eyptian Ba
Vessels lyinq Lhe LqypLian laq and LqypLianowned vessels are qranLed Lhe same LreaLmenL in all Lhe
Egyptian ports regarding tariffs and exemptions.
5.1 Infrastructure
5.1.1 Major ports
Egypts major ports include the Port of Alexandria, the nations largest port, and Dekheila Port, which is an
extension to the Port of Alexandria. The Port of Damietta offers shipping companies the largest container
Lerminal and Lhe mosL sophisLicaLed equipmenL in Lhe Middle LasL. Sokhna PorL, which was developed wiLh a
LoLal invesLmenL ol LCP3.^ billion, ollers invesLors sLraLeqic warehousinq capabiliLies Lhrouqh iLs sLaLeolLhe
Employee share Employee share
Salary up to EGP875 14% 26%
Salary exceedinq LCP750 and oLher paymenLs
such as overLime up Lo LCP1,050
11% 24%
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art logistics center in addition to full port operations.
Egypts other ports are Port Said and Port Suez at the terminals of the Suez Canal. In 2009, Egyptian ports
handled approximately 123.1 million tons compared to 116.2 million tons in 2008 and 112.2 million tons in
2007, achieving a growth rate up to 6% in 2009 compared to 2008, 3.5% in 2008 compared to 2007, and
5.2% in 2007 compared to 2006. About 90% of Egypts foreign trade is shipped via seaborne vessels.
Dockinq
SLoraqe
The following airports are near major ports:
Cairo AirporL
Alexandria AirporL
Sharm Ll Sheikh AirporL
Hurqhada AirporL
MariLime educaLion is available aL Lhe Arab Academy lor Science and 1echnoloqy and MariLime 1ransporL
(Cairo and Alexandria).
The Authority is responsible for shipping business safety and environmental issues. The Authority regulates
and manages safety of maritime navigation in accordance with international conventions and regulations.
It provides technical cooperation with all the international ports and countries and maritime assistance and
services to all ships in the Egyptian territorial waters. It is responsible for planning, developing, installing,
monitoring, upgrading and maintaining lighthouses and navigational aids all over the nations coasts, as well
as approvinq relaLed permissions and cerLilcaLions.
5.3 Registration
5.3.1 Ship registration
The registration of ships is governed by the Authority, which is responsible for the registration of Egyptian
ships and marine units. The Authority monitors the technical standards of Egyptian vessels and maritime
units built locally or purchased abroad to verify their compliance with international technical requirements
belore issuinq Lheir reqisLraLion cerLilcaLes.
There is no restriction on the nationality of the crew to be employed on board Egyptian ships, provided that a
10:1 ratio of locals to foreigners is maintained.
5.4 Further information
For lurLher inlormaLion, please reler Lo Lhe MariLime 1ransporL SecLor aL www.mLs.qov.eq.
Estonia
1. Tax
1here are no specilc Lax laciliLies lor shippinq companies in LsLonia. However, residenL companies and
permanent establishments of nonresident companies in Estonia are not subject to corporate income tax
{Cl1) on undisLribuLed prolL, because only disLribuLed prolL {usually in Lhe lorm ol a dividend) is sub|ecL
Lo Cl1. 1he expenses LhaL are noL deducLible in a LradiLional sysLem, e.q., lrinqe benelLs, qilLs, donaLions,
represenLaLion expenses, expenses and paymenLs noL relaLed Lo business, are Laxable in LsLonia as prolL
disLribuLion. Cl1 aL Lhe raLe ol 217 lrom Lhe qross amounL {i.e., Lhe neL amounL mulLiplied by 21/79) is
applied Lo Lhe above menLioned paymenLs and Lo prolL disLribuLion.
Free caLerinq provided by Lhe employer, which as a rule is sub|ecL Lo Lax as a lrinqe benelL, is exempL lrom
lrinqe benelL Lax il Lhe daily cosL ol meals does noL exceed t6 per ship crew member.
There are no special tax facilities for seafarers. Nonresident natural persons from the European Economic
Area (EEA) who receive more than 75% of their annual taxable income from Estonia and resident natural
persons can deducL lrom Lheir Laxable income a basic annual Lax exempLion ol t1,728, and also housinq loan
inLeresL, donaLions, and conLribuLions Lo pension lunds, amonq oLher cosLs wiLhin speciled limiLs.
1ne hat |ncome tax rate for natura| ersons |n 2013 |s 21x out as of 2015 |t w||| oe 20x.
Estonia has effective double taxation avoidance agreements regarding income and capital taxes with 50
countries (the list is constantly expanding):
Albania, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Czech
Republic, Denmark, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Ireland, Isle
of Man, Israel, Italy, Jersey, Kazakhstan, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Moldova,
Netherlands, Norway, Poland, Portugal , Romania , Serbia ,Singapore, Slovak Republic, Slovenia, South
Korea (ROK), Spain, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, United Kingdom,
United States of America.
According to the Estonian Income Tax Act, resident companies are companies registered (effectively, the
same as incorporated) in Estonia. The business entities of Estonia are regulated by the Estonian Commercial
Code. Luropean public limiLed liabiliLy companies and cooperaLive socieLies LhaL have Lheir reqisLered ollce in
Estonia are deemed to be Estonian tax residents.
Estonias tax treaties are based on the Organization for Economic Cooperation and Development (OECD)
model tax convention; as such, exclusive taxing rights are conferred on the state of registration (even if the
place of effective management is not the state where the enterprise operating ships is resident).
1.4 Freight taxes
Estonia does not levy freight taxes.
1here are no special Lax benelLs oLher Lhan Lhe qeneral nonLaxaLion ol reLained prolLs ol residenL leqal
persons and permanent establishments of non-residents (see section 1.1).
Corporate and personal income tax rates will be decreased to 20% in 2015.
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2. Human capital
The acts that regulate employment relationships (primarily the Employment Contracts Act), together
wiLh Lhe specilcaLions provided lor in Lhe Sealarers AcL, apply Lo employinq personnel workinq on ships.
1he Sealarers AcL shall be applied as lrsL prioriLy, and in Lhe maLLers noL requlaLed by eiLher LmploymenL
Contracts Act or the Seafarers Act, other regulative acts shall be applied.
1he Sealarers AcL provides specilcaLions relaLinq Lo employmenL relaLionships ol persons workinq on ships
registered in the Estonian Ship Register or the register of bareboat chartered ships.
The parties to a seafarers contract of employment are a crew member and a shipowner or another employer.
A seafarers contract of employment is an agreement between a shipowner or another employer and a crew
member under which the crew member undertakes to work in the interests of the shipowner in subordination
to the management and supervision of the shipowner, and the shipowner undertakes to remunerate the crew
member for such work and to provide such working conditions as are prescribed by law, other legislation, the
seafarers contract of employment or collective agreement and by agreement between the parties.
If a crew member has to commence employment on a ship that is not located in the place where the
seafarers contract of employment is entered into, the shipowner shall, at the shipowners expense, make
travel arrangements for the crew member to reach the location of the ship and provide the crew member
with food and accommodation during the journey.
The costs of returning a crew member sent to a health care institution due to illness or injury to the ship
together with the expenses for food and accommodation during his or her return journey shall also be borne
by the shipowner.
Special regulations have also been provided for requirements of accommodating, catering and counting the
working and rest time of the ships crew.
The Seafarers Act, jointly with the Employment Contracts Act, shall apply to employing personnel working
on ships. In addition, if the ships crew is assigned under collective agreement, the Collective Agreements Act
shall also apply.
As the terms and conditions of a seafarers contract of employment have been intricately described in the
Seafarers Act, the Employment Contracts Act shall apply only in circumstances not described therein.
1he PrivaLe lnLernaLional Law AcL also applies in cases where a leqal relaLionship is connecLed wiLh Lhe law ol
more than one state. The main principles for the choice of applicable law are:
LmploymenL conLracLs shall be qoverned by Lhe law ol Lhe sLaLe aqreed upon by Lhe parLies;
however, the choice of law must not have the result of depriving the employee of the protection afforded
to the employee by the mandatory rules of the law of the state that would be applicable in case of the
absence of a choice of law.
ln Lhe absence ol a choice ol law, an employmenL conLracL shall be qoverned by Lhe law ol Lhe sLaLe
where:
1he employee habiLually carries ouL Lhe work in Lhe perlormance ol Lhe conLracL, even il Lhe employee is
temporarily employed in another state
1he place ol business Lhrouqh which Lhe employee was enqaqed is siLuaLed, il Lhe employee does noL
habitually carry out its work in any one state
If it becomes evident from all the circumstances that the employment contract is more closely connected with
another state, then the law of such other state applies.
The Collective Agreements Act is in place to determine the legal basis for entry into and performance of
collective agreements. A collective agreement is a voluntary agreement between employees, or a union
or federation of employees, and an employer or an association or federation of employers, as well as state
agencies or local governments, which regulates labor relations between employers and employees, concluded
for the term of one year, unless the parties agree otherwise.
With a collective agreement, the parties may agree to the conditions of working, rest time, occupational
health and safety, suspension, amendment and termination of an employment contract, and the rules for
calculating the continuous length of employment with the same employer, as well as the conditions and
procedure for layoff of employees and guarantees in the event of layoff.
A collective agreement entered into by the parties may also determine the minimum wage and the procedure
for amending it based on rises in the cost of living, additional employment guarantees and additional
measures providing assurance regarding occupational health and safety.
As LsLonia is an LU member sLaLe, Lhe provisions ol Lhe Council RequlaLion {LC) No. 883/200^ ol 29
April 2004 on the application of social security schemes to employed persons, self-employed persons and
members of their families moving within the community should be followed.
Estonia has also entered into an agreement on social security (a so-called totalization agreement) with
Ukraine {since 1 June 2002) and Canada {since 1 November 2006).
2.5 Mannin issues with Byin the Estcnian Ba
1here are no manninq issues wiLh reqard Lo lyinq Lhe LsLonian laq.
The most commonly used legal structures for the operation of shipping activities are the public limited liability
company and the private limited liability company. In particular cases, a partnership is used. In some cases,
nonresident companies prefer to set up a branch as well.
In all of the legal structures mentioned above, the taxation follows the same provisions, i.e., a 21% income tax
on qross amounL shall be levied on prolL disLribuLion {see subsecLions 1.1 and 3.2).
Resident companies and permanent establishments of nonresident companies in Estonia are not subject to
Cl1 when Lhe prolL is earned, buL when Lhe prolL is disLribuLed {usually in Lhe lorm ol a dividend).
However, Lhe expenses LhaL are noL deducLible in a LradiLional sysLem, e.q., lrinqe benelLs, qilLs, donaLions,
representation expenses, expenses and payments not related to business, are taxable in Estonia. Resident
companies and permanenL esLablishmenLs ol nonresidenL companies have Lo pay Cl1 on prolL disLribuLions
(i.e., dividends).
Cl1 aL Lhe raLe ol 21/79 is applied on Lhe neL amounL ol such paymenLs, i.e., 217 on Lhe qross amounL.
ConsequenLly, a company's Lax liabiliLy arises when iL makes disLribuLions, noL when Lhe prolLs are earned.
1he Lransler ol prolL lrom a permanenL esLablishmenL Lo iLs head ollce or Lo oLher nonresidenLs is also
treated as a taxable distribution.
There are no general subsidies for shipping companies. Subsidies may be available in the case where a
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shipping company provides transportation services as the result of winning a public procurement.
1here are no specilc invesLmenL incenLives lor shippinq companies or lor Lhe shipbuildinq indusLry. A so
called indirecL incenLive is derived lrom Lhe specilc naLure ol Lhe LsLonian LaxaLion policy {as speciled in
1.1).
1here are no special incenLives specilc Lo Lhe shippinq indusLry; however, Lhere is an incenLive called Lhe
LnvironmenLal Deed and Small LnvironmenLal Deed ol Lhe year award LhaL was inLroduced by Lhe MinisLry
of the Environment. This award not only addresses shipping companies, but also commends outstanding
performances connected with environmental protection, and is intended to identify organizations that have
been most concerned with environmental issues.
4.4 !ssues with Byin the Estcnian Ba
1here are no issues reqardinq subsidies and qranLs when lyinq Lhe LsLonian laq.
Vessels wiLh Lhe riqhL Lo ly under Lhe LsLonian laq:
Seaqoinq vessels owned by LsLonian ciLizens
Seaqoinq vessels in common ownership may ly Lhe naLional laq ol Lhe Republic ol LsLonia il Lhe larqer
share of the seagoing vessel is owned by Estonian co-owners
A seaqoinq vessel LhaL is Lhe ob|ecL ol shared succession may ly Lhe naLional laq ol Lhe Republic ol
Estonia if the larger share of the succession is owned by Estonian citizens or Estonian legal persons who
have inherited the seagoing vessel in common
The captain of a seagoing vessel for which a paper of nationality has been issued must be an Estonian citizen.
No major changes are expected.
5.1 Infrastructure
5.1.1 Major ports
LsLonia is qeoqraphically in a lavored locaLion open Lo Lhe BalLic Sea, enablinq close access Lo Cermany,
Scandinavian countries and the Russian Federation, which is an international transit hub. A number of major
Estonian harbors are navigable year round and easily approachable with depths of up to 18 meters, enabling
them to receive all vessels that are able to pass the Danish Straits.
Some of the major ports are:
PorL ol 1allinn: consisLs ol lve consisLenL harbors, Lwo larqer and Lhree smaller ones Old CiLy, Muuqa,
Paldiski SouLh, Pal|assaare and Saaremaa harbors. AddiLional inlormaLion: hLLp://www.porLolLallinn.com
Bekker PorL: a privaLely owned porL operaLinq on Lhe Kopli peninsula, 1allinn. lnlormaLion on Lhe porL's
inlrasLrucLure, LransporLaLion connecLions and Lrallc sLaLisLics is available aL Lhe lollowinq websiLe: hLLp://
www.LallinnbekkerporL.com/?lanq=enq
Paldiski NorLhern PorL: a privaLely owned porL LhaL specializes in handlinq qeneral carqo, dry bulk, rollinq
carqo and conLainers. 1he porL is siLuaLed 50km wesL ol 1allinn. AddiLional inlormaLion: hLLp://www.
porLolpaldiski.ee/index.php?lanq=enq
PorL ol Sillamae: a privaLely owned porL LhaL is Lhe mosL easLern deepwaLer porL in LsLonia and in Lhe LU,
siLuaLed 25km lrom Lhe LURussian border. AddiLional inlormaLion: hLLp://www.silporL.ee
SaarLe Liinid: mainLains and develops harbors in WesLern LsLonia and on Lhe LsLonian islands Lo ensure
naviqaLion beLween Lhem. AddiLional inlormaLion: hLLp://www.saarLeliinid.ee/enq
1ransCom: a privaLely owned holdinq company operaLinq Lhe Parnu seaporL and 1arLu river porL.
AddiLional inlormaLion: hLLp://www.Lranscom.ee/index_enq.hLml
Among others, the following support facilities are available in these ports:
Dockinq
FreiqhL lorwardinq
1owinq
WasLe handlinq
SLoraqe and Lerminals {e.q., liquid bulk carqo, oversized carqo, roro)
Business incubaLion services aL porLs
There are a number of industrial parks at ports with all necessary communications up to plot borders (water,
sewerage, gas, power and telecommunications). In addition, there are three Free Zone Areas in Estonian
porLs: Muuqa, Paldiski NorLhern and Sillamae Harbors.
There is only one true international airport in Estonia: Tallinn Airport. The Port of Tallinn is the closest port
(10km) to Tallinn Airport.
5.1.4 Railway network
The total length of railway lines in Estonia is 1,200 km. All bigger towns and centers are united through the
railway network, which covers the whole mainland part of Estonia. This creates good prerequisites for the
development both for passenger and freight transport on railway.
One of the shortest and developed transit corridors uniting the Russian Federation and the Commonwealth
of Independent States (CIS) countries and Europe passes through Estonia. Together with ports, the railway
comprises an important infrastructure for the Estonian economy.
The main part of the goods volume transported on the railway is transit goods that are transported from
Russia to the Western countries. In international goods transportation, railway dominates with 88%, followed
by road transport with 9% and sea transport with 3%.
The majority of transit cargo is handled by railways that use the same 1520mm gauge standard as the
Russian Federation and CIS countries, as well as Finland. A number of large ports are integrated into the
railway neLwork, ollerinq quick and cosLellcienL carqo LransporL opporLuniLies across reqions wiLh Lhe same
gauge standard.
Among others, the following supporting facilities for the shipping industry are easily available:
Carqo handlinq services
Bunkerinq services
SLevedore services
Chandler services
The main maritime educational institutions in Estonia are the:
LsLonian MariLime Academy: hLLp://www.emara.ee/?id=831
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LsLonian MariLime School: hLLp://www.merekool.ee/
1allinn UniversiLy ol 1echnoloqy, FaculLy ol Mechanical Lnqineerinq, Shipbuildinq {specializaLion): hLLp://
www.LLu.ee/laculLyolmechanicalenqineerinq/educaLion/academic/
1he implemenLaLion ol Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code aboard vessels depends on
Lhe vessel's displacemenL Lonnaqe. Wherever implemenLaLion ol Lhe lSM Code is required, Lhe companies
concerned comply. From 1 July 1996, the regulation is mandatory for seagoing passenger Ro-Ro ferries
operaLinq a reqular service Lo or lrom a porL ol an LU member sLaLe. On 11 January 2006, Lhe AqreemenL
Concerninq Specilc SLabiliLy RequiremenLs lor RoRo Passenqer Ships UnderLakinq Reqular Scheduled
International Voyages Between or to or From Ports in North West Europe and the Baltic Sea entered into force
(in Estonia).
All manning processes are regulated by law (including the Seafarers Act). Shipping companies should abide
by these rules.
All requiremenLs reqardinq saleLy and Lhe environmenL are sLaLed in Lhe MariLime SaleLy AcL, which requlaLes
the seaworthiness of ships, recreational craft and other water craft and their navigability in navigable inland
waLers, Lhe saleLy ol ships {includinq saleLy rules) and ensurinq Lhe saleLy ol vessel Lrallc on waLerways.
5.3 Registration
All requiremenLs lor ship reqisLraLion are sLaLed in Lhe Law ol Ship Flaq and ReqisLers ol Ships AcL. 1he use ol
unregistered ships for merchant shipping is prohibited.
The following vessels must be registered in the Estonian Ship Register:
A seaqoinq vessel aL leasL 12 meLers in lenqLh lyinq Lhe LsLonian laq
An inland vessel aL leasL 12 meLers in lenqLh whose owner is a naLural person and whose place ol
residence is Estonia or a legal person located in Estonia
Sailinq yachLs and launches LhaL are a minimum ol 2^ meLers in lenqLh
1here is volunLarily reqisLraLion lor ships LhaL ly Lhe LsLonian laq whose overall lenqLh does noL exceed
12 meLers {less Lhan 2^ meLers in Lhe case ol sailinq yachLs and launches), nonpropelled loaLinq vessels
siLuaLed in LsLonia {e.q., loaLinq crane, loaLinq dock), and ships builL in LsLonia LhaL are permanenLly
marked with a name or number and keel of which has been laid.
Registering a ship in the Estonian Ship Register gives the shipowner the possibility of establishing a mortgage
on such registered ship as security for a claim, also usufruct. In addition, value added tax incentives apply to
a registered ship.
ln order Lo reqisLer a seaqoinq or inland vessel, {and in accordance wiLh Lhe Law ol Ship Flaq and ReqisLers ol
Ships Act), required documents should be submitted to the Estonian Ship Registers registration department.
Notary and state fees have to be paid for the registration.
1he LsLonian Ship ReqisLer holds Lhe daLa relaLed Lo marine and inland vessels {includinq lshinq vessels)
and Lhe nonpropelled loaLinq vessels and vessels under consLrucLion. ln addiLion Lo Lhe vessel's Lechnical
data, the Ship Register stores data about the vessels owners, ship mortgages, usufructs and prohibition
notations and other restrictions regarding the vessels. The data in the Ship Register have legal force. Any
transaction made with a registered vessel enters into force only after the transaction has been entered into
the Ship Register.
OLher vessels lyinq Lhe LsLonian laq {e.q., charLered ships wiLhouL a crew, small ships, ships which perlorm
sLaLe adminisLraLive duLies) are reqisLered by Lhe MariLime AdminisLraLion. Unlike Lhe Ship ReqisLer, Lhe
reqisLers ol Lhe MariLime AdminisLraLion have no leqal ellecL; Lhey are simply Lechnical daLabases.
In Estonia, parallel registration is possible.
Parallel registration is available for seagoing vessels which, pursuant to the Ship Flag and Registers of Ships
AcL, may ly Lhe naLional laq ol Lhe Republic ol LsLonia and shall be enLered in Lhe reqisLer ol bareboaL
chartered ships. Such parallel registration is available under international agreement or, for seagoing vessels
aL leasL 12 meLers in lenqLh, on Lhe basis ol a provisional cerLilcaLe ol naLionaliLy issued by Lhe MariLime
Board at the request of the charterer if:
1he charLerer ol Lhe ship belonqs Lo an LsLonian ciLizen or an enLiLy locaLed in LsLonia whose
management boards or equivalent bodies comprise an Estonian citizen majority (for general and limited
partnerships: those in which Estonian partners have a majority of votes).
1he ship has been bareboaL charLered lor use in Lhe charLerer's own name.
1he shipowner consenLs Lo Lhe exchanqe ol laqs.
1he law which had applied wiLh reqard Lo Lhe ship does noL prohibiL lyinq Lhe naLional laq ol Lhe Republic
of Estonia.
1here are special requiremenLs {relaLed Lo caLerinq, cloLhes, accommodaLion, saleLy, eLc.) lor ollcers and
crew serving on vessels. The requirements are stipulated with different regulations in accordance with the
Seafarers Act.
5.3.5 International maritime conventions that Estonia has acceded
UniLed NaLions ConvenLions:
1he UniLed NaLions ConvenLion on Lhe Law ol Lhe Sea {UNCLOS) and Lhe AqreemenL RelaLinq Lo Lhe
lmplemenLaLion ol ParL Xl ol Lhe ConvenLion
1he lnLernaLional ConvenLion on ArresL ol Ships, 1999
1he lnLernaLional ConvenLion on MariLime Liens and MorLqaqes, 1993
lMO ConvenLions:
1he lnLernaLional MariLime OrqanizaLion {lMO) ConvenLion
1he ConvenLion lor Lhe Suppression ol Unlawlul AcLs aqainsL Lhe SaleLy ol MariLime NaviqaLion {SUA)
OLher convenLions
lnLernaLional Labour OrqanizaLion {lLO) ConvenLion:
MerchanL Shippinq {Minimum SLandards) ConvenLion, 1976
Additional information on Estonian logistics and the shipping industry can be found at the following websites:
AssociaLion ol PorL OperaLors: www.apo.ee
LsLonian MariLime AdminisLraLion: www.vLa.ee
LsLonian PorLs AssociaLion: www.esLonianporLs.com
LsLonian Ship ReqisLer: www.rik.ee/en/oLherservices/shipreqisLer
LsLonian LoqisLics and 1ransiL AssociaLion: www.LransiL.ee/_enq
LsLonian lnvesLmenL & 1rade Aqency:
hLLp://www.invesLinesLonia.com/en/businessenvironmenL/Paqe31
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Finland
1. Tax
Finland enacLed new Lonnaqe Lax leqislaLion as ol 1 March 2012.
In general, shipping companies are subject to taxation under the normal corporate income tax regime. The
corporate income tax rate in Finland is 24.5%.
A shipping company established in Finland operating international transport of goods or passengers,
however, may elecL, insLead ol normal corporaLe income LaxaLion {based on acLual prolLs), a Lax on Lhe
income calculaLed on Lhe basis ol Lhe LoLal neL Lonnaqe ol Lhe company's leeL. Such income is Laxable aL
Lhe reqular, laL corporaLe income Lax raLe ol 2^.57. ln addiLion Lo companies residenL in Finland, Lhe reqime
applies to Finnish permanent establishments of international shipping companies that are resident in another
Luropean Union {LU) Member SLaLe.
To qualify for the tonnage tax regime, the shipping companys actual place of management must be in
Finland, the company has to transport to or from Finland and be tax liable in Finland, have at least 60% of its
leeLs neL capaciLy reqisLered in Lhe LU Member SLaLes and Lhe company has Lo own aL leasL 207 ol Lhe leeL
it uses for international shipping.
Furthermore, vessels held and chartered out on a bareboat- or time-charter basis qualify for the regime, if the
charter period is less than three years, the shipping company has a temporary overcapacity and the capacity
ol Lhe vessels charLered ouL does noL exceed 207 ol Lhe neL capaciLy ol Lhe company's leeL.
Shipping companies have to apply for the tonnage tax regime by 31 December 2014 or within three months
from the establishment of a new corporation. If a company decides to opt for the tonnage tax regime, it
commits itself to the regime for a period of 10 years, which is called a tonnage tax period. The tonnage tax
period can be renewed.
The income subject to tonnage tax is calculated as follows:
1he compuLed income based on Lhe LoLal neL Lonnaqe ol Lhe leeL is sub|ecL Lo Lhe normal corporaLe income
tax rate of 24.5%. Also, the days during which the vessels are not in transit are subject to tax.
Any costs or expenses (e.g., depreciations) incurred in connection with the generation of income subject
to tonnage tax are not deductible for the tonnage taxation. The tonnage tax regime only applies to income
derived from international transportation of goods and passengers and activities directly relating thereto;
any other income of the shipping company, derived, for example, from sales of goods not to be consumed on
board, is sub|ecL Lo Lhe normal corporaLe income Lax reqime {prolL is Laxed aL 2^.57 laL Lax raLe). 1hus, in
many cases, a shipping company may have both income subject to tonnage tax and income subject to normal
corporate income tax.
Shipping companies opting for the tonnage tax regime gain a possibility for tax relief regarding their latent
tax. One ninth of the total latent tax is deducted every year the company is taxed under the tonnage regime,
starting from the second tonnage tax regime year. However, the relief cannot exceed the yearly maximum
Tonnage Taxable income per day per 100 tons ()
01,000 0.9
1,00110,000 0.7
10,00125,000 0.5
Above 25,000 0.2
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amount of state aid available per each taxpayer, considering all aid received by the taxpayer in question. The
maximum amounL ol reliel is conlrmed yearly by Lhe Lax auLhoriLies.
ProlL disLribuLion by a limiLed liabiliLy shippinq company is Laxed similarly Lo prolL disLribuLion by a normal
limiLed liabiliLy company. See lurLher inlormaLion on LaxaLion ol prolL disLribuLion in secLion 3.2.
According to the tonnage tax law, any tax levied by a foreign state is not credited against tonnage taxation in
Finland.
The sanctions for failure to comply with the tonnage tax regime are rather strict, as there is a possibility of
reLroacLively levyinq income Lax il Lhe shippinq company does noL lullll Lhe requiremenLs seL lor Lhe Lonnaqe
tax regime status. If the taxpayer does not meet the requirements, it is possible that income tax will be levied
retroactively on the total income of the tonnage tax period. However, a certain time period is reserved for
Lhe Laxpayer Lo lx Lhe nonconlormance. AddiLionally, Lhere is a possibiliLy ol a puniLive Lax increase in cerLain
cases. In cases where the tonnage tax status is revoked, the taxpayer cannot reapply for the tonnage tax
status regime during the next 10 years.
Under Lhe reqime, Lhe shippinq company can deducL a repurchase reserve lrom iLs Laxable income il iL has
or can reliably show that it intends to purchase a vessel to be used in activities falling under the tonnage tax
regime during the next three years from the disposition.
Seafarers are allowed to deduct a so-called seafarers earnings allowance from their taxable seafarers
income.
Seafarers receiving seafarers income as determined in the Finnish Income Tax Act are allowed to deduct 18%
of their earnings earned on a Finnish or foreign ship in computing their national income taxation. However,
Lhe sealarers' earninqs allowance in naLional income LaxaLion is t6.650 aL maximum. NaLional income Lax is
imposed according to progressive tax rates.
Seafarers are also allowed a seafarers earnings allowance in municipal taxation. Seafarers receiving
seafarers income as determined in the Finnish Income Tax Act are allowed to deduct 30% of their income
earned on a Finnish or foreign ship in computing municipal taxation. However, the earnings allowance in
municipal LaxaLion is t11.350 aL maximum and is increased by t170 per monLh when Lhe ship is locaLed
ouLside Finland's borders and Lhe sealarer is on board. Municipal Lax is imposed accordinq Lo Lhe laL Lax raLes.
Finland has concluded double taxation agreements with respect to income and capital taxes with more than
60 countries. Thus, there is an extensive network of tax treaties that in many cases effectively reduces the
rates enacted in domestic legislation.
According to the domestic Finnish tax rules, a corporate body (e.g., a limited company) is deemed to be
domiciled in Finland if it is registered (incorporated) in Finland or otherwise established under Finnish law. A
corporate body is not deemed to be domiciled in Finland based on the fact that it has a place of management
in Finland. If a corporate body is tax resident in Finland, it is, according to domestic Finnish legislation, liable
to taxation on its worldwide income.
Finlands tax treaties are mostly based on the Organisation for Economic Co-operation and Development
(OECD) model tax convention. According to the OECD model tax convention on income and on capital,
ArLicle 8, Lhe place ol ellecLive manaqemenL ol a shippinq company is crucial: Lhe prolLs ol a shippinq
company shall be taxable only in the state in which the place of effective management of the company is
situated. Finlands tax treaties are, generally, based on the model tax convention and thus, in most of the
applicable treaties, Article 8 is as mentioned. The interpretation of the relevant articles is usually based on
the commentaries on the model tax convention and customary application of the treaties.
1.4 Freight taxes
Finland does not levy any freight taxes. Finland has concluded treaties with other countries that grant relief
from these taxes.
The mere registration of the vessel is not enough. The owner of the vessel or the company carrying on
shipping activities has to be a Finnish company (a subsidiary of the foreign investor). See also section 1.1
above.
2. Human capital
All crew members must have:
A relevanL Finnish cerLilcaLe or an endorsemenL lrom Lhe Finnish MariLime AdminisLraLion lor Lheir
respective positions
A relevanL SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq {S1CW) 95 basic Lraininq cerLilcaLe
Public musLerinq musL be carried ouL lor all crew members by Lhe Finnish MariLime AdminisLraLion.
National labor law does not apply to crew members. Finland has three separate laws that regulate the
working conditions of crew members:
1he Seamen's AcL {1978/^23)
1he AcL relaLinq Lo hours ol work on board ships {1976/296)
1he Seamen's Annual Leave AcL {198^/^33)
The Finish Financial Supervisory Authority (FSA) has entered into collective labor agreements with:
1he Finnish Lnqineers' AssociaLion
1he Finnish Seamen's Union
1he Finnish Ships Ollcers' Union
These agreements together with the laws listed in section 2.2 above cover wages and other working
condiLions, such as hours ol work and hours ol resL, duraLion ol service vacaLion, repaLriaLion, sickness/
disabiliLy and deaLh benelLs.
All seafarers and employers are required to contribute to the social security system and to the Seafarers
Pension Fund. LU DirecLive 1^08/71 on social securiLy is in lorce in Finland.
2.5 Mannin issues with Byin the Finnish Ba
The Finnish manning costs are above the European average.
The most common legal structure for shipping companies is a public or private limited liability company.
LimiLed liabiliLy companies are sub|ecL Lo corporaLe income Lax aL Lhe 2^.57 raLe. See also secLion 1.1 above.
Under Lhe Finnish corporaLe Lax reqime, dividend income received by a FinnishresidenL enLiLy is, in qeneral,
tax-exempt in Finland if certain requirements are met. In the new tonnage tax regime, dividend distribution is
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taxed similarly to the manner of normal limited liability companies.
According to domestic law, dividends paid to foreign shareholders would generally be subject to a withholding
Lax. However no wiLhholdinq Lax is due in Finland on dividends paid Lo a qualiled parenL company locaLed
in an LU Member SLaLe. ln addiLion, Lax LreaLies usually ellecLively reduce Lhe raLe ol Lhe wiLhholdinq Lax or
eliminate the withholding tax on dividends.
Finnish partnerships are not regarded as separate taxable entities. The taxation of a partnership is imposed
at the partner level. However, the taxable income of a partnership is determined at the partnership level. In
qeneral, reqardinq parLnerships, no wiLhholdinq Lax is due based on prolL disLribuLion. A FinnishresidenL
non-corporate partners share of a Finnish partnerships income may be considered partly capital income and
partly earned income. However, if the partner is an entity, the partners share, if taxable in Finland, is taxed at
the corporate tax rate of 24.5%. This applies to both Finnish and foreign partners that are entities. Advance
taxes may be levied at the partner level.
Under Lhe Finnish second reqisLer, Finnish shipowners, or under cerLain condiLions, Finnish shippinq
companies, enjoy a reimbursement of all social security costs and seafarers income taxes for cargo vessels.
For years until 2009, a broadly similar system is applicable to passenger ships as well.
No investment incentives are available.
No special incentives are available.
4.4 !ssues with Byin the Finnish Ba
1here are no specilc issues.
5.1 Infrastructure
5.1.1 Major ports
The major ports in Finland are:
HaminaKoLka
Hanko
Helsinki
Kemi
Kokkola
NaanLali
Oulu
Pori
Raahe
Rauma
Skldvik
1urku
Dockinq
SLoraqe
HelsinkiVanLaa, close Lo Helsinki and Skldvik
Pori, close Lo Pori and Rauma
1urku, close Lo 1urku and NaanLali
Alands PolyLechnic/MariLime SLudies {Mariehamn)
Alands S|mansskola/MariLime SLudies {Mariehamn)
KoLka VocaLional lnsLiLuLe/MariLime SLudies
Kymenlaakso PolyLechnic/MariLime SLudies {KoLka)
Rauma VocaLional lnsLiLuLe/MariLime SLudies, SaLakunLa PolyLechnic/MariLime SLudies {Kankaanpaa)
SydvasL PolyLechnic/MariLime SLudies {Raseborq)
UniversiLy ol 1urku/CenLer lor MariLime SLudies
All ol Lhe above, as well as MeriLurvakeskus {1he MariLime SaleLy 1raininq CenLer), oller saleLy Lraininq lor
sealarers. MeriLurva is a sLaLeowned esLablishmenL, which ollers mariLime saleLy Lraininq in various lorms.
All Finnish vessels and owners, includinq inland/domesLic Lrallc, are cerLiled {SaleLy ManaqemenL SysLems
[SMS| and lnLernaLional SaleLy ManaqemenL Code cerLilcaLe).
Finnish safety rules may be characterized as strict to medium.
The Stockholm Agreement concerning bow doors on passenger ferries applies.
5.3 Registration
1here is no possibiliLy lor parallel reqisLraLion, e.q., bareboaL charLer. However, companies in LU Member
SLaLes are allowed Lo reqisLer ships under Lhe Finnish laq wiLhouL Lranslerrinq Lhe ownership ol Lhe vessel Lo
Finland.
1he qualilcaLions ol ollcers and crew have Lo comply wiLh S1CW 95.
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No international conventions are applicable.
5.3.4 SpeciaI requirements/ruIes reIatin tc reistraticn
1here are special surveys ol Finnish and Swedishlaqqed passenqer vessels sailinq beLween porLs in Sweden
and Finland according to a bilateral agreement.
France
1. Tax
Tonnage tax regime
As with many other European countries, France implemented a tonnage tax regime, which started 1 January
2003, under which a shipping company can compute its French corporate income tax (CIT) at the rate of 33
1/37 based on a noLional prolL, dependinq on Lhe neL Lonnaqe ol Lhe ship operaLed.
This regime is optional, and a shipping company needs to expressly elect for this regime for a 10- year period.
Lach year, Lhe shippinq company musL enclose wiLh iLs Lax reLurn Lhe mandaLory Form 2076, which is specilc
to the tonnage tax regime. Furthermore, the choice to do so is binding for a 10-year period, and at the end of
that period, the tonnage tax election can be expressly renewed for another 10 years.
Under Lhe Lonnaqe Lax reqime, Lhe Laxable noLional prolL is deLermined on Lhe basis ol Lhe neL Lonnaqe ol Lhe
vessels operaLed {raLher Lhan on Lhe acLual prolL derived lrom iLs shippinq acLiviLy) as well as on Lhe number
ol operaLinq days durinq Lhe lscal year.
Article 209-0 B of the French Tax Code (FTC) compiles the requirements to qualify for that tonnage tax
regime, which are as follows:
1his reqime is applicable Lo companies LhaL are liable Lo French Cl1.
1urnover arises lrom aL leasL 757 ol Lhe operaLion ol qualiled commercial ships.
1he ship musL be seaqoinq, aL leasL 50 qross Lons and used lor Lhe carriaqe ol passenqers, LransporLaLion
of goods, towage, salvage, or other marine assistance or transport in connection with other services of a
kind necessarily provided at sea.
1he ship musL be sLraLeqically and commercially manaqed in France. Ships lyinq Lhe French laq are
deemed to be strategically and commercially managed in France.
1he shippinq company commiLs Lo mainLain iLs ships under Lhe Luropean Union {LU) laq durinq Lhe
above-mentioned 10-year election period.
The ships eligible for the tonnage tax are:
Ships owned by Lhe operaLinq company, includinq Lhose charLered ouL {excludinq Lhe bareboaL charLered
out to third parties or to related parties within the meaning of Article 39-12 of the FTC that did not elect
for the tonnage tax regime).
Ships lull Lime charLered in {includinq Lhose LhaL are parLially Lime charLered) and bareboaL charLered in
by the operating company.
Only Lhe prolLs derived lrom Lhe operaLion ol Lhose qualilyinq ships will be eliqible lor Lhe Lonnaqe Lax
sysLem. ProlLs lrom Lhe operaLion ol oLher ships will noL be covered by Lhe Lonnaqe Lax noLional prolLs.
1he daily noLional prolL lrom Lhe qualilyinq shippinq acLiviLies is compuLed by relerence Lo Lhe neL Lonnaqe
(NT) of each of the eligible ships operated according to the following table:
Total NT Fixed proht per day per 100 NT {6)
Up Lo 1,000 0.93
1,00110,000 0.71
10,00125,000 0.47
Over 25,000 0.24
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1he daily noLional prolL is Lhen mulLiplied by Lhe number ol days Lhe ship is operaLed by Lhe company durinq
Lhe year. A similar compuLaLion is done lor each ship operaLed. 1he noLional prolL ol all ships operaLed is Lhen
aqqreqaLed Lo obLain Lhe company's Lonnaqe Lax prolL lor a qiven lnancial year.
The company tonnage tax is grossed up by the following add-backs:
Waiver ol debL, qranLs and qilLs made in lavor ol Lhe company wiLhin Lhe Lonnaqe Lax reqime by a relaLed
company that has not elected this regime
lncome lrom lowLhrouqh enLiLies and oLher LaxLransparenL enLiLies, excepL lor |oinL ownership ol vessels
under the tonnage tax regime
Cain arisinq lrom Lhe disposal ol eliqible ships and/or asseLs used in Lhe operaLion ol such ships buL only
as lar as Lhe qain is relaLed Lo Lhe Lime when Lhe ship/asseL was used ouLside Lhe Lonnaqe Lax reqime
Cains qeneraLed lrom Lhe sLepup ol eliqible ships and lxed asseLs used in Lhe operaLion ol Lhe ships
Cains on capiLal conLribuLions relaLed Lo depreciable asseLs wiLh respecL Lo merqer, spinoll or parLial
business Lransler qains LhaL benelL lrom Lhe lavorable merqer Lax reqime
lnLeresL calculaLed on Lhe basis ol Lhe porLion ol shareholders' equiLy LhaL exceeds Lwice Lhe amounL ol
Lhe debLs ol Lhe company increased by {i) Lhe lease paymenLs remaininq due aL Lhe end ol Lhe lnancial
year and (ii) the residual purchase price of the assets leased
1he lnal prolL is sub|ecL Lo Lhe sLandard Cl1 aL 33 1/37 raLe. ln addiLion, should Lhe Cl1 due exceed t 763k,
a social security surtax of 3.3%
1
is levied on the CIT itself, raising the full tax rate to a maximum of 34.43%.
FurLher, a 57 surcharqe {assessed on Lhe Cl1 due) also applies Lo enLerprises wiLh a Lurnover exceedinq t
250m lor Lheir lscal years endinq lrom 31 December 2011 Lo 30 December 2015.
Based on the above, the maximum effective CIT rate is currently 36.10% in France.
Sec|hc exemt|on for fore|n coman|es :/rt|c|e 24 of tne l1C;
As an exception to the principle of territoriality, income arising from a foreign shipping company that
performs its activities in France is exempt from French taxation, as long as a similar exemption for French
corporations is granted by the considered foreign country.
Accelerated depreciation (French administrative guidelines BOI-BIC-AMT-20-40-60-10)
Seagoing vessels may be depreciated over eight years, using an annual depreciation rate of 28.13% for the
lrsL lve years and 33.337 lor Lhe lollowinq remaininq Lhree years. As a qeneral rule, Lhe depreciaLion cannoL
benelL Lo secondhand qoods. However, Lhe French Lax auLhoriLy allows depreciaLion upon secondhand
shipping vessels provided that the length of life retained is eight years for shipping vessels and six years for
lshinq boaLs. As a resulL, a shippinq vessel can be depreciaLed by each ol iLs successive owners.
1he shippinq companies can beqin depreciaLion lrom Lhe end ol Lhe lscal year belore Lhe shippinq vessel was
delivered, provided that the vessel was dry-docked before that date.
In order to support the French economy, depreciation rates have been increased for investments made from
4 December 2008 to 31 December 2009. Consequently, seagoing vessels acquired during that period can be
depreciaLed aL an annual raLe ol 3^.377 durinq Lhe lrsL six years and 507 lor Lhe lollowinq Lwo years.
Territorial economic contribution (Articles 1447-0, 1586 of the FTC, and Article 317 E of Appendix II to the FTC)
1he lnancial bill lor 2010 replaced Lhe prolessional Lax in lorce unLil 31 December 2009 by Lhe LerriLorial
economic contribution (TEC) made up of two distinct taxes: the company value added contribution (BVAC)
and the company property contribution (BCP). The TEC is applicable as from January 1, 2010.
Reqardinq Lhe lrsL Lax, shippinq companies, which carry ouL Lheir acLiviLy boLh in France and abroad, are
liable to BVAC merely on the portion of the added value arising from operations performed within the French
territory. When both loading and unloading occur on the French territory, the operations are deemed to be
performed within the French territory. The share of taxable added value for BVAC computation purposes
1
The social security surtax of 3.3% is assessed on the portion of the corporate tax due exceeding 763,000 before
offsetting the tax credits granted under tax treaties.
derived lrom Lhe French shippinq acLiviLy is proporLional Lo Lhe raLio resulLinq lrom Lhe prolLs derived lrom
Lhe French shippinq acLiviLy compared Lo Lhe LoLal amounL ol prolLs. ln any case, when Lhe shippinq carried
on by the company is mainly originating from or destined for France, this taxable part cannot be less than
107 ol Lhe LoLal amounL ol prolLs realized by Lhe shipowner in relaLion wiLh iLs shippinq acLiviLy.
Regarding the second tax (i.e., BCP), this tax is computed upon the rental value of the goods that are subject
to the property tax.
Value-added tax (Article 262 II of the FTC)
Supply, repairs, alteration, maintenance, chartering and leasing of seagoing vessels are zero-rated for value-
added tax (VAT) purposes, but the vessels have the right of recovery of input VAT should these services be
supplied to:
Commercial seaqoinq vessels {includinq leisure boaLs buL only Lhose LhaL are simulLaneously
commercially registered, commercially operated and manned with a professional crew)
Vessels used lor deepsea indusLrial acLiviLies
Vessels used lor prolessional lshinq
Vessels used lor assisLance and rescue aL sea
Companies that are involved in operations of construction, transformation or repair as subcontractors are
zero-rated in the same way as the project manager.
The VAT exemption also applies to the aforementioned operations relating to goods aimed to be incorporated
in these vessels or used at sea.
Services relaLed Lo Lhe lreiqhL ol Lhese vessels {such as loadinq/unloadinq) are also zeroraLed in mosL
cases. The supply of goods for the fueling and provisioning of warships is likewise zero-rated. The French VAT
exemption is, in principle, not applicable to vessels used on international rivers and channels.
ln addiLion, eliqible companies need Lo provide some supporLinq documenLaLion Lo have Lhe benelL ol Lhe
VAT exemption.
When boaLs or equipmenL sLop beinq used by shippinq lines or prolessional lshermen or sLop beinq
exclusively allocated to seagoing use, the VAT becomes due and is to be paid to the customs authorities.
1he inLernaLional LransporL ol passenqers {i.e., Lravelinq Lo and/or lrom a loreiqn counLry) carried ouL wiLh
seagoing vessels is, in principle, zero-rated, including for the portion of the journey taking place in France.
Customs
Customs duties are suspended with respect to goods intended for incorporation in vessels for the purpose of
Lheir consLrucLion, repair or mainLenance and wiLh respecL Lo qoods inLended lor lLLinq Lo or equippinq such
vessels.
On 21 January 2009, the European Commission (EC) adopted an action plan with a view to establish a
Luropean mariLime LransporL area wiLhouL borders beLween Lhe LU Member SLaLes. ln order Lo reduce cosLs
and delays and increase the competitiveness of maritime transport, this action plan aims at simplifying
customs formalities, port reporting formalities and administrative procedures.
Fiscal aid scheme for ship purchase (Article 39 C of the FTC)
From 1998 unLil 2005, France had an ellcienL Lax lease scheme Lo laciliLaLe French ship purchases. 1his
scheme granted a tax relief from 20% to 25% of the investment; it was ruled as state aid by the EC and
therefore repealed. Since then, a new tax lease regime has been enacted that allows shipowners to optimize
Lheir asseL lnancinq. lL applies Lo leasinq aqreemenLs enLered inLo as ol 1 January 2007. 1he new reqime
has been exLended Lo all LUlaqqed ships. 1his reqime allows a lnancial lessor Lo qain Lhe benelLs ol
ownership through a front loading of capital allowances while the lessee gains the rewards of ownership of
that asset. The purpose of such a scheme is to grant a tax relief by reducing the amount of the rental for the
lessee, namely Lhe charLer. 1he Lax benelL ol Lhis reqime ranks beLween 157 and 197 ol Lhe invesLmenL.
Tax credit (French administrative guideline BOI-BIC-RICI-10-150-10)
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Shippinq companies liable Lo Lhe French Cl1 and under Lhe Lonnaqe Lax reqime can have Lhe benelL ol Lhe Lax
credit corresponding to the compensations received by their employees allocated to the activities subject to
the French CIT according the standard rules (CICE).
1.2 Tax facilities for seafarers (Article 81 A of the FTC)
Sealarers who have Lheir lscal residence in France and who sail on board vessels reqisLered under Lhe French
lnLernaLional ReqisLer {RlF ReqisLre lnLernaLional Franais) en|oy a lull Lax exempLion on Lheir waqes
provided that they perform their activities for at least 183 days over a period of 12 consecutive months and
LhaL Lhey are liable Lo pay Lax on waqes equal aL leasL Lo 2/3 ol Lhe one LhaL Lhey would have paid in France.
ln Lhe evenL LhaL Lhose requiremenLs are noL lulllled, Lhe sealarers can sLill have Lhe benelL ol a parLial
exemption, merely on the additional compensation related to the situation of expatriates.
France has the broadest tax treaty network in the world (more than 120 treaties). Almost all of them
include a specilc provision lor shippinq companies dralLed in Lerms similar Lo ArLicle 8 ol Lhe OrqanisaLion
for Economic Co-operation and Development (OECD) model tax convention concerning the taxation of
prolLs lrom Lhe operaLion ol ships in inLernaLional Lrallc and provide LhaL Lhe Laxinq riqhL shall be lelL Lo Lhe
contracting state in which the place of effective management of the shipping company is situated.
France has a tax treaty with the following countries:
Albania, Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus**,
Belgium, Benin, Bolivia, Bosnia and Herzegovina*, Botswana, Brazil, Bulgaria, Burkina-Faso, Cameroon,
Canada, Central African Republic, Chile, China, Congo (Republic of), Croatia, Cyprus, Czech Republic,
Denmark, Ecuador, Egypt, Estonia, Ethiopia, Finland, French Oceania, Gabon, Georgia, Germany, Ghana,
Greece, Guinea, Hong Kong, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Ivory Coast,
Jamaica, Japan, Jordan, Kazakhstan, Kenya, Kuwait, Kyrgyzstan**, Latvia, Lebanon, Libya, Lithuania,
Luxembourg, Macedonia, Madagascar, Malawi, Malaysia, Mali, Malta, Mauritania, Mauritius, Mayotte,
Mexico, Moldova**, Monaco, Mongolia, Montenegro*, Morocco, Namibia, Netherlands, Norway, New
Caledonia, New Zealand, Niger, Nigeria, Oman, Pakistan, Panama***, Philippines, Poland, Portugal, Qatar,
Quebec, Romania, Russian Federation, Saint Martin, Saint Pierre and Miquelon, Saudi Arabia, Senegal,
Serbia*, Singapore, Slovak Republic, Slovenia, South Africa, South Korea (ROK), Spain, Sri Lanka,
Sweden, Switzerland, Syria, Tajikistan**, Thailand, Taiwan, Togo, Trinidad and Tobago, Tunisia, Turkey,
Turkmenistan**, Ukraine, United, Arab Emirates, United Kingdom, United States of America, Uzbekistan,
Venezuela, Vietnam, Zambia, Zimbabwe.
* The tax treaty with the former Yugoslavia remains applicable to Bosnia-Herzegovina, Kosovo, Montenegro
and Serbia.
** The tax treaty with the former USSR remains applicable to Belarus, Kyrgyzstan, Moldova, Tajikistan
and Turkmenistan
*** Entered into force 1 February 2012
Negotiation started in June 2011 between France and Peru for the conclusion of a double tax agreement.
Sec|hc sn||n |ncome areement
Besides Lhese LreaLies, France has specilc aqreemenLs on shippinq income wiLh Jersey, Venezuela and Lhe
lsle ol Man {noL in lorce yeL).
1.4 Freight taxes
There are no freight taxes in France.
Shipowners reqisLerinq vessels in a French reqisLer may benelL lrom specilc exempLion lrom social
conLribuLions. Frenchlaqqed ships used Lo be eliqible lor a lscal aid scheme lor ship purchase {French Lax
lease). However, the former legislation has been repealed, and the new tax lease regulation theoretically
applies Lo all LUlaqqed ships. ReqisLraLion is usually noL a requiremenL lor oLher income Lax laciliLies.
1.6 Authorized economic operator
In response to increased threats to the supply chain and ever-growing trade volumes, worldwide customs
authorities have embarked on a new risk-based approach to customs supervision and inspection.
lnLernaLional and LU requlaLions are beinq inLroduced Lo Lhis ellecL.
Those companies, especially shipping companies, that meet the requirements will be recognized as trusted
parLies in Lhe supply chain and can be qiven access Lo "qreen lane" sLaLus and onqoinq cusLoms simplilcaLion
procedures as authorized economic operators (AEOs).
An applicaLion should be lled wiLh Lhe cusLoms auLhoriLies, and Lhey will check wheLher Lhe applicanL is
compliant with the AEO requirements. Preparation for the customs authorities audit is, therefore, highly
recommended.
Reliable and complianL Lraders will benelL lrom simplilcaLions in Lhe cusLoms procedures and lrom
facilitation with regard to customs controls relating to safety and security. Secure AEOs may be informed that
their consignment has been selected for controls and will get priority treatment for controls. They will also be
allowed Lo submiL less daLa lor Lhe prearrival/deparLure declaraLion and will also be sub|ecL Lo lewer conLrols,
as they would be considered secure partners by customs, and their compliance and reliability would have
been Lhorouqhly checked when Lhe ALO cerLilcaLe was qiven.
Parties that do not comply with these new regulations carry the risk that their goods will be delayed in the
supply chain. Companies that cannot show compliance may also see their business opportunities curtailed.
2. Human capital
As ol 9 April 2008, Lhe capLain and his subsLiLuLe do noL need Lo be French naLionals; Lhey can be LU ciLizens,
Luropean Lconomic Area {LLA) naLionals or Swiss ciLizens, sub|ecL Lo prolessional skills and sullcienL
knowledqe ol Lhe French lanquaqe and law {ArLicle L 55221 ol Lhe French Code lor 1ransporL AcLiviLies
[FC1A|).
For vessels reqisLered in Lhe RlF, 257 ol Lhe crew members musL be LU or LAA naLionals. For vessels LhaL
benelL lrom Lhe lscal aid scheme lor ship purchase {French Lax lease), Lhis proporLion is increased Lo 357
lor Lhe duraLion ol Lhe aid scheme {ArLicle L 56123 ol Lhe FC1A).
Crew members musL have a wriLLen conLracL ol employmenL wiLh Lhe shipowner/ship manaqer {ArLicle L
5542-1 of the FCTA). The employment agreement should state the duty of the seafarers, their wage, the
workinq hours and so on. 1he law ol 3 May 2005, creaLinq Lhe RlF, sLipulaLes LhaL sealarers can be placed aL
the disposal of the shipowner by an authorized maritime manning agency. In such cases, a written contract of
employment must exist between the seafarer and the manning agency and a written agreement between the
laLLer and Lhe shipowner {ArLicle L 56111 ol Lhe FC1A). When Lhe aqency is esLablished in a counLry where
Lhe lnLernaLional Labour OrqanizaLion {lLO) 179 ConvenLion on recruiLmenL and placemenL ol sealarers is
not in force, the shipowner should make sure that the manning agency complies with the requirements of this
convention.
France raLiled in 2006 Lhe lLO's MariLime Labour ConvenLion, which provides a comprehensive seL ol basic
maritime labor principles and rights. This convention will come into force in France on 22 August 2013.
French labor law qenerally applies Lo Frenchlaqqed vessels {ArLicle L 55^11 ol Lhe FC1A). For vessels
registered in the RIF, seafarers residing in France, regardless of their citizenship, are subject to French laws.
Seafarers residing outside France are subject to the provisions of their employment agreement and the
minimum requirements set by the law creating the RIF. However, hiring, working, salary and living conditions
on a vessel reqisLered in Lhe RlF cannoL be less lavorable Lhan Lhe ones resulLinq lrom Lhe lLO convenLions
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raLiled by France.
Sealarers residinq in France, reqardless ol Lheir naLionaliLy, sailinq on board Frenchlaqqed vessels are
covered by Lhe sealarers' special social securiLy sysLem {LNlM Etablissement National des Invalides de la
Marine). However, sealarers who had been sailinq prior Lo 31 March 1999 on board loreiqnlaqqed vessels
can, aL Lheir requesL, when Lhey are sailinq on a vessel reqisLered in Lhe RlF, keep Lhe benelL ol Lhe social
insurances they had contracted prior to that date. Seafarers residing outside France and working on vessels
registered in the RIF are covered by the social security provided for in their employment agreement subject
Lo mandaLory provisions ol social securiLy LreaLies or LU requlaLions. 1heir social proLecLion cannoL be less
lavorable Lhan Lhe one resulLinq lrom Lhe lLO convenLions applicable Lo sealarers and bilaLeral social securiLy
conventions between France and the countries from where the seafarers originated.
Social securiLy conLribuLions lor sealarers are assessed aL a lxed amounL LhaL is qenerally lower Lhan Lhe
actual wages. Shipowners are exempt from employers social security contributions for crew members on
board vessels lyinq Lhe French laq assiqned Lo mariLime LransporLaLion acLiviLies sub|ecL Lo inLernaLional
compeLiLion {ArLicle 10, bill 2005^12, 3/05/2005).
2.3 Collective bargaining agreements
Several collecLive barqaininq aqreemenLs {CBAs) apply Lo sealarers, e.q., Lhe CBA lor ollcers ol 30
September 1948 and the CBA for ratings of 30 November 1950. Collective bargaining agreements include
various provisions concerning discrimination, working hours, minimum wages, paid vacation, free days and
termination allowances.
Sealarers residinq in an LU Member SLaLe, or LLA naLionals or ciLizens ol a sLaLe LhaL has siqned a bilaLeral
social securiLy convenLion wiLh France, will have Lhe benelL ol a social securiLy and pension scheme as per
the conditions of the European rules or the applicable bilateral convention.
For LU social securiLy requlaLions, please reler Lo LU RequlaLion 1^08/71, which provides LhaL sealarers
sailinq on board a vessel lyinq a laq ol an LU counLry should be covered by Lhe leqislaLion ol LhaL counLry.
Reciprocal agreements
1o avoid double social securiLy Laxes and Lo assure benelL coveraqe, France has concluded aqreemenLs wiLh
the following countries:
Algeria, Andorra, Benin, Bosnia and Herzegovina , Cameroon, Canada, Cape Verde, Chile, Congo
(Republic of), Croatia, Gabon, Guernsey, India, Israel, Ivory Coast, Japan, Jersey , Macedonia ,
Madagascar, Mali, Mauritania, Monaco, Montenegro, Morocco, Niger, Philippines, Quebec, Saint Pierre
and Miquelon, San Marino, Senegal, Serbia, South Korea (ROK), Togo, Tunisia, Turkey, United States of
America.
2.5 Mannin issues with Byin the French Ba {see aIsc secticn1.2)
Seafarers who have their tax residence in France and who sail on board RIF-registered vessels for a period
ol aL leasL 183 days in any period ol 12 consecuLive monLhs may benelL lrom a French personal income Lax
exemption on the portion of related compensation (Article 81A of the FTC). Seafarers who are not French
tax residents remain subject to the law of their place of tax residence.
1he mosL commonly used leqal sLrucLure lor shippinq companies is Lhe limiLed liabiliLy company. LimiLed
liability companies are subject to corporate income tax at a rate of 36.10% maximum. However, when they
are engaged in shipping activities, they may elect taxation according to the tonnage tax regime (see section
1.1).
Under Lhe parLicipaLion exempLion reqime, dividends received by French companies or French branches
of nonresident companies are exempt from CIT, except for a 5% share of expenses, which is computed on
the gross dividend income (net dividend income and foreign tax credits) and added back to the recipients
taxable income.
The participation exemption regime applies if the recipient holds 5% or more of the share capital (voting and
lnancial riqhLs) ol Lhe disLribuLinq company lor aL leasL Lwo years.
In general, a 30% withholding tax is imposed on dividends paid to nonresidents. It is increased to 55% for
dividends paid to a resident of a non-cooperative state or territory. This withholding tax may be reduced or
eliminated by tax treaties.
ln addiLion, under Lhe LU ParenLSubsidiary DirecLive {90/^35/LLC), dividends disLribuLed by French
subsidiaries Lo LU parenL companies are exempL lrom wiLhholdinq Lax, il, amonq oLher condiLions, Lhe
recipient holds 15% or more of the shares of the subsidiary for at least two years. The 15% threshold has
been reduced Lo 107, ellecLive lrom 1 January 2009 {DirecLive 2003/13/LC).
National aids
Aid to haulage companies for feasibility studies for the shift to combined railroad or road-river transportation
These studies, aimed at informing conveyors on the importance of using combined transport, should deal
with the commercial aspects (e.g., market study), organizational aspects (such as a search for partners
Lo ensure an enLire chain ol LransporL) and lnancial aspecLs {e.q., invesLmenLs, ellecL on accounLinq).
The studies should include an estimated level of reduction of the CO2 emissions that would result from the
passaqe Lo combined LransporL {lor example, road Lo shorL sea shippinq [SSS|).
1his aid is also open Lo consorLia ol haulaqe companies and/or Lo charqers Lo laciliLaLe cooperaLion beLween
lrms lor Lhe concerLed developmenL ol combined LransporL around axes or ol qeoqraphical areas.
Target: haulage companies, consortia of transport and chargers, chambers of commerce
Co-funding rate: 50%
Maximum level: 75,000
Aid for the launching of new SSS lines
For each launch ol a new pro|ecL ol connecLion beLween a French porL and a porL ol anoLher LU Member
SLaLe, a publicaLion in Lhe Ollcial Journal ol Lhe Luropean CommuniLies speciles Lhe ob|ecLive ol Lhe pro|ecL
and the ceiling of the aid considered. A call for proposals will be launched periodically (at the beginning of
each calendar year, for example) in the form of an opinion published in the journal, specifying the details of
the aid to be granted, the procedure to be followed and the selection criteria for the candidates.
Maximum duration: three years
Co-funding rates: 30% of the operating costs of the service and 10% of the investments
European aid for modal shift from road to SSS
Marco Polo is an LC proqram providinq aid Lo enLerprises shilLinq lreiqhL oll Lhe road Lo SSS, rail, inland
waterways or a combination of these modes. The grant is provided for transport services (core infrastructure,
research and sLudy pro|ecLs are noL eliqible under Marco Polo). 1he LC launches yearly calls lor submission
of projects.
Marco Polo LarqeLs lve Lypes ol eliqible acLions:
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1. Modal shilL acLions: sLarLinq up new lreiqhL service by rail, inland waLerways, SSS or a combinaLion ol
Lhese modes. LxisLinq services, which are siqnilcanLly enhanced, are also eliqible.
Maximum duration: 36 months, with a maximum of 35% of eligible costs and a maximum of 1 per shift of
500 tonne-kilometer (tkm). Minimum grant: 500,000 (250 million tkm).
2. Catalyst actions: these are innovative actions causing a real breakthrough and offering solutions for
structural market barriers.
Maximum duration: 60 months, with a maximum of 35% of eligible costs. Minimum grant: 2 million.
3. Common learning actions: the purpose of these actions is to improve cooperation, share know-how and
provide mutual training.
Maximum duration: 24 months, with a maximum of 50% of eligible costs. Minimum grant: 250,000.
^. MoLorways ol Lhe seas acLions: Lhese are innovaLive acLions under which lrequenL, larqe volume
intermodal services are developed, based on SSS.
Maximum duration: 60 months, with a maximum of 35% of eligible costs and a maximum of 1 per shift of
500 tkm. Minimum grant: 2.5 million (1.25 billion tkm).
5. 1rallc avoidance acLions: Lhis innovaLive Lype ol acLion increases ellciency in inLernaLional lreiqhL
LransporL Lhrouqh modilcaLions in producLion and disLribuLion. AL leasL a 107 Lrallc avoidance ol Lhe
freight volume is achieved.
Maximum duration: 60 months, with a maximum of 35% of eligible costs and a maximum of 1
per 500 tkm avoided (or 25 vehicle km). Minimum grant: 1 million (500 million tkm or 25
million vehicle km).
Under cerLain condiLions, Lhe LC also lunds ancillary inlrasLrucLure works, which are necessary Lo achieve Lhe
goals of the respective action (except for modal shift actions).
Companies lrom Lhe lollowinq counLries are eliqible lor lundinq: 27 LU Member SLaLes, Luropean Free 1rade
AssociaLion {LF1A) and LLA sLaLes alLer conclusion ol a specilc aqreemenL wiLh Lhe LC, and candidaLe and
close third countries after signing a memorandum of understanding with the EC.
CerLain operaLions correspondinq Lo a lrsL applicaLion ol new Lechnoloqies, new processes or innovaLinq
systems could be supported in order to cover a part of the risks and often a part of the investments. The aid
rate has a maximum of 50%.
ll Lhere are any chanqes, Lhey will be in accordance wiLh LU leqislaLion and will noL conLravene LC quidelines
on state aid.
5.1 Infrastructure
5.1.1 Major ports
Bordeaux {sixLh French commercial porL in LoLal Lonnaqe)
Dunkerque {Lhird French commercial porL in LoLal Lonnaqe)
La Rochelle {sevenLh French commercial porL in LoLal Lonnaqe)
Le Havre {second French commercial porL in LoLal Lonnaqe)
Marseille {lrsL French commercial porL in LoLal Lonnaqe)
NanLes SainLNazaire {lourLh French commercial porL in LoLal Lonnaqe)
Rouen {llLh French commercial porL in LoLal Lonnaqe)
The following support facilities are available:
Dockinq
SLoraqe
Airports close to the major ports are:
Calais AirporL {Dunkerque)
le de Re AirporL {La Rochelle)
Le Havre OcLeville AirporL {Le Havre)
Marseille Provence AirporL {Marseille)
Meriqnac AirporL {Bordeaux)
PoinLPiLre AirporL {PoinLPiLre, Jarry)
Vallee de Seine AirporL {Rouen)
The following support services are readily available:
MariLime educaLion and Lraininq insLiLuLions lor Lhe merchanL marine are Lhe lollowinq:
1. LNMM Le Havre {lor lrsLclass, dualpurpose ollcers up Lo Lhe masLer and chiel enqineer unlimiLed
cerLilcaLe): enmmlhequipemenL.qouv.lr/www.hydrolehavre.lr
2. LNMM Marseille {also lor lrsLclass, dualpurpose ollcers up Lo Lhe masLer and chiel enqineer unlimiLed
cerLilcaLe):
enmmmarseilleequipemenL.qouv.lr/www.hydromarseille.com
3. LNMM SainLMalo {lor deck or enqine ollcers, up Lo unlimiLed cerLilcaLes):
enmmsLmalodeveloppemenLdurable.qouv.lr/www.hydrosainLmalo.lr
^. LNMM NanLes {also lor deck or enqine ollcers, up Lo unlimiLed cerLilcaLes):
enmmnanLesequipemenL.qouv.lr/www.hydronanLes.orq
MariLime educaLion and Lraininq colleqes lor raLinqs are Lhe lollowinq:
BasLia www.lyceemariLimebasLia.lr
Bouloqne www.lyceemariLimebouloqne.com
Cherbourq www.lmacherbourq.lr
Ciboure www.lyceemariLimeciboure.lr
Concarneau www.celcm.lr
LLel www.lpmaeLel.lr
Fecamp www.lyceeaniLaconLibruz.acrennes.lr
La Rochelle www.lyceemariLimelarochelle.com
Le Cuilvinec www.lyceemariLimequilvinec.com
LorienL www.celcm.lr
NanLes www.lyceemariLimenanLes.lr
SainLMalo www.lyceemariLimesainLmalo.lr
SeLe www.lyceedelamer.lr
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5.2 Registration
France has several shipping registers: the standard French Shipping Register, the RIF, the French Austral and
AnLarcLic 1erriLories {1AAF or Kerquelen) ReqisLer, Lhe French Polynesian ReqisLer, Lhe New Caledonian
Register and the Wallis and Futuna Register.
In order to be registered in a French register, at least 50% of a vessel must be owned by a company
esLablished in France or in one ol Lhe LU Member SLaLes or one ol Lhe LLA Member SLaLes. OLher vessels
must be managed and controlled from a permanent establishment located in France. Similarly, foreign vessels
bareboat chartered must be managed and controlled from a French permanent establishment during the
bareboat charter period (Article 219 2 A and B of the French Customs Code).
The RIF is the most attractive French register. The RIF was implemented in 2005 to replace the TAAF for
Lhe French merchanL leeL and Lo compeLe wiLh Lhe inLernaLional shippinq reqisLers seL up by Lhe oLher LU
Member SLaLes. Unlike Lhe 1AAF, Lhe RlF is an LU reqisLer. Ships reqisLered in Lhe RlF are sub|ecL Lo saleLy and
securiLy, cerLilcaLion and Lraininq, healLh and saleLy aL work, and environmenLal proLecLion rules applicable
as per French law, European regulations and French international commitments.
1he vessels LhaL may be reqisLered in Lhe RlF are {ArLicle L56112 ol Lhe FC1A):
Vessels employed in deepsea Lrades or inLernaLional caboLaqe
Commercially operaLed leisure vessels over 2^ meLers in overall lenqLh, manned wiLh a prolessional crew
1he reqisLraLion is simpliled by Lhe implemenLaLion ol a unique enLry poinL {Guichet Unique) in Marseille,
which handles all questions from shipowners of vessels registered in the RIF. For further information, please
contact:
CuicheL unique du ReqisLre lnLernaLional Franais {RlF)
5 place de la Joliette
13002 Marseille
France
04 26 84 57 62 ou 63
rilequipemenL.qouv.lr
www.rif.mer.equipement.gouv.fr
Germany
1. Tax
The taxable income of a shipping company can be determined either according to regular taxation rules or,
at the companys option, under the tonnage tax regime. The tonnage tax regime is the preferred taxation
scheme. It can be elected by shipping companies of any legal form, for example corporations or partnerships,
and by individual investors.
Regime applicable if a shipping company has not opted for tonnage tax
Shipping companies not opting for the tonnage tax regime are subject to regular taxation. The capitalized
acquisition cost, less anticipated scrap value, can be depreciated in general on a straight-line basis over 12
years. Accelerated depreciation, which was available for vessels acquired before 1 January 2008, has been
abolished and reintroduced for vessels acquired after 31 December 2008 and before 1 January 2011. In the
acquisition of used vessels, a shorter depreciation period may apply. On the other hand, certain vessels, such
as liquid naLural qas {LNC) Lankers or cruisinq vessels, can have a lonqer expecLed lile.
Regime applicable if a shipping company has opted for tonnage tax
Since 1999, shipping companies have had the opportunity to choose a special tax regime instead of being
Laxed in accordance wiLh Lhe Cerman sLandard Lax rules. Companies wiLh income qeneraLed lrom Lhe
operaLion ol merchanL ships in inLernaLional Lrallc may, upon irrevocable applicaLion, opL lor Lhe Lonnaqe
Lax reqime. Under Lhe Lonnaqe Lax reqime, Lhe Laxable prolL is deLermined on Lhe basis ol Lhe neL Lonnaqe
ol Lhe ship and Lhe number ol operaLinq days durinq Lhe lscal year. 1his Lonnaqe Lax prolL is sub|ecL Lo
federal income tax or corporate income tax and to municipal trade tax. In addition, the solidarity surcharge on
income tax or corporate tax, respectively, applies.
SecLion 5a ol Lhe Cerman lncome 1ax AcL lisLs lour basic requiremenLs Lo qualily lor Lhe Lonnaqe Lax reqime:
Business wiLh a place ol manaqemenL in Cermany
OperaLion ol merchanL ships in inLernaLional Lrallc, reqisLered in a Cerman ship reqisLer
Ship manaqemenL has Lo be carried ouL in Cermany
lrrevocable applicaLion
Companies who opL lor Lhe Lonnaqe Lax reqime musL have Lheir place ol ellecLive manaqemenL in Cermany.
Accordinq Lo Lhe Cerman Federal Fiscal CourL, Lhis is Lhe place where Lhe imporLanL, shippinqrelaLed
management decisions (charter and freighting of the vessel, negotiation of bunker and oil contracts,
manning and so on) are taken.
1he commercial and Lechnical manaqemenL ol Lhe vessel has Lo be carried ouL enLirely in Cermany. However,
Lhe Lax auLhoriLies do accepL recruiLmenL ol ranks ouLside Cermany. 1he masLer and ollcers have Lo be
recruiLed and employed by a Cerman employer.
MerchanL ships are considered Lo be operaLinq in inLernaLional Lrallc il Lhe lollowinq condiLions are saLisled:
1he vessel musL be reqisLered in Lhe Cerman Shippinq ReqisLer lor mosL ol Lhe shippinq company's
lnancial year. However, iL is noL required LhaL Lhe vessel ly Lhe Cerman laq or a Luropean Union {LU)
laq. Under special circumsLances, vessels charLered in are exempLed lrom Lhis reqisLraLion requiremenL.
1he Lonnaqe Lax reqime applies reqardless ol Lhe ownership ol Lhe vessel. 1he shippinq company can
perform its shipping activities with its own or with chartered vessels. However, for chartered vessels,
addiLional condiLions have Lo be meL. 1he Cerman Lax auLhoriLies prescribe LhaL a company earninq
shipping income with chartered vessels can only opt for the tonnage tax regime if the shipping company
also operates a vessel owned by the shipping company. If the chartered vessels of the operating company
are noL reqisLered in Cermany, Lhe Lonnaqe Lax reqime only applies il Lhe qross Lonnaqe ol Lhe charLered
ships does not exceed the gross tonnage of the vessels owned by the shipping company by 300%.
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1he vessel has Lo be operaLed in inLernaLional Lrallc lor mosL ol Lhe shippinq company's lnancial year.
lnLernaLional Lrallc consisLs ol LransporLaLion ol passenqers or qoods beLween domesLic and loreiqn
ports, between foreign ports or between a foreign port and the high sea. According to the Hamburg tax
authorities, this criterion is also met if the ship is laid up for more than a half year and could directly have
been operaLed. However, Lhis is only an unollcial sLaLemenL ol Lhe Lax auLhoriLies noL a bindinq rulinq.
1he shippinq company has Lo submiL an ollcial applicaLion in order Lo opL lor Lhe Lonnaqe Lax reqime.
Companies who have ordered their ships after 31 December 2005 can only opt for tonnage tax at the
beginning of the vessels deployment. If the application is not made at this point in time, the application is
only possible again after a 10-year period. Once approved, the application will bind the shipping company
for a period of 10 years.
1he annual Laxable prolL lor each ship is deemed Lo be equal Lo Lhe lollowinq laL raLes lor every 100 neL Lons
per day of operation:
Accordinq Lo Lhe Cerman Lax auLhoriLies, Lhe days ol "warm" lay ups ol vessels are also seen as operaLinq
days since Lhe ship could have been direcLly used in inLernaLional Lrallc.
Opting for the tonnage tax regime can lead to an effective tax rate of approximately 1% to 3% of the net
income ol prolLable ships. However, iL musL also be paid in lossmakinq years.
When a company opts for the tonnage tax, the difference between assessed book value and fair market
value of all assets of the shipping company will be assessed as positive or negative hidden revenue. When
switching back to the regular taxation system, the difference amount is regarded as income in the subsequent
lve lnancial years ol Lhe shippinq company. ll Lhe swiLchback Lo reqular LaxaLion happens, Lhe menLioned
difference is generally subject to tax in the year of disposal. For shipping companies that have applied from
the beginning of the vessels deployment, no difference amount will be assessed.
Ship management companies participating in partnerships operating one or more of their own vessels under
Cerman Lonnaqe Lax can benelL Lo a cerLain exLenL concerninq Lheir service income. However, Lhis benelL is
limited to 4% of the gross cargo rate. Exceeding fees are taxed according to the standard regime.
Tax rates
1he Lonnaqe Lax prolL, as well as Lhe sLandard Lax prolL, is sub|ecL Lo Lax aL Lhe lollowinq raLes:
CorporaLe income Lax: 157 plus 5.57 solidariLy surcharqe on Lhe corporaLe Lax amounL
lncome Lax: 1^7 Lo ^57 plus 5.57 solidariLy surcharqe on Lhe income Lax amounL
Value-added tax
Income from the charter or lease of seagoing ships is exempt for value-added tax (VAT) purposes, as is the
supply ol services and qoods Lo such vessels. 1he Lax exempLion is only applicable il Lhe benelciary is an
operator of a seagoing ship. Therefore, sales to agents or shipbrokers on an upstream trade level are subject
to VAT and not tax exempt. Exceeding fees are taxed according to the standard regime.
The following instrument is indirectly in favor of the seafarers. A shipping company may keep 40% of the
reqular payroll Lax lrom Lhe sealarers' waqe paymenL lor iLs own benelL il Lhe lollowinq condiLions are
Total net tonnage Fixed proht per day per 100 net tons {6)
Up Lo 1,000 0.92
1,00110,000 0.69
10,00125,000 0.46
Over 25,000 0.23
saLisled:
1he sealarers musL have worked lor more Lhan 183 consecuLive days on ships owned or charLered by Lhe
employer.
1he ship has Lo be reqisLered in Lhe Cerman Shippinq ReqisLer and ly Lhe Cerman laq.
1he ship is in operaLion lor LransporLinq qoods or passenqers beLween or Lo loreiqn porLs or lrom a
foreign port to the main sea.
Cermany has concluded more Lhan 90 LreaLies LhaL are predominanLly based on Lhe OrqanizaLion lor
Lconomic CooperaLion and DevelopmenL {OLCD) model Lax convenLion. 1he Cerman double Lax LreaLies
allocate the right to tax shipping income either to the state of effective management or to the state of
residence of the shipping company.
Cermany has a Lax LreaLy wiLh Lhe lollowinq counLries:
Algeria, Albania, Argentina, Armenia, Australia, Austria, Azerbaijan, Bangladesh, Belarus, Belgium,
Bolivia, Bosnia-Herzegovina, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark,
Ecuador, Egypt, , Estonia, Finland, France, Georgia, Ghana, Greece, Hungary, Iceland, India, Indonesia,
Iran, Ireland, Israel, Italy, Ivory Coast, Jamaica, Japan, Jersey, Kazakhstan, Kenya, Kuwait, Kyrgyzstan,
Latvia, Liberia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico,
Moldova, Mongolia, Montenegro, Morocco, Namibia, Netherlands, New Zealand, Norway, Pakistan,
Philippines, Poland, Portugal, Romania, , Serbia, Singapore, Slovak Republic, Slovenia, South Africa,
South Korea (ROK), Spain, Sri Lanka, Sweden, Switzerland, Syria, Tajikistan, Thailand, Trinidad and
Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of
America, Vietnam, Uruguay, Uzbekistan, Venezuela, Zambia, Zimbabwe.
Besides Lhese LreaLies, Cermany has specilc aqreemenLs on shippinq income wiLh Brazil, Chile, China,
Colombia, Honq Konq, lraq, lsle ol Man, Conqo, Lebanon, Papua New Cuinea, Syria, 1aiwan and Venezuela.
The agreement with the former Yugoslavia remains applicable to all states that were geographically included
in Yugoslavia until said states sign a new agreement on shipping income.
1.4 Freight taxes
1he lollowinq rule applies Lo nonresidenL shippinq companies: when accessinq Cerman harbors, 57 ol Lhe
lreiqhL cosLs are deemed Lo be Laxable income and are sub|ecL eiLher Lo Cerman income Lax in Lhe case ol
individuals or parLnerships or are sub|ecL Lo Cerman corporaLe Lax in Lhe case ol corporaLions. FurLhermore,
lreiqhL Lax also applies Lo Cerman branches ol loreiqn shippinq companies. 1his rule does noL apply il a
mutual tax treaty has been concluded or in the case of reciprocity in connection with the stipulation of
innocuousness {i.e., a Lax exempLion lrom lreiqhL Lax) by Lhe Cerman minisLry ol LransporL.
1o benelL lrom Lhe Lonnaqe Lax reqime, Lhe vessel has Lo be reqisLered in Lhe Cerman Shippinq ReqisLer.
For Lhe waqe Lax benelL, Lhe vessel has Lo be reqisLered in Lhe Cerman Shippinq ReqisLer and has Lo ly Lhe
Cerman laq.
2. Human capital
ln Cermany, lor approximaLely 10 years, a socalled "MariLimes Bndnis" {mariLime alliance) has
been esLablished, consisLinq ol Cermany, coasLal counLies ol Cermany and unions, aimed aL laciliLaLinq
employmenL and educaLion on Cerman vessels, plus counLerinq Lhe Lrend ol Cerman ship owners Lo ly
loreiqn {"cheap") laqs.
1he Cerman qovernmenL has seL up a dralL lor a "SeearbeiLsqeseLz" {Sea Labor Code , implemenLinq Lhe
2006 ConsolidaLed MariLime Labour ConvenLion ol Lhe lnLernaLional Labour OrqanizaLion, which seLs lorLh
numerous minimum standards for working and remuneration conditions and may lead to a complete overhaul
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ol Lhe presenL Cerman Sea Labor Law. AL presenL, Lhe dralL is currenLly beinq discussed in Lhe Cerman
parliament..
The new Seearbeitsgesetz is tailored to apply to all employees working on board a vessel, and in the future it
will also include the captain and employees not working for the shipowner.
1he dralL provides lor unilorm requlaLion concerninq Lhe procedure Lo deLermine sullcienL healLh condiLions
lor sea service, prolessional Lraininq on board and medical supplies, which is expecLed Lo beLLer serve specilc
practical needs. The draft also contains provisions concerning employment services and seafarers social care.
1he presenL Cerman Sealarer's AcL is beinq abolished due Lo iLs provisions becominq obsoleLe, e.q.,
provisions concerning vacation entitlement and termination of the employment relationship, with the
envisaged enactment of the Seearbeitsgesetz.
1he exisLinq sysLem ol laq sLaLe and porL sLaLe conLrols is exLended Lo Lhe conLrol ol crew members' workinq
and livinq condiLions. 1he dralL aims aL improvinq lair compeLiLion in Lhe leld ol qlobal merchanL shippinq.
1herelore, vessels lrom sLaLes LhaL have noL yeL raLiled Lhe 2006 ConsolidaLed MariLime Labour ConvenLion
ol Lhe lnLernaLional Labour OrqanizaLion are required Lo provide similiar mimimum sLandards lor workinq and
livinq condiLions on board as well as sLaLes LhaL have already raLiled iL.
At present, it cannot yet be determined with certainty whether the draft will still be amended, so it is
advisable to watch the development until the new law is passed.
2.1 Formalities on hiring personnel
ll a ship is reqisLered in Lhe Cerman Shippinq ReqisLer and lies Lhe Cerman laq, Lhe capLain musL be an LU
ciLizen and hold a valid Cerman cerLilcaLe ol his qualilcaLion Lo command a ship or an equivalenL, recoqnized
loreiqn cerLilcaLe. 1he minimum number ol Cerman/LU naLional and qualiled ollcers, mechanics and crew
members that must be employed on board the vessel depends on the gross tonnage and ranges from one
ollcer Lo one ollcer, one mechanic and one addiLional crew member {Lwo lor larqer vessels).
Specilc obliqaLions apply Lo Lhe required qualilcaLions and Lhe hirinq process ol crew members, who need,
lor insLance, a qualiled docLor's cerLilcaLe on Lheir healLh condiLions. ln principle, hirinq has Lo Lake place in
front of the Seemannsamt.
As a qeneral rule, Cerman labor law concerninq, lor example, workinq hours, works council, saleLy and
minimum waqes, applies only Lo vessels lyinq Lhe Cerman laq. OlLen, Cerman law {mosL siqnilcanLly, Lhe
"SeemannsqeseLz," Lhe Cerman Crewmen Law) provides lor specilc provisions lor crewmen in deviaLion
lrom Lhe qeneral Cerman labor law applicable Lo all employees. However, in exLraordinary cases, Cerman
law may also apply Lo ships lyinq a dillerenL laq. Also, il Lhe vessel lies Lhe Cerman laq buL is reqisLered
in Lhe Cerman lnLernaLional Shippinq ReqisLer, Cerman labor law does noL necessarily apply Lo loreiqn crew
members wiLh residence ouLside Cermany il a vessel lies Lhe Cerman laq.
For vessels lyinq Lhe Cerman laq, Lhe NaLional RequlaLion lor Sale Manninq {SchillsbeseLzunqsverordnunq)
is applicable. 1he ship manaqer has Lo apply lor a crew cerLilcaLe. 1his cerLilcaLe is issued by Lhe Seamen's
Accident Prevention and Insurance Association (See-Berufsgenossenschaft). At present, crewmen must
register at the local Seemannsamt before signing on a vessel for a journey. Together with the intended
implemenLaLion ol Lhe 2006 ConsolidaLed MariLime Labour ConvenLion ol Lhe lnLernaLional Labour
OrqanizaLion, Lhe Cerman qovernmenL inLends Lo abolish Lhis cumbersome procedure, which sLems lrom a
Lime period belore elecLronic reqisLraLion sysLems were invenLed. AlLhouqh Lhe lrsL dralL ol Lhe new law was
expecLed Lo be submiLLed lor discussion in Lhe Cerman parliamenL in early 2012, Lhe dralL has noL yeL been
submiLLed. 1herelore, Lhe NaLional RequlaLion lor Sale Manninq {SchillbeseLzunqsverordnunq) in iLs currenL
version is still applicable, but, similarly to the new Seearbeitsgesetz, it is advisable to watch the current
development.
1he collecLive labor aqreemenLs beLween Lhe relevanL union, Lhe UniLed Services Union {ver.di, an
independenL, individual Lrade union) and Lhe Cerman Shipowners' AssociaLion {VDR) were updaLed ellecLive
as ol 11 July 2007 and in 2011 {increase ol Lhe sLandard waqes and benelLs lor all reqisLers per 3.2 7,
effective as of 1 January 2012). Some shipping companies have negotiated special conditions.
On vessels lyinq Lhe Cerman laq, Lwo separaLe commiLLees represenLinq Lhe employees exisL, i.e. Lhe
Bordvertretung (Ship Representation) and the Seebetriebsrat (Sea Works Council). As a rule, the
Bordvertretung is competent regarding the crew on board, while the Seebetriebsrat represents the crewmen
while on shore. "Sprecherausschsse" {Speakers' CommiLLees) represenLinq execuLive employees do noL
exist on board a vessel, as the captain is deemed the only executive employee.
Cermany has concluded bilaLeral LreaLies on social securiLy wiLh Lhe lollowinq counLries: AusLralia, Bosnia
Herzeqovina, Canada, Chile, China, CroaLia, lsrael, Japan, Kosovo, Macedonia, MonLeneqro, Morocco, Serbia,
Korea {ROK), 1unisia, 1urkey, and Lhe UniLed SLaLes.
As ol 200^, nonresidenL loreiqn crew members workinq on a vessel lyinq Lhe Cerman laq and reqisLered in
Lhe Cerman lnLernaLional Shippinq ReqisLer are noL covered by Cerman unemploymenL, healLh and nursinq
care insurance and can be exempted upon application from the statutory pension scheme. However, they
remain insured under Lhe sLaLuLory accidenL insurance LhaL is lully covered by Lhe employer. LU RequlaLion
1^08/71 applies lor sealarers lrom LU Member SLaLes and Luropean Lconomic Area {LLA) sLaLes. NeiLher
seafarers from these member states nor seafarers covered by the bilateral treaties on social security are
exempt from unemployment, health and nursing care insurance, and it is not possible for them to apply for an
exemption from the statutory pension scheme.
2. Mannin issues with Byin the Cerman Ba
Cerman shipowners can apply Lo ly cerLain loreiqn laqs even il a vessel is reqisLered in Cermany. 1he permiL
Lo ly a loreiqn laq is qenerally qranLed lor Lwo years. An exLension is usually qranLed. As a rule, Cerman
shipowners only ly Lhe Cerman laq il and when Lhe associaLed Lax benelLs exceed Lhe addiLional cosLs.
The additional costs are largely related to crewing issues, particularly regarding social security contributions
issues. Also, when lyinq Lhe Cerman laq, nonLU crew members in principle need a workinq permiL {aL
presenL, Lhe Cerman qovernmenL is invesLiqaLinq wheLher Lhis requiremenL should be abolished Lo render
lyinq Lhe Cerman laq more aLLracLive). As menLioned above, lyinq a dillerenL laq may in qeneral buL noL in
excepLional circumsLances hinder Lhe applicaLion ol Cerman labor law.
As ol January 2013, permission lor laqqinq a ship ouL is only qranLed il Lhe applicanL commiLs Lo provide
training positions on the ship or if an amount is paid to a foundation to promote vocational training in the
shippinq indusLry. 1he amounL payable depends on Lhe size ol Lhe ship and ranqes lrom t2.000 {500 qross
Lonnaqes or less) up Lo t16.169 {more Lhan 80,000 qross Lonnaqes). ln addiLion, siqnilcanL hiqher lees lor
Lhe relevanL shippinq auLhoriLies {BundesamL lr SeeschilllahrL und Hydroqraphie) will be Lriqqered.
The most commonly used legal structure for shipping activities is a partnership. All partners participate
in Lhe prolLs and losses as well as in Lhe hidden reserves ol Lhe parLnership {i.e., Lhe unrealized reserves
of the book value of the assets compared with the fair market value), in proportion to their interest in the
parLnership. As Lhe parLnership is LransparenL lor lederal income/corporaLe income Lax, Lax raLes may vary
according to the individual situation of the partner.
ln Lhe pasL, due Lo Lhe leqal resLricLions ol Lhe Cerman Shippinq ReqisLer AcL, loreiqn shippinq companies
very olLen esLablished subsidiaries as corporaLions in Cermany {CmbH, AC). For LUnaLionals, Lhese
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limitations have been abolished as of 1 January 2013.
If the shipping company is a corporation, a 15% corporate tax rate applies. This tax amount is subject to the
solidariLy surcharqe ol 5.57. 1he laL raLe also applies Lo Cerman branches ol nonresidenL corporaLions and
Lo loreiqn corporaLions LhaL operaLe Lhrouqh Cerman parLnerships. 1rade Lax raLes vary lrom Lown Lo Lown
and are 16% on average.
There is no withholding tax on partnership or branch income.
The domestic withholding tax rate for dividend distributions of corporations is 25% plus the 5.5% solidarity
surcharge for individual shareholders.
Foreign shareholders are often entitled to a lower tax treaty rate of 15% or 5% if their shareholding in the
shippinq company is siqnilcanL. 1he minimum shareholdinq lor Lhis benelL varies lrom 10 Lo 257 dependinq
on Lhe applicable double Lax aqreemenL. 1here is no wiLhholdinq Lax levied under Lhe LU ParenLSubsidiary
DirecLive on LU parenL corporaLions holdinq a siqnilcanL share in a Cerman company. An anLiLreaLy shoppinq
provision applies if no good business reason is available to justify interposing a holding company, and its
shareholder would noL be enLiLled Lo similar benelLs under a Lax LreaLy or an LU direcLive.
4.1 Regional state aid for investments
1he Cerman coasLal areas ol Bremen, Bremerhaven, MecklenburqWesLern Pomerania and Schleswiq
HolsLein have been idenLiled as economically underdeveloped reqions or less developed reqions and are
Lherelore eliqible lor reqional sLaLe aid under Lhe JoinL Federal CovernmenL/Federal SLaLe Scheme lor Lhe
lmprovemenL ol Reqional Lconomic SLrucLures. Accordinq Lo LU sLaLe aid law, Lhe maximum lundinq lor Lhe
shipbuilding industry is limited to a certain maximum level depending on the region. Funding, however, is only
available for projects aimed at the modernization or rationalization of an existing permanent establishment.
1he maximum possible lundinq level in MecklenburqWesLern Pomerania amounLs Lo 507 {lor small
enterprises) of the capital expenditure. In Bremen, Bremerhaven and Schleswig-Holstein, funding is generally
only available lor SMLs {SMLs are small and mediumsized enLerprises accordinq Lo Lhe delniLion ol Lhe
European Commission). Funding may range from 3.5% to 7.5% of the capital expenditure.
One of the main preconditions for investment funding is that the implementation of the investment project
should resulL in Lhe creaLion ol new |obs or Lhe salequardinq ol exisLinq |obs lor a period ol aL leasL lve years.
4.2 Shipbuilding and innovation
Based on Lhe new LU lramework on sLaLe aid Lo shipbuildinq LhaL came inLo ellecL on 1 January 2012, Lhe
Federal Ollce ol Lconomics and LxporL ConLrol has seL up a naLional proqram LhaL supporLs Lhe use ol
innovaLive producLs and Lechniques in indusLrial shipbuildinq in Cerman shipyards.
Eligible applications for aid granted for innovation are shipbuilding (including inland water vessels as well as
loaLinq and movinq ollshore sLrucLures).
The maximum aid intensity is 20% of the eligible costs, provided that the aid relates to the industrial
application of innovative products and processes, that is to say, technologically new or substantially improved
products and processes when compared to the state of the art existing in the shipbuilding industry within the
Luropean Union {LU), which carry a risk ol Lechnoloqical or indusLrial lailure.
The deadline for submitting funding application is December 16, 2013.
4.3 Incentives for employment
Cermany supporLs Lhe creaLion ol Lraininq posiLions on vessels lyinq Lhe laq ol an LU Member SLaLe.
Vessels have Lo be reqisLered in Lhe Cerman Shippinq ReqisLer and need Lo be owned or leased by
Cerman shippinq companies
2
.
Supported training positions are those for ship mechanics, assistants of the nautical mate and assistants of
Lhe Lechnical maLe. Lumpsum qranLs lor ship mechanics amounL Lo t25,500, t12,750 lor nauLical maLe's
assisLanLs and t17,000 lor Lechnical maLe's assisLanLs. Funds are also available lor Lhe reducLion ol nonwaqe
labor cosLs. lnLernaLional shippinq companies whose vessels are reqisLered under Lhe laq ol Cermany and are
wholly owned by natural or juristic private persons of the EEA are eligible to receive grants for crew members
who are LU ciLizens or ciLizens ol Luropean Free 1rade AssociaLion {LF1A) sLaLes. Dependinq on Lhe size ol
Lhe ship and Lhe posiLion occupied by Lhe employee aboard Lhe ship, qranLs may ranqe beLween t9,^00 and
t16,700
3
.
FurLhermore Lhe Cerman Lax law provides lor Lhe possibiliLy ol a waqe Lax reducLion lor employers ol
seafarers
4
. ForLy percenL ol Lhe waqe does noL need Lo be Lranslerred Lo Lhe Lax ollce under Lhe condiLion
LhaL Lhe sealarer's assiqnmenL exceeds 183 days on a ship reqisLered in Lhe Cerman Ship ReqisLer and lyinq
Lhe Cerman Flaq. 1he ship has Lo serve lor Lhe LransporL ol qoods and persons Lo or beLween loreiqn harbors.
4.4 Incentives for setting up new intra-European shipping services (Marco Polo II)
1he Marco Polo ll proqram
5
supports setting up new trans-European shipping services if they contribute
to shifting freight transport from the road to either short sea shipping or inland waterways, or otherwise
conLribuLe Lo avoidinq road lreiqhL Lrallc. 1he porL ol arrival and Lhe porL ol deparLure have Lo be locaLed in
Lwo dillerenL LU Member SLaLes or in an LU Member SLaLe and a close Lhird counLry.
UnderLakinqs lrom LU Member SLaLes, lrom LF1A sLaLes and LLA and candidaLe counLries are eliqible Lo
participate in this program. The program is valid until 31 December 2013. The maximum funding level is 35%
of project costs. A typical project runs between three and four years.
Calls lor proposals are published annually by Lhe Luropean Commission. 1he nexL call is expecLed lor March/
April 2013.
4.5 Special incentives
Almost all government agencies provide incentives for improving the environmental impact of industries.
They may apply to shipping companies, depending on the facts and circumstances.
Subsidies for innovative research and development (R&D) activities may be available to the shipbuilding
indusLry in Lurope and Cermany, dependinq on Lhe lacLs ol Lhe planned pro|ecL and Lhe planned level ol
technical innovation as well as on the size of the applicant. The maximum funding for R&D activities in the
context of individual projects amounts to 80% of project costs for small enterprises
6
, mainly for personnel
and material.
4. !ssues with Byin the Cerman Ba
WiLh reqard Lo qranLs, Lhere are no issues wiLh lyinq Lhe Cerman laq, oLher Lhan Lhose menLioned above
(see section 4.3).

1
lor a c|st|nu|snec cehn|t|on of sma|| anc mec|um enterr|ses, |ease refer to tne Cfhc|a| Journa| of tne fU No. | 124,
20, May 2003, p. 36.

2
German guidelines on funding for the creation of training positions in maritime shipping 2013 (Richtlinien zur
Ausbildungsplatzfrderung in der Seeschifffahrt 2013).
3
German guidelines on the reduction of non-wage labour costs in German maritime shipping as of September 2012
(Richtlinien zur Senkung der Lohnnebenkosten in der deutschen Seeschifffahrt, 25 July 2012, in its version of 13.
September 2012).
4
41 a para. IV German Income Tax Act.
5
Peu|at|on :fU; No. 192/200 of tne furoean Par||ament anc tne furoean Counc||, 24 Cctooer 200, Cfhc|a|
Journal, L 328, 24. November 2006, p. 1.
6
Communication from the Commission Community framework for state aid for research and development
Cfhc|a| Journa| C 323/1 of 30. 0ecemoer 200.
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5.1 Infrastructure
5.1.1 Major ports
Bremen/Bremerhaven
Lmden
Hamburq
JadeWeserPorL {newly opened deep waLer harbor)
Lbeck
RosLock
Wilhelmshaven
The following facilities are available in particular, although the list is not exhaustive:
Drydockinq, dockinq
SLoraqe, loqisLic services ol all kinds
Free Lrade zones
Airports close to the major ports are:
Bremen AirporL {Bremen/Bremerhaven, Wilhelmshaven, JadeWeserPorL)
Hamburq AirporL {Hamburq, Lbeck)
Lbeck AirporL {Hamburq, Lbeck)
RosLockLaaqe AirporL {RosLock)
All shipping industry services are readily available, in particular but not limited to the following:
ConsulLinq lrms specializinq in Lhe shippinq indusLry
Shippinq indusLry insurance brokers and loss ad|usLers
The following are maritime education and training institutions for the merchant marine:
Bremen UniversiLy ol Applied Sciences {indusLrial enqineer lor ship consLrucLion and mariLime Lrallc,
nautical science, shipping and chartering)
Bremerhaven UniversiLy ol Applied Sciences {enqineer lor ship operaLinq Lechnoloqy, mariLime
technologies, cruise tourism management)
Cuxhaven Public NaviqaLion School {lor lrsL class, dualpurpose ollcers up Lo masLer and chiel enqineer,
unlimiLed cerLilcaLe)
LlsleLh/Leer UniversiLy ol Applied Sciences Oldenburq/OsLlriesland/Wilhelmshaven {masLer mariner
nauLical science, mariLime Lrallc, mariLime manaqemenL)
Flensburq UniversiLy ol Applied Sciences {B.Sc. mariLime Lrallc, nauLics and loqisLics; enqineer lor ship
operating technology; ship mechanical engineering)
Flensburq NaviqaLion School {lor lrsL class, dualpurpose ollcers up Lo masLer and chiel enqineer,
unlimiLed cerLilcaLe)
Warnemnde UniversiLy ol Wismar DeparLmenL ol MariLime SLudies {naviqaLion/mariLime loqisLics, ship's
operation technology, installation engineering and supply engineering)
MariLime educaLion and Lraininq colleqes lor raLinqs are Lhe lollowinq:
LlsleLh: vocaLional school lor Lhe counLy ol Wesermarsch
Lbeck1ravemnde: SHS Seaman School SchleswiqHolsLein
RosLock: AFZ shippinq and harbor
Cermanowned and conLrolled Lonnaqe consisLs mainly ol conLainer vessels. ChapLer 9 ol Lhe lnLernaLional
ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS) has been compulsory lor Lhese vessels since 2002.
1he 88Lh amendmenL ol Lhe SOLAS proLocol is in lorce since July 2006 and prescribes Lhe doublehull
construction of bulker ships.
SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq {S1CW) 95 qoverns all manninq ol seaqoinq vessels.
European Port State Control requires that all ships entering European ports be manned according to STCW
95. ln Cermany, compliance wiLh S1CW 95 is moniLored by Lhe SeeBerulsqenossenschalL.
Cermany has raLiled inLernaLional LreaLies reqardinq marine polluLion and saleLy ol lile aL sea, such as
Lhe lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships {MARPOL) and SOLAS. PresenL
regulations concerning safety and environmental issues are in line with these relevant international
convenLions Lo which Cermany is a parLy.
5.3 Registration
1he Cerman Shippinq ReqisLer is operaLed by Lhe disLricL courLs and consisLs ol Lhree reqisLers:
1. Register of inland navigation ships
2. Register of seagoing ships
3. Register of ships under construction
1he vessel musL be owned by a person residinq in Cermany or an LU Member SLaLe. ll a parLnership owns a
vessel, Lhe ma|oriLy ol Lhe parLners have Lo be Cerman. ll a corporaLion owns a vessel, Lhe ma|oriLy ol Lhe
manaqinq direcLors have Lo be Cerman.
An LU locaLed parLnership or corporaLion may reqisLer a ship in Lhe Cerman Shippinq ReqisLer il Lhey appoinL
a represenLaLive residinq in Cermany who is responsible lor compliance wiLh shippinqrelaLed provisions.
As a basic rule, the registration procedure complies with the procedure of any other international ship
register.
Parallel registration is possible. The prerequisites are the existence of a bareboat charter party and
qovernmenL permission in boLh counLries, i.e., Lhe counLry ol Lhe bareboaL charLerer and Cermany. 1he
permission is granted for two years and can be revoked at any time. In practice, it will be renewed upon simple
application.
1he qualilcaLions ol ollcers and crew musL comply wiLh S1CW 95. MasLers and ollcers ol Lhe deck and
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enqine deparLmenL have Lo be Cerman or LUciLizens. Numbers and qualilcaLions have Lo comply wiLh Lhe
Sale Manninq CerLilcaLes. However, Lhe mariLime alliance enables excepLions Lo Lhe naLionaliLy requiremenLs
lor ollcers and mechanics il Lraininq posiLions are provided aL Lhe same Lime.
There are no such conventions.
6. Accounting
6.1 Vessel
Vessels inLended lor lonqLerm ownership or use are classiled as lxed asseLs accordinq Lo Cerman qenerally
accepted accounting principles. The vessels are valued at historical cost, but are written down to actual
value where the decline in value is considered to be permanent and book value exceeds nominal net cash
low. Vessels are depreciaLed over Lheir economic lileLime. AudiL procedures locus on Lhe compleLeness
of capitalized acquisition costs, appropriate calculation of depreciation and assessment of the need for
impairment charges.
6.2 Vessel-based loans
LonqLerm loans are reporLed in Lhe balance sheeL aL Lhe nominal value ol Lhe amounL received when Lhe loan
was granted and is not appreciated to its actual value due to a change in interest rates. The audit procedures
focus on reconciliation loan redemption with the loan contracts, the appropriateness of recorded interest
durinq Lhe lscal year as well as accrued inLeresLs aL Lhe balance sheeL daLe and Lhe adequaLe consideraLion ol
foreign currency translations.
6.3 Charter hire and operational expenditures
Lxpenses relaLed Lo uncompleLed Lramp voyaqes are capiLalized as invenLories wiLhouL prolL marqin
realization. Revenue is recognized when cargo is unloaded. However, charter hire regarding time charter
aqreemenLs are sLaLed on a pro raLa Lemporis basis wiLhin Lhe prolL and loss sLaLemenL. 1he audiL procedures
focus on reconciliation of charter hire with the corresponding charter contracts and the completeness and
appropriateness of operational expenditures.
Greece
1. Tax
Under Creek law, income lrom shippinq acLiviLies {i.e., prolLs lrom ownership ol a Creeklaqqed vessel) is
annually Laxed on Lhe basis ol Lhe qross reqisLered Lonnaqe {CR1) ol Lhe ship. PaymenL ol Lhis Lax resulLs
in exempLion lrom any oLher obliqaLion ol corporaLe/income Lax, and Lhis exempLion also applies Lo Lhe
shareholders {ArLicle 2 ol Law 27/1975). FurLhermore, Lhis exempLion also covers any capiLal qains derived
from the sale of vessels, as well as any insurance indemnity associated thereto. The tax is payable annually to
Lhe special Lax ollce lor ships, provided LhaL Lhe shipowninq companies have no oLher asseLs, and Lhe sole
income tax they are obliged to pay is the tonnage tax.
Under Creek Lax law {L.27/75), vessels are classiled in Lwo caLeqories:
Category A includes:
Carqo vessels, Lankers and relriqeraLors wiLh a CR1 ol aL leasL 3,000 reqisLer Lons
SLeel hull vessels lor dry or liquid carqo and relriqeraLors wiLh a CR1 exceedinq 500 reqisLer Lons and up Lo
3,000 reqisLer Lons exLendinq Lheir voyaqes lrom Creek Lo loreiqn porLs or Lradinq beLween loreiqn porLs
Passenqer vessels exLendinq Lheir voyaqes lrom Creek Lo loreiqn porLs or LransporLinq passenqers
between foreign ports
Cruise vessels wiLh a CR1 ol over 500 reqisLer Lons which durinq Lhe year precedinq Lhe Lax year carried ouL
pleasure voyages between domestic and foreign ports for at least six months and on an exclusive basis
Ollshore drillinq riqs {ol over 5,000 displacemenL Lons) and loaLinq producLion sLoraqe olloadinq
vessels {FPSO uniLs) wiLh a CR1 ol over 15,000 reqisLer Lons, used lor seabed exploraLion, ollshore
drillinq, oil or naLural qas pumpinq, relninq and sLorinq
Category B includes:
Fishinq boaLs
Sailinq boaLs and ships
Any oLher vessel noL classiled under class A
Category A vessels in the Greek registry
1he ownership {on 1 January ol each year) ol vessels lyinq Lhe Creek laq Lriqqers a Lonnaqe Lax liabiliLy,
irrespective of the owners place of residence or establishment.
ln 2002, Lhe Creek qovernmenL reduced Lhe Lonnaqe Lax by approximaLely 707 {as presenLed below) lor
Lankers, carqo vessels and relriqeraLors wiLh a CR1 ol over 1,500 reqisLer Lons as lonq as Lhey are reqisLered
under leqislaLive decree {LD) 2687/53, wiLh Lhe aim Lo aLLracL vessels Lo lyinq Lhe Creek laq. Such reduced
raLes remained lxed up unLil 31 December 2007 {see sLandard raLes 200207 lor vessels reqisLered under
LD 2687/53). As ol 1 January 2008, said raLes increase by ^7 per year.
The above-mentioned tax (concerning vessels registered after 22 April 1975) is calculated on the gross
tonnage of the vessel and is determined by the following scale:
GRT CoeIhcient
10010,000 1.2
10,00120,000 1.1
20,001^0,000 1.0
^0,00180,000 0.9
Over 80,000 0.8
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For vessels reqisLered under LD 2687/53, Lhe Lax due is lurLher reduced by 507 lor Lhe brackeL beLween
^0,001 CR1 and 80,000 CR1 and 757 lor Lhe brackeL over 80,000 CR1 and Lhe above scale is deLermined
as follows:
1he Laxable qross Lonnaqe is calculaLed by mulLiplyinq Lhe above coellcienL raLes by each scale ol CR1
and addinq up Lhe LoLal {lor example, Lhe Laxable Lonnaqe ol a vessel wiLh a CR1 ol 30,000 Lons would be:
10,000 CR1 ` 1.2 + 10,000 CR1 ` 1.1 + 10,000 ` 1 = 33,000 Lons).
The amount of the gross taxable tonnage is then multiplied by the respective tax rate corresponding to the
age of the vessel, as stated below:
Followinq Lhe same example, il Lhe above vessel is a louryearold Lanker, reqisLered under LD 2687/53, Lhe
2013 Lonnaqe Lax will be: 33,000 Laxable Lonnaqe ` USS0.39^ = USS13,002
1he Luro equivalenL is in accordance wiLh Lhe ollcial exchanqe raLe as ol 28 February ol each year concerned
(i.e., 28 February 2013 in the case at hand).
Category B ships in the Greek registry
1he Lonnaqe Lax imposed on Lhe owner individual or company ol Lhese vessels, is calculaLed usinq a scale
Lakinq inLo consideraLion Lheir CR1 and applyinq Lhe correspondinq Lax raLe.
Ships of Greek ownership in a foreign registry
ll Lhe crew ol Lhese vessels {irrespecLive ol Lheir caLeqory) are insured by NA1 {Lhe Creek Sealarers'
Pension Fund), the shipowners, ship managers, their representatives and process agents, and the person
GRT CoeIhcient
10010,000 1.20
10,00120,000 1.10
20,001^0,000 1.00
^0,00180,000 0.45
Over 80,000 0.20
Age of
the ship
Standard
rates
1975
Standard
rates
2011
Standard
rates
2012
Standard
rates
2013
Rates
200207
for vessels
registered
under LD
2687/53
Rates
2011 for
vessels
registered
under LD
2687/53
Rates
2012 for
vessels
registered
under LD
2687/53
Rates
2013 for
vessels
registered
under LD
2687/53
(US$) (US$) (US$) (US$) (US$) (US$) (US$) (US$)
04
years
0.40
(0.53)
0.99
(1.293)

(1.314)

(1.336)
0.24
(0.318)
0.28
(0.369)

(0.382)

(0.394)
59
years
0.73
(0.95)

(2.318)

(2.356)

(2.394)
0.44
(0.57)
0.50
(0.661)

(0.684)

(0.707)
1019
years
0.71
(0.93)

(2.269)

(2.306)

(2.344)
0.43
(0.558)
0.49
(0.647)

(0.670)

(0.692)
2029
years
0.67
(0.88)

(2.147)

(2.182)

(2.218)
0.40
(0.528)
0.47
(0.612)

(0.634)

(0.655)
Over 30
years
0.52
(0.68)

(1.659)

(1.686)

(1.714)
0.31
(0.408)
0.36
(0.473)

(0.490)

(0.506)
who execuLed Lhe relaLinq aqreemenL wiLh NA1, are |oinLly liable Lo pay a special conLribuLion Lo Lhe Creek
auLhoriLies under Law 29/75.
The above contribution is calculated on the taxable gross tonnage of the vessel and is determined using a
scale based on Lhe CR1 ol Lhe vessel. 1he amounL ol Lhe Laxable qross Lonnaqe is mulLiplied by a Lax raLe
corresponding to the age of the vessel.
1he LoLal amounL ol Lhis conLribuLion is calculaLed in USS.
Under Lhe provisions ol arLicle 26 ol Law 27/1975, as amended by Law ^110/2013, Lhe aloremenLioned
Lonnaqe Lax is also imposed on vessels lyinq a loreiqn laq owned eiLher by domesLic or by loreiqn
companies, in case Lhe vessel's manaqemenL is assiqned Lo a Creek ship manaqemenL ollce esLablished
under the conditions set forth by the aforementioned law. The rates applicable are the rates that were
applicable lor Creek laq lyinq vessels each precedinq year {e.q. lor 2013 Lhe raLes applicable lor loreiqn
laq lyinq vessels are Lhe raLes LhaL were applicable in 2012 lor Creek laq lyinq vessels).
Contr|out|on tax of ofhces of |aw 27/1975
Accordinq Lo Lhe laLesL amendmenLs in Lhe Creek Lax law, ollces esLablished under arLicle 25 ol Law
27/1975 {lormer law 89/1967) and enqaqinq in acLiviLies oLher Lhan shippinq manaqemenL and
exploitation (e.g., insurance, brokerage, agency, etc.) are annually taxed on the amount of foreign exchange
imporLed in Creece and converLed Lo Luros durinq Lhe calendar years 20122015 {which can be no less Lhan
$50.000) according to the following scale:
1he main incenLive lor Creek sealarers is Lhe lower income Lax raLe compared Lo oLher employees {i.e., Lhe
income Lax raLes lor sealarers are 157 and 107 lor ollcers and lower crew, respecLively).
As mentioned above, the question of deductibility of seafarers wages is irrelevant for shipping companies
since they are not subject to corporate income tax.
Creece has concluded double Lax LreaLies {D11) on income/capiLal Lax wiLh Lhe lollowinq counLries in order Lo
avoid double taxation:
Albania, Armenia, Austria, Azerbaijan, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic,
Denmark, Egypt, Estonia, Finland, France, Georgia , Germany, Hungary, Iceland, India, Ireland, Israel, Italy,
Kuwait, Latvia, Lithuania, Luxembourg, Malta, Mexico, Moldova, Morocco, Netherlands, Norway, Poland,
Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia, Slovak Republic, Slovenia, South
Africa, South Korea (ROK), Spain, Sweden, Switzerland, Tunisia, Turkey, Ukraine, United Kingdom, United
States of America, Uzbekistan.
Under mosL ol Lhe above LreaLies, prolLs lrom inLernaLional LransporLaLion are Laxable in Lhe sLaLe ol Lhe
ships registry.
ln addiLion, Creece has concluded shippinq and air LransporL aqreemenLs lor Lhe avoidance ol double LaxaLion
of income derived from sea and air transport. The table below lists the main countries:
Tax scale (US $)
Bracket of
imported foreign
exchange (US$)
Rate %
Bracket tax
(US$)
Total foreign
exchange
imported (US$)
Total tax (US$)
200,000 5 10,000 200,000 10,000
200,000 4 8,000 400,000 18,000
Excess amount 3
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Albania, Australia, Bulgaria, China, Denmark, Egypt, Estonia, Ethiopia, Georgia, Germany, Jordan,
Lebanon, Morocco, Netherlands, Norway, Pakistan, Poland, Romania, Russian Federation, South Africa,
Switzerland, Syria, Yugoslavia*.
* The application of the GreeceYugoslavia shipping and air transport agreement varies depending on the successor
state (i.e., Bosnia-Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia, Montenegro, Serbia, Slovenia,
Kosovo). It explicitly applies with respect to Croatia and Slovenia.
1.4 Freight taxes
No freight taxes are levied.
Tonnage tax was reduced by approximately 70% as from 1 January 2002 and was maintained at these rates
unLil 31 December 2007 lor Lankers, carqo vessels and relriqeraLors wiLh a CR1 ol over 1,500 Lons, which
are reqisLered under LD 2687/53.
1.6 Changes to tax law
Accordinq Lo arLicle 2 ol L.3790/2009 as amended by arLicle 6^ ol Lhe recenLly enacLed L.38^2/2010, a
special annual tax is imposed on private (not professional) leisure (recreational) ships. Said special tax is
imposed only il Lhe aloremenLioned ships remain in Creek LerriLory lor more Lhan 60 days wiLhin a calendar
year, are reqisLered eiLher in a Creek or loreiqn reqisLry and have been lurnished wiLh cerLain documenLs
(i.e., a leisure ships trade slip or transit log book) by the domestic competent authorities.
Within this legislative framework, the special tax is imposed on motor vessels that exceed 10 meters and is
calculated as follows:
For Lhe lrsL 10 meLers, a special duLy ol t1 {USS1.3) is imposed
For Lhe nexL 3 meLers {1113 meLers), t300 {USS390) per meLer
For Lhe nexL ^ meLers {1^17 meLers), t550 {USS720) per meLer
For Lhe nexL ^ meLers {1821 meLers), t800 {USS1,000) per meLer
For Lhe nexL ^ meLers {2225 meLers), t1,050 {USS1,^00) per meLer
For Lhe meLers in excess {26 meLers and over), t1,300 {USS1,700) per meLer
Special tax is also imposed on sailing ships and again is calculated based on the length of the ship.
The owner of the leisure ship, either individual or legal entity, is liable for the payment of said special tax.
If the owner is a legal entity, its legal representative or administrator is jointly and severally liable for the
payment of said tax. Said special tax has to be prepaid by 15 October of the year preceding the calendar year
to which it refers.
ln addiLion, pursuanL Lo arLicle 3 ol L.3790/2009 as amended by arLicle ^ ol L.3808/2009, an exLraordinary
special levy was imposed on privaLe {noL prolessional) ships lyinq eiLher a Creek or loreiqn laq. Said special
levy applied only for calendar year 2009 and had to be paid by 30 April 2010. It was imposed only if the
aloremenLioned ships were reqisLered in Creece or were wiLhin Creek LerriLory on 31 March 2009 and had
been furnished with certain documents (i.e., a leisure ships trade slip or transit log book) by the domestic
competent authorities.
Accordinq Lo arLicle 19 ol L. ^002/2011, owners ol prolessional leisure ships, Lhe acquisiLion ol which
had been exempt from value-added tax (VAT) and the corresponding license has been, or is due to be,
terminated on any grounds whatsoever, were allowed to remit the amount of VAT due on the ship and fuels to
Lhe SLaLe, beinq released lrom any Laxes, lnes and surcharqes applicable lor havinq used Lhe ships as privaLe
ones in conLradicLion Lo Lhe license Lerms. 1he deadline lor cominq under Lhis benelcial reqime expired on 20
January 2012.
2. Human capital
Crews ol Creek carqo vessels consisL ol Creek qualiled sealarers, holdinq an appropriaLe cerLilcaLe,
depending on their capacity.
The safe manning of the vessels, the licenses, diplomas or the permits that each crew member must
possess are determined by the relevant Presidential Decrees, according to the tonnage, type and technical
characteristics of each vessel.
1he lormaliLies lor hirinq personnel are qoverned by Lhe lnLernaLional SLandards ol 1raininq, CerLilcaLion and
Watchkeeping 1995 (STCW 95).
All seafarers enter into a contract with the management company on behalf of the owning company. The
crew contracts usually contain details of wages and overtime, duration, payment terms, repatriation, the
nature of work, duties and responsibilities according to each time applicable rules.
The safe manning of each vessel is being ruled by relevant ships administrative registration acts. The captain
is obliqaLory Lo be ol Creek naLionaliLy.
NaLional labor law applies Lo all vessels lyinq Lhe Creek laq or employinq sealarers reqisLered wiLh NA1,
unless (and always under the provisions of each vessels administrative registration act) an individual
employment contract was signed between the seafarer and the ship-owning company under the laws of a
third country.
CompeLenL, Lrained, qualiled, medically examined and experienced personnel are hired and employed.
LoyalLy relaLionships are builL beLween ollcers and ship manaqemenL companies. Sealarers wiLh previous
experience on the same type of vessel are usually preferred.
Creek MariLime CollecLive Labor AqreemenLs are execuLed in accordance Lo Lhe provisions ol Law 3276/^^
beLween relevanL employer's and employee's lederaLions. AlLer execuLion, Lhey are raLiled by AdminisLraLion
and published Lo Lhe Creek CovernmenL's CazeLLe {C.C.C.).
Collective labor agreements contain terms such as:
1erm ol embarkaLion
Minimum waqe and oLher mandaLory paymenLs, which vary accordinq Lo Lhe sealarer's posiLion
Leave enLiLlemenLs {eiqhL days per monLh holiday paymenL)
LnLiLlemenLs due Lo illness
Rules reqardinq breach ol Lhe conLracL
Rules reqardinq workinq hours, e.q., eiqhL sLandard hours and lour hours maximum overLime as per Lhe
lnLernaLional Labour OrqanizaLion {lLO) 180 ConvenLion
Creek sealarers are orqanized under relevanL mariLime Lrade unions, such as Lhe PNO {Panhellenic
Sealarers' Union OrqanizaLion), Lhe Panhellenic Union ol Lnqineers {PLMLN) and Lhe Panhellenic Union ol
MasLers {PLPLN). 1hese bodies have an acLive role in Lhe lormaLion ol collecLive labor aqreemenLs and Lhe
protection of seafarers rights in general.
Creek sealarers are reqisLered wiLh NA1. Various reqularly renewed collecLive aqreemenLs exisL, and Lhey vary
depending on the position of the seafarer on board and the type of vessel.
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The most commonly used legal structure for carrying on shipping activities is the incorporation of a ship-
owning company (one vessel per company) as an offshore legal entity (most frequently as a Cypriot,
Liberian, MalLese, Marshallese or Panamanian ollshore shipowninq company), which operaLes in Creece
through a management agreement with a management company (usually incorporated in one of the
above |urisdicLions), esLablishinq a branch ollce in Creece under lormer Law 89/67 {and yeL under Law
27/1975).
Provided that this structure is adhered to, ship management and ship-owning companies are exempt from
any corporaLe income Lax relaLed Lo Lhe shippinq acLiviLy {excepL lor Lhe Lonnaqe Lax [see secLion 1.1|).
AparL lrom Lhe Lonnaqe Lax menLioned above, no oLher Lax is imposed on eiLher Lhe prolLs ol companies
owninq vessels lyinq Lhe Creek laq or dividends lrom such companies. Moreover, no Lax is imposed on Lhe
disLribuLion ol prolLs Lo Creek Lax residenLs lrom loreiqn companies owninq ships lyinq a loreiqn laq, which
are under Lhe adminisLraLion ol a company esLablished in Creece; eiLher Lhe disLribuLion is made direcLly Lo
the shareholders or through a holding company, regardless of how many holding companies are interposed.
Law ^1^1/2013, which came inLo lorce on 5 April 2013, speciles cerLain condiLions and Lhe necessary
supporLinq documenLaLion LhaL Creek Lax residenL individuals are obliqed Lo mainLain and submiL in order
Lo ollseL evenLual deemed income assessmenLs Lhrouqh Lhe receipL ol shippinq dividends. Law ^1^1/2013
imposed a 107 Lax, exhausLinq any oLher Lax liabiliLy ol Lhe benelciary, on dividends or disLribuLed prolLs in
Lhe lorm ol bonus which are received by a Creek Lax residenL individual and are paid or crediLed lrom lscal
year 2012 {lnancial year 2013) onwards by a loreiqn company ol any Lype and lorm which mainLains
ollces or branches esLablished in Creece accordinq Lo arLicle 25 ol Law 27/75, which deal exclusively
wiLh lreiqhL, insurance, seLLlemenL wreck, brokeraqe or consLrucLion or insurance or charLerinq ol Creek
or loreiqnlaqqed ships ol over 500 CR1 as well as wiLh Lhe represenLaLion ol shippinq companies and
companies wiLh a similar ob|ecL. Foreiqn companies LhaL have seL up an ollce or branch in Creece under
arLicle 25 ol Law 27/75 and are enqaqed in Lhe manaqemenL or operaLion ol Creek or loreiqnlaqqed ships
are exempt from such tax.
Vessels lyinq Lhe Creek laq and builL in Creek shipyards are exempL lrom Lonnaqe Lax lor Lhe lrsL six years
of their existence.
ln 2002, Lhe Creek qovernmenL reduced Lhe Lonnaqe Lax by approximaLely 707, qivinq incenLives Lo Creek
and Luropean CommuniLy vessels Lo reqisLer under Lhe Creek laq.
There are no special incentives. Penalties are a deterrent.
No such changes are expected.
5.1 Infrastructure
5.1.1 Major ports
Alexandroupoli
lqoumeniLsa
lrklion
KalamaLa
Lavrio
PaLras
Piraeus
Ralna
1hessalonki
Vlos
1he porL ol Piraeus, manaqed by OLP AL, a company lisLed on Lhe ALhens SLock Lxchanqe, has qeneral
cargo and container facilities and is also used extensively for transshipment by sea. The port, which
is the largest European port and the third largest passenger port worldwide, facilitating more than 20
million passengers per year, was reorganized with new infrastructure works for the hosting of the 2004
Olympic Cames.
Thessalonki port, already privatized, is mainly used for trading with Balkan Peninsula countries.
Dockinq {in Lhe porL ol Piraeus, drydockinq laciliLies can accommodaLe vessels up Lo 300,000 dead
weight tonnage)
SLoraqe {lor qeneral carqo, reeler carqo and conLainer Lerminals)
5.1.3 Airports close to major ports
Airports are located close to all major ports. The main airports are:
DimokriLos {Alexandroupoli)
LlelLerios Venizelos airporL, which is siLuaLed aL SpaLa, on Lhe ouLskirLs ol ALhens {Lavrio, Piraeus,
Ralna)
KalamaLa {KalamaLa)
Kinq Pyrrhus, loannina {lqoumeniLsa)
Macedonia {1hessalonki)
Nicos KazanLzakis {lrklion)
Creek and loreiqn banks wiLh a shippinq desk
ConsulLinq lrms specializinq in shippinq {more Lhan 20 lrms)
MariLime law services {more Lhan 50 Creek and loreiqn law lrms specializinq in qeneral and special
maritime law)
ProLecLion and indemniLy {P&l) clubs
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MariLime educaLion is provided by:
NaLional MerchanL Navy Academy, which operaLes in various ciLies in Creece {Aspropirqos, Chios, Hydra,
lonian lslands, lrklion, Kimi Luvoias, Syros, amonq oLhers)
UniversiLy ol Piraeus Shippinq SLudies DeparLmenL
All Lankers, bulk carriers, carqo vessels and passenqer vessels under Creek benelcial ownership have
implemenLed Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code. {Creece has implemenLed Lhe relevanL
Luropean Union leqislaLion and Lhe decisions ol Lhe lMO reqardinq Lhe compulsory implemenLaLion ol Lhe lSM
Code).
The existing safety rules for manning can be characterized as strict. High standards are imposed on
educaLion, qualilcaLions and Lraininq ol sealarers. ln addiLion, Creece is in compliance wiLh S1CW 95
regulations.
1he MinisLry ol MercanLile Marine moniLors Lhe consLanL upqradinq ol Hellenic ships' saleLy sLandards
and their harmonization with the decisions and regulations of international organizations and European
Community directives.
5.2.3 Special regulations regarding safety and the environment
Creece has raLiled a larqe number ol inLernaLional LreaLies reqardinq marine polluLion and saleLy ol lives aL
sea, such as MARPOL {lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion From Ships) {raLiled under
Law 7^3/1977) and SOLAS {lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea). ln addiLion, Creece is in
lull compliance wiLh Lhe lMO. Creece is a conlrmed parLy ol Lhe lMO WhiLe LisL.
Since 2001, Lhe Creek laq has been included in Lhe Paris Memorandum ol UndersLandinq {MoU) WhiLe LisL.
Also, Lhe percenLaqe ol porL sLaLe conLrol inspecLions Lo ship calls aL Creek porLs was much hiqher Lhan Lhe
required percenLaqe ol inspecLions under Lhe Paris MoU {accordinq Lo Lhe Annual ReporL 2007 Paris MoU
on PorL SLaLe ConLrol, available aL: hLLp://www.parismou.orq/upload/anrep/PSC_annual_reporL_20071.
pdl). 1his underlines Lhe qualiLy ol vessels lyinq Lhe Creek laq and Lhe Creek qovernmenL's awareness ol
environmental safety.
1he MinisLry ol MercanLile Marine is qenerally reqarded as very sLricL where saleLy is concerned and has
validated the international safety regulations, Environmental Risk from Ionising Contaminants: Assessment
and ManaqemenL {LRlCA) l and ll. FurLhermore, Creece, as a member ol Lhe Luropean Union, promoLes Lhe
implementation of double hull requirements for oil tankers and equivalent design requirements for single hull
oil tankers, as well as the banning of carriage of heavy fuel oil by single hull tankers.
5.3 Registration
Registration of a vessel under the general provisions of Greek law
Accordinq Lo ArLicle 5 ol Lhe Creek Code ol Public MariLime Law {Law 187/1973), in order lor a ship Lo
be reqisLered in Lhe Creek reqisLry, more Lhan 507 ol Lhe shares in Lhe ship musL be owned by Luropean
CommuniLy ciLizens {individuals or companies). A Creek ship musL be reqisLered in a ship's reqisLry. 1he acL
ol reqisLraLion musL be daLed and siqned by Lhe reqisLrar ol ships. All Creek ships and loaLinq sLrucLures are
registered in the public registry books kept by the port authorities. A ship under construction may also be
registered. There are no age limits for cargo vessels and tankers.
Registration of a vessel pursuant to the terms of Article 13 of LD 2687/53 for investments and protection of
foreign capital
1he Creek sLaLe, aiminq Lo aLLracL loreiqn capiLal, has enacLed ArLicle 13 ol LD 2687/53. Under Lhis
arLicle, a loreiqn {nonCreek) company can reqisLer a vessel under Lhe Creek laq on Lhe condiLion LhaL
more Lhan 507 ol Lhe shares in Lhe ship are owned by Luropean CommuniLy ciLizens {Lhis is cerLiled by
Lhe AssociaLion ol Creek Shipowners, which issues a cerLilcaLe ol Creek ownership), and Lhe CR1 ol Lhe
vessel is over 1,500 tons.
1here is no lee lor Lhe reqisLraLion ol a ship under Lhe Creek laq, nor are Lhere any annual lees. 1here is also
no fee for the registration of a mortgage in the ships registry.
An applicaLion is submiLLed Lo Lhe Creek MinisLry ol MercanLile Marine, alonq wiLh all ol Lhe necessary
documenLaLion and, upon approval, a cerLilcaLe ol reqisLraLion under Lhe Creek laq is issued in Lhe name ol
the shipping company.
Parallel reqisLraLion is noL possible aL Lhis Lime under Creek leqislaLion.
CerLain minimum educaLional qualilcaLions and a minimum number ol years experience aL sea are required
in Lhe case ol ollcers. Nonollcers musL have a valid sealarer's passporL.
No international conventions regarding registration have been adopted.
All Creek porL auLhoriLies who keep ships' reqisLry books also keep Lhe relevanL morLqaqe books. 1here are
two types of mortgages:
1he ordinary morLqaqe lor all Lypes ol vessels
1he prelerred morLqaqe, which is lor vessels wiLh a CR1 ol over 500 {LD 3899/10 11 November
1958)
A notarial deed is required for a maritime mortgage to be registered in the ships registry.
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Hong Kong
Honq Konq is a special adminisLraLive reqion ol China, and hence is a separaLe |urisdicLion lrom mainland
China.
1. Tax
1here is a specilc charqinq secLion in Honq Konq lnland Revenue Ordinance {lRO), SecLion 23B, qoverninq
Lhe LaxaLion ol a shipowner carryinq on business in Honq Konq.
Under SecLion 23B{1) ol Lhe lRO, a person carries on business as an owner ol ships in Honq Konq il:
1he business is normally conLrolled or manaqed in Honq Konq
1he person is a company incorporaLed in Honq Konq
1he Lerm "conLrolled and manaqed in Honq Konq" is noL delned in Lhe lRO. ln pracLice, a business is
considered conLrolled and manaqed in Honq Konq il Lhe conLrol or manaqemenL ol Lhe dayLoday operaLions
ol Lhe business Lakes place in Honq Konq.
Under SecLion 23B{2) ol Lhe lRO, when a person Lo whom SecLion 23B{1) does noL apply carries on a
business as an owner ol ships, and any ship owned by LhaL person calls aL any locaLion wiLhin Honq Konq
waLers, Lhe person shall be deemed Lo be carryinq on LhaL business in Honq Konq. ln Lhis connecLion, calls ol
a casual nature may be disregarded at the discretion of the Commissioner of Inland Revenue (CIR). It should
be noted that the casual call exemption only applies to taxpayers to whom Section 23B(1) does not apply.
PursuanL Lo SecLion 23B{3) ol Lhe lRO, Lhe amounL ol Honq Konq assessable prolLs or allowable losses
derived by a Honq Konq shipowner under SecLion 23B{1) or a nonresidenL shipowner under SecLion
23B(2) are ascertained by the following formula:
Relevant sums
1ota| sn||n roht x
Total shipping income
Where the assessor is of the opinion that the above formula cannot be satisfactorily applied to a nonresident
shipowner, Lhe assessable prolLs ol such a nonresidenL shipowner may insLead be compuLed on Lhe basis ol a
fair percentage of the relevant sums accruing to the shipowner during the basis period.
If an assessment has been made on the basis of this fair percentage method, it is open to the shipowner to
elecL aL any Lime wiLhin Lwo years alLer Lhe end ol Lhe year ol assessmenL Lo have Lhe prolLs revised Lo Lhose
ascertained by the formula method.
1ne cehn|t|ons of tne re|evant terms usec uncer sect|on 23B are as fo||ows.
1oLal shippinq prolL means: Lhe worldwide accounLinq prolL ol Lhe shipowner lrom his business as an owner
ol ships and as ad|usLed lor prolLs Lax purposes in accordance wiLh Lhe provisions ol Lhe lRO.
1oLal shippinq income means: Lhe worldwide income ol Lhe shipowner as relecLed in iLs accounLs lrom Lhe
operation of the shipping business. The amount excludes any income from ship dealing, agency income and
investment income.
Relevant sums are the shipowners receipts earned from, attributable to, or in respect of:
Any relevanL carriaqe shipped in Honq Konq {carriaqe by sea ol passenqers, qoods, livesLock and mail,
but does not include goods in transit and re-embarking passengers).
Any Lowaqe operaLion underLaken by a ship wiLhin Lhe waLers ol Honq Konq or underLaken by a ship
commencinq wiLhin Honq Konq waLers.
Any dredqinq operaLion underLaken by a ship wiLhin Honq Konq waLers.
Any charLer hire in respecL ol Lhe operaLion ol a ship naviqaLinq solely or mainly wiLhin Lhe waLers ol Honq
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One hall ol Lhe charLer hire in respecL ol Lhe operaLion ol a ship naviqaLinq beLween any locaLion wiLhin
Lhe waLers ol Honq Konq and any locaLion wiLhin waLers ol river Lrade limiLs.
Any charLer hire in respecL ol a charLer parLy where one ol Lhe parLies is a limiLed parLnership LhaL was
reqisLered in accordance wiLh Lhe LimiLed ParLnership Ordinance belore 2 December 1990 and whose
principal assets include any ship, or any interest therein, acquired on or before that date.
Where:
Coods in LransiL means qoods speciled in a bill ol ladinq which are brouqhL Lo Honq Konq by sea solely lor
the purpose of onward carriage of those goods and in respect of which no freight charges for that onward
carriaqe are paid or payable in Honq Konq.
Reembarkinq passenqers are passenqers whose LickeLs do noL specily Honq Konq as Lhe place ol
departure or as the place of destination.
CharLer hire means any sums earned by or accrued Lo an owner ol a ship under a charLer parLy in respecL
of the operation of a ship, but does not include any sums so earned or accrued where that charter party
does not, or does not purport to, extend to the whole of that ship.
ll a charLer parLy does noL exLend Lo Lhe whole ol Lhe ship, Lhe sums so derived are noL LreaLed as charLer
hire income. lnsLead, Lhe sums derived aLLribuLable Lo any voyaqe commencinq in Honq Konq waLers are
deemed Lo be in respecL ol Lhe relevanL carriaqe shipped in Honq Konq and are Laxed as such.
River Lrade limiLs has Lhe same meaninq as in Lhe Honq Konq MerchanL Shippinq Ordinance. 1he Lerm
relers Lo waLers in Lhe viciniLy ol Honq Konq and inland waLerways wiLhin Lhe Pearl River DelLa {lor
example, Macau and Mainland China porLs such as Cuanqzhou).
Exempt sums are excluded from the relevant sums and comprise any amount otherwise included under (i)
and {ii) above Lo Lhe exLenL Lhe ship LhaL uplilLed Lhe qoods, livesLock, mail or passenqers in Honq Konq, or is
enqaqed in Lowinq operaLions, is proceedinq Lo sea lrom Honq Konq and
1he ship is reqisLered in Honq Konq under Lhe MerchanL Shippinq {ReqisLraLion) Ordinance.
1he amounL is derived by a person who has "reciprociLy sLaLus." A shipowner has "reciprociLy sLaLus" il
sub|ecL Lo Honq Konq prolLs Lax by virLue ol SecLion 23B{2) and residenL in a LerriLory ouLside Honq
Konq which, il Lhe Commissioner is saLisled, qranLs exempLion lrom income or prolLs Lax Lo shipowners
conLrolled, manaqed or incorporaLed in Honq Konq in respecL ol his or her income derived lrom a
business as an owner ol ships carried on in LhaL LerriLory. ln Lhis reqard, Lhe Honq Konq lnland Revenue
DeparLmenL {lRD) has advised LhaL shipowners lrom New Zealand and Lhe Republic ol Korea qualily lor
reciprocity status.
1he waqe cosLs ol sealarers would normally be charqed Lo Lhe prolL and loss accounL ol a shipowner in
order Lo arrive aL iLs LoLal shippinq prolL lor a year. 1hus, Lhe waqe cosLs would be deducLible, sub|ecL Lo Lhe
apportionment as shown above.
Honq Konq salaries Lax is imposed on a person who is in receipL ol income arisinq in or derived lrom Honq
Konq lrom any ollce, employmenL or pension.
An exemption clause is provided in the IRO to exempt a crew member from salaries tax if he or she is present
in Honq Konq lor no more Lhan:
A LoLal ol 60 days in Lhe basis period {i.e., lrom 1 April Lo 31 March ol nexL year) lor a year ol
assessment
A LoLal ol 120 days lallinq parLly wiLhin each ol Lhe basis periods lor Lwo consecuLive years ol assessmenL
The salaries tax charge is the lower of a) the net chargeable income (assessable income less concessionary
deducLions and allowances) aL proqressive raLes ranqinq lrom 27 Lo 177, or aL a laL raLe ol 157 on
assessable income less concessionary deductions.
NoLwiLhsLandinq Lhe above, Lhe income ol a crew member ol a ship operaLed in inLernaLional Lrallc may be
exempL lrom Honq Konq salaries Lax irrespecLive ol Lhe individual's physical presence in Honq Konq, pursuanL
Lo Lhe condiLions as speciled in cerLain sLandalone shippinq aqreemenLs or comprehensive double Lax
aqreemenLs {CD1As) Honq Konq has enLered inLo wiLh oLher |urisdicLions.
Honq Konq has enLered inLo Lax LreaLies wiLh Lhe lollowinq:
Austria, Belgium, Brunei, Canada**, Czech*, France, Hungary, Indonesia*, Ireland, Italy**, Japan,
Jersey**, Kuwait**, Liechtenstein, Luxembourg, Mainland China, Malaysia**, Malta*, Mexico**,
Netherlands, New Zealand, Portugal*, Spain*, Switzerland*, Thailand, United Kingdom, Vietnam.
*Treaties will be effective from 20132014
**1reat|es not yet |n force, enc|n tne com|et|on of tne rat|hcat|on rocecures
Honq Konq has enLered inLo CD1As wiLh Lhe above |urisdicLions and is also neqoLiaLinq wiLh a number ol
other jurisdictions. Except for Thailand and Indonesia, each of the above-listed CDTAs contains a clause with
respecL Lo Lhe LaxaLion ol inLernaLional LransporLaLion LhaL sLaLes LhaL prolLs lrom Lhe operaLion ol ships
in inLernaLional Lrallc shall only be Laxed in Lhe |urisdicLion in which Lhe enLerprise operaLinq Lhe ships is
a residenL. Under Honq Konq's CD1As wiLh 1hailand and lndonesia, however, 507 ol Lhe relevanL shippinq
prolLs would sLill be Laxed in Lhe source |urisdicLion. 1he CD1A wiLh Mainland China, in addiLion Lo exempLinq
CorporaLe lncome 1ax, also exempLs Lhe relevanL shippinq income lrom Business 1ax in Mainland China.
ln addiLion Lo CD1As, Honq Konq has also enLered inLo sLandalone shippinq aqreemenLs wiLh Denmark,
Cermany, Norway, Sinqapore, Sri Lanka and Lhe UniLed SLaLes. LxcepL lor Lhe aqreemenL wiLh Sri Lanka,
these agreements generally provide for tax exemption in one contracting party for international shipping
prolLs and qains on Lhe disposal ol ships operaLed in inLernaLional Lrallc derived by cerLain qualiled
enLerprises ol Lhe oLher conLracLinq parLy. Under Lhe aqreemenL beLween Honq Konq and Sri Lanka, 507
ol Lhe prolLs derived lrom Lhe operaLion ol ships in inLernaLional Lrallc may sLill be Laxed in Lhe source
jurisdiction.
Residence
Under mosL ol Honq Konq's CD1As, a company LhaL is incorporaLed in Honq Konq or, il incorporaLed ouLside
Honq Konq, is normally manaqed or conLrolled in Honq Konq will be considered Lo be a residenL ol Honq
Konq.
ln Lhis reqard, Lhe lRD has sLaLed LhaL Lhe phrase "normally manaqed or conLrolled in Honq Konq," as used
in Honq Konq's CD1As, is dillerenL lrom Lhe phrase "cenLral manaqemenL and conLrol" as qenerally used in
common law to establish the residence of a company. The IRD states that the former phrase has a broader
meaninq Lhan Lhe laLLer as iL does noL require LhaL boLh manaqemenL and conLrol be exercised in Honq Konq.
ln relaLion Lo deLermininq wheLher a company is normally manaqed or conLrolled in Honq Konq, Lhe lRD has
indicated the following:
"ManaqemenL," in Lhis conLexL, relers Lo manaqemenL ol daily business operaLions or implemenLaLion ol Lhe
decisions made by top management, etc. Control, on the other hand, refers to control of the whole business
at the top level, including formulating the central policy of the business, making strategic policies of the
company, choosinq business lnancinq, evaluaLinq business perlormance, eLc. 1he board ol direcLors usually
exercises control. In other words, if the business of the company is normally managed or controlled in Hong
Konq, includinq il Lhe manaqemenL ol iLs daily business operaLions, Lhe implemenLaLion ol Lhe decisions made
by Lop manaqemenL or Lhe makinq ol Loplevel policies is manaqed or conLrolled in Honq Konq, Lhe company
will be considered Lo be a residenL ol Honq Konq. 1he "manaqemenL" or "conLrol" ol a company may be
conducted in more than one place. However, so long as a company is normally managed or controlled in Hong
Konq, iL will be considered Lo be a residenL ol Honq Konq.
Where a company is a residenL ol boLh |urisdicLions under Lhe delniLion ol Lhe relevanL Lerms conLained in
a CDTA, the tie-breaker clause of the CDTA generally provides that the company shall be deemed to be a
resident only of the side in which its place of effective management is situated.
In this context, the IRD has stated the following:
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The term place of effective management refers to the place where key management and strategic
decisions LhaL are necessary lor Lhe conducL ol Lhe company's business are in subsLance made. Under normal
circumstances, it is the place where the most senior persons of a company formulate the direction and work
plans of the company. A company can have only one place of effective management at any one time.
1.4 Freight taxes
Honq Konq does noL have any lreiqhL Laxes.
Please refer to section 1.1 above.
Ma|or chanqes Lo Lhe Lax leqislaLion reqardinq shippinq in Lhe near luLure are noL expecLed.
2. Human capital
1here are no naLionaliLy or residenLial requiremenLs lor ollcers and crew servinq on Honq KonqreqisLered
ships. Crew size depends on Lhe size and Lhe Lype ol ship and is seL ouL in Lhe Minimum Sale Manninq
CerLilcaLe required by Lhe SOLAS ConvenLion. Ollcers, as lisLed in Lhe Minimum Sale Manninq CerLilcaLe,
are required Lo hold Lhe respecLive classes ol cerLilcaLes ol compeLency issued by Honq Konq, or Honq Konq
Licences issued in recoqniLion ol cerLilcaLes ol compeLency {lor seaqoinq [oceanqoinq| ships excepL coasLal/
river trade voyages) issued by other maritime authorities in accordance with the Standards of Training,
CerLilcaLion and WaLchkeepinq ConvenLion {S1CW) 95 ConvenLion. RaLinqs enqaqed on waLchkeepinq
duLies should hold S1CW WaLchkeepinq CerLilcaLes issued in accordance wiLh Lhe S1CW 95 ConvenLion.
The Employment Ordinance covers all employees, whether temporary or part-time, except a person serving
under a crew aqreemenL under Lhe MerchanL Shippinq {Sealarers) Ordinance, or on board a ship LhaL is noL
reqisLered in Honq Konq.
Honq Konq does noL have collecLive labor leqislaLion.
2.4 Treaties regarding to social security contributions
Honq Konq has noL enLered inLo any social securiLy or premium obliqaLions LreaLies wiLh oLher |urisdicLions.
2.5 Mannin advantaes/disadvantaes cf ByinHcn Kcn's Ba
1here are no apparenL advanLaqes or disadvanLaqes ol lyinq Honq Konq's laq in relaLion Lo manninq.

The most commonly used legal structures for shipping activities are in the form of corporations. The tax rate
applicable to all corporations is 16.5%.
Dividends are exempLed lrom Lax in Honq Konq as a maLLer ol law or pracLice, and Lhere is no wiLhholdinq Lax
on dividends made by a Honq Konq company Lo iLs invesLors.
1here are no specilc/qeneral subsidies available Lo shippinq companies.
There are no investment incentives for shipping companies and the shipbuilding industry.
4.4 Advantaes/disadvantaes cf Byin the Hcn Kcn Ba
1here is none applicable, as Honq Konq does noL provide any subsidies and qranLs lor shippinq companies.
Ma|or chanqes Lo shippinq subsidy leqislaLion in Lhe near luLure are noL expecLed.
5.1 Infrastructure
5.1.1 Major ports
Honq Konq has only one ma|or porL locaLed in Lhe Kwai Chunq1sinq Yi basin.
The following support facilities are available:
Dockinq
SLoraqe
5.1.3 Airport close to the major port
Honq Konq has only one airporL Lhe Honq Konq lnLernaLional AirporL, locaLed on LanLau lsland.
The following support facilities for the shipping industry are available:
1here are Lwo Lypes ol sysLems lor MariLime educaLion:
UniversiLy level: 1he Honq Konq PolyLechnic UniversiLy operaLes a deqree proqram in lnLernaLional Shippinq
and 1ransporL LoqisLics. 1his proqram equips qraduaLes wiLh a wide knowledqe ol mariLime LransporL and
loqisLics wiLhin a qeneral broad perspecLive ol inLernaLional LransporL and Lrade. CraduaLes are LauqhL Lhe
skills necessary to understand and manage maritime organizations and personnel.
VocaLional Lype: 1he MariLime Services 1raininq lnsLiLuLe {MS1l) provides a wide ranqe ol courses lor new
entrants, local and foreign in-service seafarers, and employees of marine-related and shore-based industry.
1he courses LhaL MS1l provides include Lhe Lwoyear lullLime Diploma Courses in MariLime SLudies, new
enLranL day courses and modular day courses lor deck cadeL ollcers, local and loreiqn inservice sealarers,
and employees ol marinerelaLed and shorebased indusLries. Besides, MS1l provides Lailormade saleLy
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training courses to meet the requirements of corporations.
All Honq Konq reqisLered ships are required Lo carry Lhe lnLernaLional SaleLy ManaqemenL {lSM) cerLilcaLes
and comply wiLh Lhe lSM cerLilcaLion requiremenLs. 1he Marine DeparLmenL also conducLs saleLy inspecLions.
1he Shippinq and PorL ConLrol {Works) RequlaLion and Lhe MerchanL Shippinq {Local Vessels) {Works)
Regulation entered into force 2 January 2007. All persons employed who carry out works on board the
vessel in Lhe waLers ol Honq Konq should hold valid cerLilcaLes in respecL ol Lhe relevanL saleLy Lraininq
courses.
The requirements of mandatory safety training under the above Regulations are to ensure that any persons
enqaqed in Lhe works such as shipboard carqo handlinq, shiprepairinq and shipbreakinq, and marine
consLrucLion on board a ship in Lhe waLers ol Honq Konq have received relevanL saleLy Lraininq.
Honq Konq adopLs all ma|or inLernaLional convenLions promulqaLed by Lhe lnLernaLional MariLime
OrqanizaLion {lMO) and Lhe lnLernaLional Labour OrqanizaLion.
5.3. Registration
A ship that complies with international standards for safety and protection of marine environment would be
able Lo meeL Lhe requiremenLs lor reqisLraLion in Honq Konq. A ship is reqisLrable in Honq Konq when:
A ma|oriLy inLeresL in Lhe ship is owned by one or more "qualiled persons," or operaLed under a demise
charLer {bare boaL charLer) by a corporaLion LhaL is a "qualiled person" {see delniLion below)
NoL reqisLered elsewhere
1he vessel {C.N.^653 daLed 16 SepLember 2005) is noL a:
Nonsellpropelled barqe carryinq peLroleum producLs or danqerous qoods ol any subsLance LhaL lalls
within the purview of the International Convention of Pollution from ships Annexes I, II or III
AccommodaLion barqe
Fishinq vessel
Ship enqaqed in processinq livinq resources ol Lhe sea, includinq whale and lsh lacLories and aqua
farming vessels
Specialized ship enqaqed in research, expediLions or survey
NonconvenLion ship servinq exclusively wiLhin Lhe domesLic waLers ol a counLry {oLher Lhan Honq Konq
and Mainland China waLers) and noL proceedinq Lo sea
Ship propelled by nuclear enerqy
Nobile ollshore drillinq uniL
A represenLaLive person is appoinLed in relaLion Lo Lhe ship
A qualiled person musL be:
An individual who holds a valid Honq Konq ldenLiLy Card and who is ordinarily a residenL in Honq Konq
A body incorporaLed in Honq Konq
An overseas company reqisLered in Lhe Honq Konq Companies ReqisLry under Lhe Honq Konq
Companies Ordinance
ReqisLraLion should be made Lo Lhe Marine DeparLmenL. 1he lollowinq documenLs {musL be oriqinal, unless
oLherwise speciled) will need Lo be submiLLed lor lull reqisLraLion ol Lhe ship:
1. ApplicaLion lorm {Form No. RS/A1)
2. Form ol AuLhoriLy {Form No. M.O. 812) lor makinq and siqninq applicaLions and declaraLions, where
necessary
3. DeclaraLion ol LnLiLlemenL Lo own a ship reqisLered in Honq Konq {where a ship has more Lhan one owner,
a separate Declaration of Entitlement must be made by each owner)
^. 1iLle documenLs {e.q., a Builder's CerLilcaLe [Form No. M.O. ^2| lor a new ship, a duly execuLed Bill ol
Sale plus a copy ol CerLilcaLe ol Ownership lree ol encumbrance where Lhere has been a sale ol Lhe ship
in lavor ol Lhe owner, a CerLilcaLe ol Ownership lree ol encumbrance where Lhere has noL been a sale ol
the ship that is not a new ship)
5. CerLilcaLe or evidence ol deleLion lrom previous reqisLry il iL is noL a new ship. 1he evidence can be in any
one of the following forms:
a. A cerLilcaLe ol deleLion lrom Lhe lasL reqisLry where Lhe ship was reqisLered
b. A leLLer/Lelex/lax lrom Lhe ship's lasL reqisLry inlorminq Lhe Honq Konq Shippinq ReqisLry LhaL iL has
consented to close the ship and that steps are being taken to effect the closure
c. A cerLiled Lrue copy ol Lhe applicaLion made by Lhe owner or Lhe represenLaLive person ol Lhe ship Lo
the registry where the ship was last registered to close the registration of the ship
d. Notes:
i) Where Lhe cerLilcaLe{s) ol deleLion cannoL be produced aL Lhe Lime ol reqisLraLion, iL/Lhey musL be
presented to the Registrar within 30 days from the date of registration.
ii) If the ship is concurrently registered in more than one register, evidence of deletion from each of the
registers is required.
iii) When Lhe vessel is successlully reqisLered in Honq Konq, Lhe vessel's previous reqisLraLion{s) shall
have been deleted.
6. CerLilcaLe ol lncorporaLion or ReqisLraLion in Honq Konq ol owner or Honq Konq ldenLiLy Card ol owner,
as appropriaLe, or a cerLiled Lrue copy ol Lhe company cerLilcaLe or Honq Konq ldenLiLy Card
7. Oriqinal or cerLiled Lrue copy ol CerLilcaLe ol lncorporaLion and Memorandum ol AssociaLion ol Lhe
representative person appointed in relation to the ship, where applicable
8. CerLilcaLe ol Survey {SUR59L) qivinq Lhe principal parLiculars ol Lhe ship, inLernaLional Lonnaqe, eLc.
9. CerLilcaLe or DeclaraLion ol Markinq ol Ship {Form No. RS/S1) compleLed by Lhe masLer ol Lhe ship or an
authorized surveyor
Provisional registration is not a prerequisite for full registration. However, provisional registry should be
appropriate when the original title documents cannot be produced at the time of registration.
The validity of provisional registration is one month. In special circumstances, it may be extended for a
lurLher period ol one monLh maximum, upon applicaLion by Lhe owner wiLh accepLable |usLilcaLion. 1he
following documents have to be submitted for provisional registration:
ApplicaLion lorm {Form No. RS/A1)
Form ol AuLhoriLy {Form No. M.O.812) lor makinq and siqninq applicaLion and declaraLion, where
necessary
DeclaraLion ol LnLiLlemenL Lo own a ship reqisLered in Honq Konq lrom owner{s)
A lax or phoLocopy ol Lhe LiLle documenL as required under paraqraph 2.1{d)
CerLilcaLe ol Survey {paraqraph 2.1{h)) or a phoLocopy ol Lhe ship's currenL lnLernaLional 1onnaqe
CerLilcaLe cerLiled by any one ol Lhe lollowinq:
1he issuinq auLhoriLy ol LhaL cerLilcaLe
1he shipowner
1he represenLaLive person appoinLed in relaLion Lo Lhe ship
CerLilcaLe ol lncorporaLion or ReqisLraLion in Honq Konq ol owner or Honq Konq ldenLiLy Card ol owner,
or a cerLiled Lrue copy ol Lhe company cerLilcaLe or Honq Konq ldenLiLy Card
Oriqinal or cerLiled Lrue copy ol CerLilcaLe ol lncorporaLion and Memorandum ol AssociaLion ol Lhe
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representative person appointed in relation to the ship, where applicable
CerLilcaLe or DeclaraLion ol Markinq ol Ship {Form No. RS/S1) compleLed by Lhe masLer ol Lhe ship or an
authorized surveyor
CerLilcaLe or evidence ol deleLion lrom previous reqisLry as relerred Lo under paraqraph 2.1{e)
A ship on demise charLer {bareboaL charLer) Lo a body corporaLion LhaL is a qualiled person {delned in
section 5.3.1 above) can be on full or provisional registration. However, no dual registration is allowed. The
registration is valid for the period of the demise charter, and any change to the owner or demise charterer will
render the ship unregistrable. The procedures for full or provisional registration of a vessel on demise charter
will be the same as described in section 5.3.2 above as appropriate. In addition, the following documents will
need to be submitted:
Form ol AuLhoriLy lor makinq and siqninq applicaLion and declaraLion by Lhe demise charLerer {Form No.
M.O. 812, where necessary
Oriqinal or cerLiled Lrue copy ol CerLilcaLe ol lncorporaLion or ReqisLraLion ol Lhe demise charLerer in
Honq Konq
DeclaraLion ol LnLiLlemenL Lo reqisLer a ship in Honq Konq by Lhe demise charLerer {Form No. RS/D6),
together with a true and complete copy of the demise charter party made between the owner and the
demise charterer
1he MercanLile Marine Ollce ol Lhe Marine DeparLmenL reqisLers local sealarers, requlaLes Lheir employmenL
Lerms and condiLions on board ships ol all laqs, and supervises Lhe employmenL and discharqe ol sealarers
on Honq Konq ships.
As a parLy Lo Lhe S1CW, Honq Konq carries ouL examinaLions and issue cerLilcaLes ol compeLencies Lo
sealarers workinq on Honq KonqreqisLered ships and local vessels. LxaminaLions are held reqularly Lo suiL
Lhe demand. CerLilcaLes ol compeLencies are issued Lo Lhose candidaLes who have passed Lhe masLer,
coxswain, deck ollcer and enqineer examinaLions Lo operaLe ships Lradinq locally and inLernaLionally.
Licences are also issued Lo sealarers whose cerLilcaLes ol compeLencies are issued by counLries on Lhe S1CW
whiLe lisL Lo serve on Honq KonqreqisLered ships.
Honq KonqreqisLered ships are required Lo comply lully wiLh Lhe requiremenLs ol lMO and lLO ConvenLions,
raLiled by Honq Konq, wiLh respecL Lo saleLy, proLecLion ol marine environmenL, and healLh and wellare ol
the crew. In special circumstances, exemption from the Convention requirements may be granted, provided
that safety as well as protection of the marine environment would not be jeopardized.
1he reqisLraLion ol a morLqaqe musL be in Lhe speciled lorm {Form No. RS/M1). MorLqaqes rank in prioriLy
according to the date and time when they are presented and accepted for registration and not according to
the date of the actual mortgage instrument.
India
1. Tax
1.1.1 Indian shipping companies
Computation of taxable income
lndian shippinq companies are assessed on a "neLolexpenses" basis.
1he expenses incurred lor Lhe purpose ol Lhe business are allowed as a deducLion, sub|ecL Lo cerLain
conditions.
Mode of assessment by the Indian revenue authorities
Companies are required Lo lle a Lax reLurn every year.
Once Lhe reLurn has been lled, Lhe lndian revenue auLhoriLies have Lhe power Lo scruLinize iL and
determine whether the taxable income was calculated correctly.
1.1.2 Alternative tax regime for Indian companies: tonnage tax regime
General
Indian shipping companies have a choice between tonnage tax and normal corporate income tax.
Provisions
1he Lonnaqe Lax reqime is opLional. ll Lhe company does noL opL specilcally lor Lhe Lonnaqe Lax reqime, iL
may continue to be governed by the normal provisions (net of expenses basis). But once opted into, the
tonnage tax regime applies to the company for a period of 10 years. The company may, however, opt out
of the regime in any subsequent year by furnishing a declaration in a prescribed form.
1he Lonnaqe income is deLermined by aqqreqaLinq Lhe prescribed Lonnaqe income ol each qualilyinq ship.
The tonnage income is determined on a presumptive basis based on the tonnage of the qualifying ship.
Once covered by the tonnage tax regime, receipts from qualifying shipping activities are not once again
taxed on actual income basis.
1he Lonnaqe income beinq deLermined on a presumpLive basis, no lurLher deducLion ol expenses or
depreciation or set off of loss can be claimed against the tonnage income.
The tonnage income so determined is taxed at the normal corporate tax rate applicable for that year. Thus,
under the tonnage tax regime, tax is payable even if there is a loss in a particular year.
1he opLion Lo be qoverned by Lhe provisions ol Lhe Lonnaqe Lax reqime is available Lo qualilyinq
companies. A qualifying company is a company that:
ls lormed and reqisLered under lndian corporaLe law
Has iLs place ol ellecLive manaqemenL in lndia
Owns aL leasL one qualilyinq ship
1akes as iLs main ob|ecLive Lo carry on Lhe business ol operaLinq qualilyinq ships
A qualilyinq ship has been delned Lo include any seaqoinq vessel ol 15 neL Lons or more LhaL is
reqisLered under Lhe MerchanL Shippinq AcL, 1958, or a ship reqisLered ouLside lndia wiLh respecL
Lo which a license has been issued by Lhe DirecLorCeneral ol Shippinq under secLions ^06 and ^07
ol Lhe MerchanL Shippinq AcL, 1958, and wiLh respecL Lo which a valid cerLilcaLe indicaLinq iLs neL
tonnage is in force subject to certain exclusions.
A company shall be regarded as operating a ship if it operates any ship, whether owned or chartered
by the company, even in the event that only part of the ship is chartered in. However, a company is not
regarded as the operator of a ship if the ship has been chartered out on bareboat charter-cum-demise
terms or on bareboat charter terms for a period exceeding three years.
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Computation of tonnage income
1he Lonnaqe income ol a Lonnaqe Lax company shall be Lhe aqqreqaLe ol Lhe Lonnaqe income ol each
qualifying ship.
1he Lonnaqe income ol each qualilyinq ship shall be Lhe daily Lonnaqe income ol each ship mulLiplied by
the number of days in the previous year (or the number of days in part of the previous year in case the
ship was operated by the company as a qualifying ship only for a part of the previous year).
1he daily Lonnaqe income ol a qualilyinq ship will be based on Lhe neL Lonnaqe ol Lhe ship.
Oualilyinq shippinq income ol a Lonnaqe Lax company has been delned as iLs prolLs lrom core acLiviLies
and prolLs lrom incidenLal acLiviLies {limiLed Lo 0.257 ol Lhe Lurnover ol core acLiviLies il Lhe balance
income from incidental activities is subject to tax at normal rates).
lncome lrom nonqualilyinq ships ol a Lonnaqe Lax company is Lo be compuLed in accordance wiLh Lhe
normal provisions.
1here are also comprehensive provisions lor Lhe allocaLion ol common cosLs, calculaLion ol depreciaLion,
set-off and exclusion of loss, among other things.
1he prolLs lrom Lhe business ol operaLinq qualilyinq ships would noL be Laken inLo consideraLion lor Lhe
purpose of computation of minimum alternate tax (a special regime of taxation imposed on the basis of
accounLinq prolLs).
Procedure
For opLinq under Lhe Lonnaqe Lax reqime, Lhe applicaLion should be made Lo an appropriaLe auLhoriLy
within three months of the date of incorporation or the date on which a company becomes a qualifying
company, as the case may be.
An opLion in lavor ol Lhe Lonnaqe Lax reqime shall, alLer iL has been approved, remain in lorce lor 10
years lrom Lhe daLe on which such opLion is exercised, buL shall cease Lo have ellecL in cerLain speciled
circumstances.
A qualilyinq company which on iLs own opLs ouL ol Lhe Lonnaqe Lax reqime or is excluded on accounL ol
any defaults, will not be eligible to opt in for the tonnage tax regime for a period of 10 years from the date
of opting out or default, as the case may be.
S|n|hcant conc|t|ons
1he company is required Lo crediL a minimum ol 207 ol iLs book prolLs Lo a Lonnaqe Lax reserve accounL.
1he Lonnaqe Lax reserve accounL can be uLilized wiLhin a period ol eiqhL years lor Lhe purpose ol acquirinq a
new ship for the business or for the purpose of operating qualifying ships until the acquisition of a new ship.
1he company is required Lo comply wiLh some minimum Lraininq requiremenLs.
1he company is required Lo mainLain separaLe books ol accounLs.
1he neL Lonnaqe ol Lhe qualilyinq ships lrom "charLerinq in" operaLions should noL exceed Lhe prescribed
ceiling limit of 49%.
Total net tonnage Income per day (R) ()
1
Up Lo 1,000 70 (0.82) per 100 tons
1,00110,000 700 (8.23) plus 53 (0.62) for every 100 tons exceeding
1,000 tons
10,00125,000 5470 (64.35) plus42 (0.49) for every 100 tons exceeding
10,000 tons
Exceeding 25,000 11770 (138.47) plus 29 (0.34) for every 100 tons
exceeding 25,000 tons
1
Exchange rate: 1=INR85.
1.1.3 Nonresident companies
Computation of taxable income
Taxable income is determined on a presumptive basis, which is 7.5% of the following gross amounts:
AmounL paid or payable {includinq demurraqe or handlinq charqes) on accounL ol Lhe carriaqe ol
passengers, livestock, mail or goods shipped at any port in India
AmounL received or deemed Lo be received {includinq demurraqe or handlinq charqes) in lndia on
account of the carriage of passengers, livestock, mail or goods shipped at any port outside India
NonresidenL shippinq companies have an opLion Lo invoke Lhe benelcial provisions ol Lhe relevanL Lax LreaLy
with India to determine their taxability.
Mode of assessment by the Indian revenue authorities
A nonresidenL shippinq company LhaL carries passenqers, livesLock, mail or qoods shipped aL a porL in
India would, before departure from India, prepare and furnish the Indian revenue authorities with a return
of the amount paid or payable on account of carriage of all passengers, livestock, mail or goods shipped
aL LhaL porL since Lhe lasL arrival ol Lhe ship. ln cerLain excepLional circumsLances, Lhe reLurn may be lled
within 30 days of the date of departure of the ship, provided that satisfactory arrangements have been
made for the payment of taxes.
Unless Laxes are duly paid or saLislacLory arranqemenLs have been made lor Lhe paymenL ol Lhe same,
cusLoms auLhoriLies will noL qranL a porL clearance cerLilcaLe lor Lhe voyaqe.
1.1.4 Frine beneht tax
Frinqe benelL Lax {FB1) was inLroduced by Lhe Finance AcL, 2005, and has been wiLhdrawn wiLh ellecL lrom
Lhe lnancial year beqinninq 1 April 2009.
Indian Income Tax Act provisions
The tax incidence on seafarers in India depends on their residential status.
Individuals are considered residents if they meet one of the following criteria:
1hey reside in lndia lor 182 days or more durinq Lhe lndian Lax year {1 April Lo 31 March).
1hey reside in lndia lor 60 days or more durinq Lhe Lax year and have resided in lndia lor aL leasL 365
days during the preceding four tax years.
In accordance with the law, a period of 60 days as referred to above is increased to 182 days with respect to
a ciLizen ol lndia who has lelL lndia in any previous year as a member ol Lhe crew ol an lndian ship as delned
under Lhe MerchanL Shippinq AcL, 1958.
Income from salaries received by or due to any individuals, being nonresident, as remuneration for services
rendered in connection with their employment on a foreign ship, where their total stay in India does not
exceed 90 days in a tax year, is exempt from tax.
The effective income tax rates for an individual are as follows:
Total income of the individual (R) () Rate of income tax (R) ()
2
Up Lo 200,000 {2,353) Zero
200,001 {2,353)500,000 {5,882) 10% of the amount that exceeds 200,000 (2,353)
500,001 {5882)1,000,000
(11,765)
Rs. 30,000 plus 20% of the amount that exceeds
500,000 (5,882)
Above 1,000,000 (11,765) 130,000 plus 30% of the amount that exceeds
1,000,000 (11,765)
2
Exchange rate: 1=INR85.
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In addition, a cess of 3% is payable on the amount of tax. Furthermore, in the case of senior citizens (over 60
years of age and up to 80 years) and super senior citizens (over 80 years of age), the basic exemption limit
has been increased Lo Rs 250,000 {t2,9^1) and Rs 500,000 {t5,882) respecLively.
CerLain deducLions are prescribed in Lhe lndian Lax laws wiLh respecL Lo various conLribuLions/invesLmenLs
made from salary, which apply to seafarers, as well as other individuals.
Double taxation avoidance agreement
In addition, the article on dependent personal services under various double taxation avoidance agreements
entered into by India generally states that: Remuneration derived with respect to an employment exercised
aboard a ship or aircralL operaLed in inLernaLional Lrallc by an enLerprise ol a conLracLinq sLaLe may be Laxed
in that state.
India has negotiated double taxation avoidance agreements with the following countries:
Comprehensive agreements
Armenia, Australia, Austria, Bangladesh, Belarus, Belgium, Botswana, Brazil, Bulgaria, Canada, China,
Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary,
Iceland, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kenya, Korea, Kuwait, Kyrgyzstan,
Libya, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Mongolia, Montenegro, Morocco,
Myanmar, Mozambique, Namibia, Nepal, Netherlands, New Zealand, Norway, Oman, Philippines, Poland,
Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Serbia, Singapore, Slovenia, South Africa,
Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Tajikistan, Tanzania, Thailand, Trinidad and Tobago,
Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States of America,
Uzbekistan, Vietnam, Zambia.
Since lndia has siqned Lax LreaLies wiLh various counLries, prolLs derived lrom Lhe operaLion ol ships in
inLernaLional Lrallc will be Laxed in one conLracLinq sLaLe only. 1he prolLs concerned are wholly exempL lrom
tax in the state of source and are taxed exclusively in the state in which the place of effective management or
place ol residence ol Lhe enLerprise enqaqed in inLernaLional Lrallc is siLuaLed.
MosL ol Lhe Lax LreaLies, such as Lhe Lax LreaLies wiLh Spain, Sweden, Lhe UniLed Arab LmiraLes, Lhe UniLed
Kinqdom and Lhe UniLed SLaLes ol America, use "place ol residence" as Lhe criLerion, insLead ol "place ol
effective management. Furthermore, the tax treaty with Switzerland is silent with respect to taxability of
prolLs lrom Lhe operaLion ol ships.
Main issues reqardinq LaxabiliLy ol prolLs ol Lhe shippinq companies in Lhese Lax LreaLies:
AscerLaininq Lhe place ol ellecLive manaqemenL where Lhis criLerion has been used in Lhe Lax LreaLy lor
deLermininq Lhe sLaLe Lo which Lhe riqhL Lo Lax shippinq prolLs has been conlerred
AscerLaininq Lhe place ol residence where Lhis criLerion has been used in Lhe Lax LreaLy Lo deLermine Lhe
sLaLe Lo which Lhe riqhL Lo Lax shippinq prolLs has been conlerred
Scope ol Lhe prolLs derived lrom Lhe operaLion ol ships in inLernaLional Lrallc. ln accordance wiLh Lhe
OrqanisaLion lor Lconomic CooperaLion and DevelopmenL {OLCD) Model ConvenLion CommenLary, such
prolLs include prolLs derived lrom noL only Lhe carriaqe ol passenqers or carqo, buL also oLher auxiliary
acLiviLies more or less closely connecLed wiLh Lhe direcL operaLion ol ships; lor example, prolLs lrom Lhe
charter of ships, sale of tickets and leasing of containers. In this connection, some of the tax treaties,
such as Lhe aqreemenL wiLh Lhe UniLed SLaLes ol America and Lhe UniLed Kinqdom, specilcally provide
lor Lhe inclusion ol Lhe prolLs derived lrom cerLain acLiviLies wiLhin Lhe scope ol prolL lrom Lhe operaLion
ol ships in inLernaLional Lrallc. 1herelore Lhe scope ol prolLs derived lrom Lhe operaLion ol ships, iLs
inclusions and exclusions, needs to be evaluated with regard to the language of the applicable tax treaty.
Under Lhe lndian lncome 1ax AcL, Lhe LaxabiliLy ol shippinq prolLs is qoverned by Lhe criLerion ol Lhe
residence ol Lhe person enqaqed in Lhe business ol operaLinq Lhe ships. ProlLs derived by a nonresidenL
enterprise from shipping activities are taxable at a presumptive rate of 7.5% of the amount payable to the
enterprise for carriage of, for example, passengers or goods.
1he residenL enLerprise is sub|ecL Lo LaxaLion on iLs neL prolLs lrom such acLiviLies or on a presumpLive basis
under the tonnage tax regime discussed above. Hence, the registration of a ship in India does not offer any
special Lax benelLs lor Lhe shipowner.
1.5 Changes to tax law and other laws anticipated in the near future
lndia has a naLional shippinq policy Lo provide lscal, lnancial, adminisLraLive and leqislaLive measures lor Lhe
growth and development of shipping in India. The draft maritime policy proposes to amend the provisions and
scope ol Lhe MulLimodal 1ransporL ol Coods AcL, Lhe Carriaqe ol Coods by Sea AcL and Lhe Bill ol Ladinq AcL
3
,
in view of the requirements of the industry.
Furthermore, the Department of Shipping is planning to enact a Shipping Trade Practices Act, which is
presently in draft stage, to bring transparency in trade practices adopted by maritime transport logistics
service providers.
2. Indirect tax
We have set out below the typical indirect tax regime currently applicable to various sectors in the shipping
industry (including coastal transportation) and the underlying industry issues and ambiguities:
U to 30 June 2012, serv|ce tax was a||cao|e on sec|hec taxao|e serv|ces.
WiLh ellecL lrom 1 July 2012, neqaLive lisL ol services has been inLroduced. Under Lhe neqaLive lisL reqime,
service tax is applicable on all services except for those which are covered in the negative list of services
or "exempLed lisL ol services." For Lhis purpose, Lhe Lerm "service" is delned as any acLiviLy done lor a
consideration (excluding transfer of immovable property, transaction involving money or actionable claim,
services provided by an employee to employer).
Services covered in Lhe neqaLive lisL or exempLed lisL ol services are noL liable Lo service Lax. 1he neqaLive
lisL ol services covers services ol "LransporLaLion ol qoods by vessel lrom ouLside lndia Lo Lhe lrsL cusLoms
station of landing in India.
OLher services Lypically provided by a shippinq company, includinq LransporLaLion ol qoods by sea and Lime
charter of vessels are regarded taxable services under the service tax law.
Place ol Provision ol Services Rules, 2012 {PPOS Rules) have been inLroduced wiLh ellecL lrom 1 July 2012
to determine the Place of Provision of Service (PPOS) for any services. If the PPOS is in India, the service
would be taxable. If the PPOS is outside India, service tax is not applicable.
FurLher, il Lhe PPOS lor any service is ouLside lndia, Lhe addiLional condiLions Lo qualily as "exporL" are:
(i) Service provider is located in taxable territory.
(ii) Service recipient is located outside India.
(iii) Service provided is a service other than in the negative list.
(iv) Payment is received in convertible foreign exchange.
ll Lhe PPOS lor any service is ouLside lndia and il Lhe services do noL qualily as exporL, such service would be
a non-taxable service.
ll Lhe services qualily as "exporL," Lhe service provider should be eliqible lor a crediL or relund ol service Lax,
excise duty and additional customs duty paid on inputs, capital goods and input services. However, if the
services are non-taxable services, taxes paid on inputs, capital goods and input services may not be eligible
for credit or refund and could be an additional cost.
3
Ministry of Shipping, Government of India website, http://shipping.gov.in.
182
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As per Lhe PPOS Rules, Lhe PPOS lor services ol LransporLaLion ol qoods by vessel lrom lndia Lo an overseas
port is the destination of the goods is outside India. Hence, these services do not attract service tax. Further,
il Lhe aloresaid condiLions are saLisled, Lhe services could qualily as exporL.
The generic effective rate of service tax applicable is 12.36%.
1here is a prevailinq ambiquiLy in relaLion Lo applicabiliLy ol valueadded Lax {VA1) on Lime charLer
arrangements.
Customs and excise duty on ships
WiLh ellecL lrom 17 March 2012, Lhe CounLervailinq duLy {CVD) is payable on conversion ol loreiqn qoinq
vessels to coastal vessels as follows:
Full lease or conLracL value, il Lhe imporL is under a lease aqreemenL or conLracL
For each monLh, or parL Lhereol, ol sLay in lndia as coasLal vessel, 1/120Lh ol Lhe applicable duLy
Goods and services tax
Following the successful execution of the VAT legislations across all states, the Indian Central Board of
DirecL 1axes {CBD1) now proposes Lo implemenL Coods and services Lax {CS1) in lndia. CS1 will be a
comprehensive consumption tax levied on the supply of all goods and services (except for a negative list)
on a desLinaLion basis. CS1 is proposed Lo subsume Lhe lollowinq Laxes:
CS1 leqislaLion has yeL Lo be lormulaLed by Lhe CovernmenL, and Lhere is a lack ol clariLy on various aspecLs,
including tax rates and tax credits.
1he Lime line lor inLroducLion ol CS1 in lndia is noL yeL lnalized.
3. Human capital
1he provisions ol Lhe MerchanL Shippinq AcL, 1958, are Laken inLo accounL while hirinq personnel. 1he
provisions include prescribed qualilcaLion and possession ol a cerLilcaLe in Lhe prescribed lorm Lo Lhe ellecL
LhaL Lhe relevanL personnel are, lor example, physically lL lor employmenL.
MosL ol Lhe naLional labor laws apply Lo crew members only. For inLernaLional shippinq companies reqisLered
in India, the laws apply as they would to any Indian company.
1he relevanL provisions ol Lhe MerchanL Shippinq AcL, 1958, are Laken inLo accounL when personnel are
hired and employed in India. The law does not mandatorily require or prescribe any important rules for the
Central taxes State taxes
Lxcise duLy VA1, sales Lax
Service Lax Entertainment tax (not levied by local bodies),
luxury tax
AddiLional and special addiLional cusLoms
duty
Taxes on lottery, betting and gambling
SLaLe cesses and surcharqes relaLinq Lo supply ol
goods and services
Surcharges and cesses LnLry Lax {noL in lieu ol ocLroi)
1hese Laxes would be subsumed inLo
CenLral CS1 {CCS1).
1hese Laxes would be subsumed inLo SLaLe CS1
{SCS1).
recruitment or selection of candidates.
Sealarers' riqhLs Lo waqes come inLo lorce aL Lhe Lime Lhey commence work or aL Lhe Lime speciled in Lhe
agreement. The ordinary hours of work for all seafarers should not exceed 48 hours a week. The right to
wages does not depend on the earnings of the freight. The medical expenses of a seafarer during the course
of a journey are borne by the employer.
India has a special scheme designed for seafarers known as the Seamens Provident Fund Scheme. This is
Lhe lrsL social securiLy scheme lor lndian MerchanL Navy sealarers, which was brouqhL under sLaLuLe by
enactment of the Seamens Provident Fund Act, 1966 (4 of 1966). It was introduced retrospectively with
ellecL lrom 1 July 196^, Lo creaLe a providenL lund lor sealarers Lo provide old aqe reLiremenL benelLs and
welfare schemes to family members in the event of the death of a member seafarer.
3. Mannin issues with Byin the !ndian Ba
1here are no specilc manninq issues perLaininq Lo lyinq Lhe lndian laq.
1he DirecLorCeneral ol Shippinq, vide Lhe DCS Order No. 5 ol 2008 daLed 15 July 2008, has relaxed Lhe
manninq requiremenLs lor ollcers ol all lndian ships. Accordinq Lo Lhe order, noL more Lhan Lwo loreiqn
naLional sealarers can be enqaqed on ship aL a Lime. FurLhermore, and Lhe masLer ol an lndianlaqqed ship
must be of Indian nationality.
ln SepLember 2008, Lhe DirecLor Ceneral Shippinq issued new quidelines relaxinq sLallnq rules lor coasLal
vessels, including cargo vessels, passenger vessels, offshore ships and dredgers. The extent of relaxation
varies according to the size and type of ship.
There is no special legal structure for the formation of companies engaged in shipping activities.
For Lhe lnancial year, dividend disLribuLion Lax aL an approximaLe raLe ol 16.227
4
is payable by domestic
companies. Shareholders are exempt from tax on dividends.
ln Lhe recenL pasL, Lhe CovernmenL ol lndia {COl) has Laken several sLeps Lo promoLe Lhe shippinq indusLry.
In the case of a sale of a vessel to foreign parties, shipowners are allowed to retain the sale proceeds abroad
and use Lhem lor new purchases. FurLhermore, Lhe COl has placed Lhe imporL ol new vessels {by way ol new
buildings or construction) under the open general license. Technical clearance and price reasonableness is not
required; however, Lhe vessel is mandaLorily surveyed aL Lhe Lime ol reqisLraLion by Principal Ollcer, MercanLile
MariLime DeparLmenL {PO, MMD). Any delciency in Lhe vessel has Lo be removed belore reqisLraLion
5
.
1he COl has allowed 1007 loreiqn direcL invesLmenL {FDl) lor Lhe acquisiLion ol ships and has brouqhL Lhe
acquisiLion ol all Lypes ol ships under Lhe ambiL ol Lhe Open Ceneral License {OCL).
4
Union budget 2012-13: highlights, Gopal Chopra & Associates Chartered Accountants, 16 March 2012, page 45
5
Guidelines for Import of All Types of Ships, Press Information Bureau, Government of India, http://pib.nic.in/
archieve, 11 January 2012.
184
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1he CenLral CovernmenL also provides 1007 qranLsinaid Lo sLaLes in Lhe norLheasLern reqion lor Lhe
development of inland water transport (IWT).
The Investment Act of 1960, last amended in 1989, regulates incentives for investments. The general
condition of eligibility for the facilities is regular bookkeeping with regular annual closings. The Finance
MinisLer qranLs Lhe laciliLies and applicaLions lor approval ol requesLs LhaL are made Lo Lhe lnvesLmenL
CommiLLee ol Lhe MinisLry ol Finance. AuLomaLic approval is also available lor acquisiLion by shipowninq
companies lor Lhe caLeqories LhaL are noL covered under Lhe OCL {e.q., barqes, Luqs, boaLs). 1he various
incentives available are as follows:
Exemption from customs duty
6
Barqes or ponLoons imporLed alonq wiLh ships lor speedier unloadinq ol imporLed qoods and loadinq
of export goods on a re-export basis are fully exempt from customs duty subject to compliance with
speciled condiLions.
CapiLal qoods, spares, raw maLerial parLs, maLerial handlinq equipmenL and consumables lor Lhe repair
ol oceanqoinq vessels by a ship repair uniL reqisLered wiLh Lhe DirecLorCeneral ol Shippinq ol Lhe lndian
CovernmenL are also exempL lrom cusLoms duLy sub|ecL Lo compliance wiLh speciled condiLions.
FurLher, Lhere is a zero raLe ol cusLoms duLy on Lhe imporL ol vessels lor Lhe LransporL ol qoods, and oLher
vessels lor Lhe LransporL ol boLh persons and qoods sub|ecL Lo compliance wiLh speciled condiLions.
Income tax incentives
See section 1.1 above for income tax incentives.
Other incentives
7
OLher invesLmenL incenLives qranLed Lo shippinq companies under Lhe shippinq policy are:
Shippinq companies can now qeL Lheir ships repaired in any shipyard wiLhouL seekinq prior approval lrom
the government.
1he OuarLerly Block AllocaLion scheme lor Lhe repair ol ships has been dispensed wiLh.
1he Reserve Bank ol lndia {RBl) now permiLs loreiqn currency paymenLs lor ship repair/drydockinq and
spares for imported capital goods, without any value limit.
Freedom Lo Lime charLer ouL ships lor lndian shippinq companies.
lnvesLmenL ol 1007 by nonresidenL lndians {NRls) in shippinq wiLh lull repaLriaLion benelLs.
FaciliLies aL par wiLh 1007 exporLorienLed uniLs {LOUs) lor Lhe ship repair indusLry.
FreiqhL charqes on accounL ol movemenL ol Lhe lerLilizers and peLroleum producLs allowed Lo be paid in
convertible currency.
No permission is required for raising foreign exchange loans from abroad by mortgaging vessels with the lender.

India has an extensive coastline of around 7,517km. The countrys maritime industry encompasses ports
(both major and non-major), shipping (overseas and coastal), IWT and aids to navigation and manpower
both on board and ashore. Around 95% of Indias external merchandise trade by volume, and 70% by value, is
transported through maritime transport.
6
Not|hcat|on No.12 /2012 Customs, Counc|| for |eatner fxorts weos|te, www.|eatner|nc|a.or, 11 January
2012; and Indian custom duty, www.eximguru.com/indian-customs-duty, 11 January 2012.
7
Shipping Manual, Director General of Shipping website, www.dgshipping.com, 11 January 2012; and Policies,
Sipcot website, http://www.sipcot.com/policies, 11 January 2012.
1he marine LransporL secLor conLribuLes more Lhan 0.27 Lo lndia's CDP aL consLanL prices. 1he LransporL
secLor's conLribuLion Lo Lhe counLry's CDP has been risinq over Lhe pasL lew years, mainly due Lo qrowinq
economic activity in India. The growing trend of Western countries transitioning their manufacturing
functions to low-cost countries, as well as the likely prospect of India emerging as a manufacturing
outsourcing hub, is expected to contribute to the growth of the countrys marine industry.
6.1 Marine industry
8
lndia's shippinq secLor has qrown over Lhe years in Lerms ol iLs physical and lnancial asseLs, human
resources, knowledge base, operating processes and support infrastructure. In January 2011, the country
ranked 16Lh qlobally by ownership ol leeL, accounLinq lor 1.537 ol qlobal DW1. lndian laq vessels
cumulaLively accounLed lor Lhe 10LhlarqesL DW1 in Lhe world. Foreiqnlaqqed vessels accounL lor 18.757 ol
Lhe LoLal owned leeL in lndia
9
.
Shippinq Lonnaqe in lndia has qrown lrom only 0.2 million qross reqisLered Lonnaqe {CR1) wiLh 59 vessels in
19^7 Lo 1.06 million CR1 wiLh 1,122 vessels as ol 31 December 2011.
Out of 1,122 vessels, 372 are engaged in overseas trade, while the remaining 750 vessels operate on inland
rouLes. ln Lerms ol capaciLy, approximaLely 90.537 ol CR1 {10.01 million) is enqaqed in overseas Lrade,
while coasLal shippinq accounLs lor Lhe remaininq 9.^77. 1he averaqe aqe ol Lhe lndian leeL has increased
from 14.8 years in FY99 to approximately 18.2 years in FY10, as against a world average of approximately
11.8 years.
In December 2011, in the case of overseas vessels, bulk carriers and oil tankers constituted approximately
93% of total capacity (with oil tankers constituting approximately 60% of total capacity). Container ships
accounL lor only 77 ol Lhe LoLal lndian overseas shippinq capaciLy {CR1). ln Lhe case ol coasLal vessels, bulk
carriers and ollshore vessels collecLively consLiLuLe approximaLely ^37 ol coasLal shippinq capaciLy {CR1),
while dry cargo liner (including tugs, ro-ro vessels and dredgers) constitute 37% share, followed by oil
tankers with a 10% share. The share of coastal shipping and IWT in total inland cargo transport is limited to
7% and 1%, respectively. The structural development of these transport modes could help normalize cargo
volumes transported via land and sea networks.
Twelfth Five-Year Plan (201217)
10
Workinq Croup on Shippinq & lnland WaLer 1ransporL recommended lund requiremenL ol lNR905.19 billion
lor Lhe shippinq secLor, which includinq lNR10^.99 billion as qross budqeLary supporL {CBS), lNR23.^0
billion sLaLe qovernmenL lundinq and lNR776.80 billion as privaLe invesLmenL/inLernal exLra budqeLary
resources {lLBR) lor Lhe 1wellLh FiveYear Plan 201217.
8
Global Shipping, Morgan Stanley, July 2010, via Thomson Research; GESCO: Initiating coverage, Pinc
Research, October 2008, via ISI Emerging Markets; Indian Shipping Industry, Dolat Capital, May 2008, via
ISI Emerging Markets; Projections of investment in Infrastructure during the Eleventh Plan, Secretariat for
Infrastructure, Planning Commission website, www.infrastructure.gov.in/pdf/Inv_Projection.pdf, January 2012;
Sector focus: orts anc sn||n, |nc|an |nfrastructure, June 2010, aes 388; /oout us, trafhc stat|st|cs,
projects, GMB website, www.gmbports.org, July 2010; Statistics, Ministry of Shipping website, www.shipping.
gov.in, January 2012; Major Port Statistics, Indian Ports Association website, www.ipa.nic.in, January 2012;
Ports, Ministry of Shipping website, http://www.shipping.gov.in, January 2012; Model Concession Agreement
for private sector projects in major ports, Ministry of Shipping website, www.shipping.gov.in, January 2012;
Consolidated Port Development Plan Vol 1, Ministry of Shipping website, www.shipping.gov.in, January 2012;
Private Sector Participation in Ports through Joint Ventures and Foreign Collaborations, Ministry of Shipping
website, www.shipping.gov.in, July 2010; Transportation, ABN AMRO, July 2008, via ISI Emerging Markets;
Shipping sector update, Care Research, 2008, via ISI Emerging Markets; Indian Industry: A Monthly Review,
CMIE IAS, October 2009; Indian Shipping Sector, UBS Investment Research, March 2009, via ISI Emerging
Markets; MOS FY11 annual report, Indianshipping statistics 2011, Ministry of Shipping website, http://shipping.
nic.in, 11 January 2013.
9
Review of maritime transport 2012, United Nations Conference on Trade and Development, 2012.
10
Maritime Agenda 2010-20 Launched, Press Information Bureau, Government of India, http://pib.nic.in/
newsite/erelease, 26 December 2011.
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Maritime Agenda 20102020
11
ln January 2011, Lhe MinisLry ol Shippinq {MoS) launched a perspecLive plan lor 10 years under Lhe
MariLime Aqenda 20102020. 1he aqenda envisaqes invesLmenL ol more Lhan lNR^,500 billion durinq 2010
20. Of this, 37% (INR1,650 billion) has been earmarked for the shipping sector and the rest, approximately
INR2,870, for the port sector. Of the proposed investments in ports, INR1,194 billion is expected for the
major ports and INR1,679 billion for the non-major ports.
Key ob|ecLives ol Lhe proqram:
1o increase lndian shippinq Lonnaqe by lourlold Lo ^3 million qross Lonnaqe {C1)
1o creaLe a porL capaciLy ol around 3,200 million Lonnes Lo handle Lhe expecLed Lrallc ol around 2,500
million tons
1o achieve a 57 and 107 share ol qlobal shipbuildinq and ship repair, respecLively
1o increase Lhe share ol lndian sealarers Lo aL leasL 97 by 2015
1o develop inland waLerways LransporLaLion and coasLal shippinq
1o increase Lhe Lonnaqe under Lhe lndian laq and increase Lhe share ol lndian ships in LxporL lmporL
{LXlM) Lrade
1he aqenda has idenLiled a LoLal ol 352 ma|or porL pro|ecLs wiLh consLrucLion/reconsLrucLion ol berLhs and
jetties accounting for one-third of the total projects. Sixty percent of the investment is proposed to come from
Lhe privaLe secLor. 1he aqenda also proposes seLLinq up |eLLies lor roro lerry service neLworks in Cull ol KuLch,
Cull ol Cambay and wesLern/souLhern coasLal sLaLes up Lo Kerala, which may cosL approximaLely lNR1 billion.
Draft coastal shipping policy
ln February 2011, Lhe DirecLoraLeCeneral ol Shippinq submiLLed Lhe dralL coasLal shippinq policy wiLh ^1
recommendations to promote coastal shipping in India. Some of the key recommendations are:
LxLendinq Lhe scope ol River Sea Vessels {RSVs) Lo oLher Lypes ol vessels, such as oil Lankers and oLher
specialized vessels
SeLLinq up more minor porLs alonq Lhe coasL, aL leasL one porL aL a disLance ol every 100km
Major heads of expenditure GBS
State
governments
Private
investment/
IEBR
Total
1 Ship acquisition 600 600
2 Restructuring of the
regulatory regime
5.46 5.46
3 DG (shipping) 1.50 1.50
4 Indian Maritime University
(IMU)
12.80 12.80
5 Training and welfare 8.28 8.28
6 Seafarers safety 0.30 0.30
7 Coastal shipping 28.35 12.00 123.60 163.95
8 Multimodal transport -
9 Lighthouses and lightships 7.90 7.90
10 Inland water transportation 40.40 11.40 53.20 105.00
11 Total 104.99 23.40 776.80 905.19
11
Maritime Agenda 2010-2020 launched: 165000 Crore Rupees Investment Envisaged in Shipping sector by
2020, Press Information Bureau, Government of India, http://pib.nic.in/newsite/erelease, 13 January 2011.
LxempLion ol Lax lor ship consLrucLion
Providinq subsidy lor roro |eLLies and repair |eLLies
LsLablishinq a coasLal developmenL lund lor coasLal ships
lnLroducinq lull caboLaqe wiLh a lead Lime ol six monLhs
Allowinq Lhe LransshipmenL ol carqo by loreiqn laqs
PromoLinq modal shilL lrom road and rail Lo coasLal shippinq usinq Lhe carbon crediL scheme
RecenLly COl has Laken various sLeps Lo develop lnland WaLer 1ransporL {lW1) in Lhe counLry. ln July
2012, Lhe COl consLiLuLed a commiLLee Lo scale up privaLe invesLmenL in Lhe lnland WaLerways SecLor. 1he
committee will assess the investment potential of the sector and suggest measures for scaling up private
invesLmenL. Durinq 201112, Lhe COl awarded Lhree new pro|ecLs under Lhe Public PrivaLe ParLnership
(PPP) mode with an investment of about INR79.77 billion
12
.
ln 2012, MoS has also released Lhe dralL proposinq revised charLerinq meLhodoloqy Lo increase Lransparency
and reduce lnalizaLion Lime lor shippinq arranqemenLs.
ln December 2012, Lhe COl issued noLilcaLion relaxinq Lhe caboLaqe policy lor Lhe lnLernaLional ConLainer
1ranshipmenL 1erminal aL Vallarpadam near Kochi in Kerala. 1he move will help Lo reduce LransiL Limes up Lo
7 days and also inLernaLional lreiqhL by up Lo USS300 a conLainer.
6.1.1 Industry outlook
From a long-term demand perspective, infrastructure development in developing economies is irreversible
and will conLinue Lo drive demand lor shippinq services. On Lhe supply side, Lhe revival ol qlobal lnancial
markets is expected to drive a new order, which is likely to apply considerable pressure on the already heavily
booked shipyards. Freight rates across all vessel types are likely to witness continued volatility due to the
exisLence ol a siqnilcanL leeL size eyeinq Lhe LransporLaLion ol limiLed carqo volumes.
Container cargo volumes are expected to grow exponentially, driven by the containerization of new
commodiLies. However, loreiqn ships, wiLh Lheir esLablished conLainer leeLs, are likely Lo qarner a subsLanLial
share of this market.
Indian tonnage has not been able to keep pace with the growing volume of its trade. During the various plan
periods, India has not been able to achieve the targeted tonnage levels.
Driven by Lhe COl's iniLiaLives, acquisiLions ol new vessels and Lhe lormulaLion ol an ellecLive mariLime policy,
Indias shipping industry will likely leverage growth opportunities by not only focusing on India-centric trade,
but also adopting a more global outlook to fully utilize cross-trade opportunities.
13
UnprecedenLed qrowLh in Lhe lndian marine secLor has led Lo qrowLh in Lhe demand lor Lrained prolessionals.
12
Government Forms a Committee to Scale Up PPP Mode in Inland Waterways Sector, Press Information Bureau,
Government of India , 18 July 2012.
13
Not|ces, 0|rector Cenera| of Sn||n weos|te, ntt://www.csn||n.com/csn|/hna|/not|ces, 14 January 2012.
Plan period Target
(million gross tonnage)
Achievement
(million gross tonnage)
5th plan 8.64 5.58
6th plan 7.50 6.32
7th plan 7.50 5.91
8th plan 7.00 6.92
9th plan 9.00 6.93
10th plan Not hxed 8.60
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This in turn has created the need to set up specialized maritime training institutes, implying different avenues
leadinq Lo mariLime Lraininq in lndia. 1here are 138 Lraininq insLiLuLes approved by DirecLor Ceneral ol
Shippinq. More Lhan 757 ol Lhese insLiLuLes belonq Lo Lhe privaLe secLor.
ln November 2008, Lhe lndian MariLime UniversiLy, Chennai was esLablished as a cenLral universiLy and Lhe
following seven public sector institutes were merged with:
1. NaLional MariLime Academy, Chennai
2. Lal Bahadur ShasLri {LBS) Colleqe ol Advanced MariLime SLudies and Research, Mumbai
3. Marine Lnqineerinq and Research lnsLiLuLe, KolkaLa
^. Marine Lnqineerinq and Research lnsLiLuLe, Mumbai
5. 1raininq Ship Chanakya, Navi Mumbai
6. lndian lnsLiLuLe ol PorL ManaqemenL, KolkaLa
7. National Ship Design & Research Centre, Visakhapatnam
1he MoS iniLiaLed various measures Lo develop mariLime educaLion and Lraininq wiLhin Lhe counLry:
1he lndian MariLime UniversiLy {lMU), Chennai has esLablished campuses in Chennai, KolkaLa, Mumbai and
Visakhapatnam to facilitate and promote maritime studies, research and extension work.
1he privaLe colleqes are allowed Lo oller marine educaLion and Lraininq in lndia. More Lhan 110 mariLime
training institutes operate in the private sector.
1he DirecLoraLe Ceneral ol Shippinq {DCS) has inLroduced a Common LnLrance 1esL {CL1) lor admission
lor Lhe Ceneral Purpose {CP) RaLinq presea Lraininq course wiLh ellecL lrom January 2012. 1his would help
achieve better training standards to match international standards.
MosL ol Lhe shippinq companies in lndia have implemenLed Lhe lnLernaLional SaleLy ManaqemenL {lSM)
Code. They have to navigate in international territories, and it would be impossible to sail their ships without
implemenLaLion ol Lhe lSM Code.
1he COl inLroduced Lhe MerchanL Shippinq {AmendmenL) Bill, 200^, which laciliLaLed Lhe implemenLaLion ol
Lhe lnLernaLional Ship and PorL SecuriLy {lSPS) Code. 1he MerchanL Shippinq AcL, 1958, had Lo be amended
to incorporate provisions relating to security measures to be adopted by ships and ports. These provisions
include Lhe inLernaLional ship securiLy cerLilcaLe, Lhe ship idenLilcaLion number, conLrol measures and
compliance. ISPS facilitates an international framework through which ship and port facilities can cooperate
to detect and deter acts, which threaten security in the maritime transport sector.
ln lndia, Lhe lSPS Code covers all ma|or porLs, nonma|or porLs and ships caLerinq Lo inLernaLional Lrade.
lndia, alonq wiLh Sinqapore, is amonq Lhe lrsL lew counLries Lo have compleLed Lhe implemenLaLion ol Lhe
ISPS Code.
ln July 2010, Lhe COl announced iLs plans Lo insLall radiaLion moniLorinq porLals {RMPs) in all ma|or lndian
ports by 2012. Currently, Customs, which is empowered to check import-export cargo, visually examines
imporLed sLeel |unk. However, RMPs will only help prevenL Lhe smuqqlinq ol radioacLive hazardous maLerial.
ln May 2010, Lhe MoS approved Lhe esLablishmenL ol Lhe lndian MariLime CasualLy lnvesLiqaLion Cell, in
view ol recenL qrowLh in marine Lrallc, which resulLed in a risinq incidence ol shippinq causaliLies and
the consequent loss of lives and ships as well as marine pollution. The cell will be in line with the Code of
lnLernaLional SLandards and Recommended PracLices lor SaleLy lnvesLiqaLions inLo Marine CasualLies or
Marine lncidenL, which Lhe lnLernaLional MariLime OrqanizaLion had implemenLed lrom 1 January 2010.
Crew members must hold the necessary license to work on a ship. The license is valid only for a few years and
would require renewal after that. In general, the safety rules are robust and strict.
1here are special requlaLions under Lhe UniLed NaLions Lconomic Proqram {UNLP) mandaLinq Lhe coasLal
states ensure adequate charts and maps to guarantee safe navigation. Other regulations are:
lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS) requlaLions
Marine PolluLion RequlaLions {MARPOL)
1he porLs in lndia are yeL Lo levy Lerminal securiLy charqes on Lhe shippinq lines as required by SOLAS,
although this has already come into force in Europe. Shipping lines have, therefore, already started passing
on Lhe charqes paid by Lhem Lo porLs/Lerminals in Lurope Lo lndian imporLers, while collecLinq Lhe lreiqhL.
1he MerchanL Shippinq AmendmenL AcL, 2003, has been passed. 1he AcL aims Lo brinq laws relaLinq Lo
safety of shipping, pollution control and liability limitation at par with international conventions and protocols
that have been signed by India.
1o prevenL oil spills aL lndian porLs, Lhe lndian CoasL Cuard has direcLed all Lhe porLs Lo prepare local oil spill
disasLer conLinqency plans. Many porLs are provided wiLh Lier1 polluLion response equipmenL. 1ankers LhaL
are more than 25 years old are not allowed to enter the ports
14
.
ln AuqusL 2012, Lhe NaLional AuLomaLed ldenLilcaLion SysLem {AlS) was seL up lor an esLimaLed cosL ol
INR1.32 billion, to provide a network to track vessels up to a distance of 50 kilometers from the coast.
In July 2011, the Indian Cabinet gave its approval for accession to the 1997 Protocol adding Annex VI
(Regulations for the Prevention of Air Pollution) to the Convention for the Prevention of Pollution from Ships
1973/78 {MARPOL 73/78) ol Lhe lnLernaLional MariLime OrqanizaLion {lMO). 1his annex limiLs seLs Lhe
sulphur conLenL ol luel oil Lo ^.57 m/m. lndia is a parLy Lo MARPOL 73/78 and has already raLiled Annexes l
to V
15
.
6.3 Registration
Every Indian ship exceeding 15 tons net weight and not solely employed for navigation along the coasts of
lndia is required Lo be reqisLered under Lhe lndian MerchanL Shippinq AcL, 1958.
Ships owned by the following are considered to be Indian ships:
A ciLizen ol lndia
A company or a body esLablished by, or under, any cenLral or sLaLe acL LhaL has iLs principal place ol
business in India
A cooperaLive socieLy LhaL is reqisLered, or deemed Lo be reqisLered, under Lhe lndian CooperaLive
Societies Act, 1912, or any other law relating to cooperative societies currently in force in any state
RecenLly, Lhe COl enacLed Lhe MerchanL Shippinq {requlaLion ol enLry ol ships inLo porLs, anchoraqes and
ollshore laciliLies) Rules, 2012. 1hese rules are applicable Lo loreiqnreqisLered vessels wiLh Lhe CR1 ol 300
tonnes or more. The rule mandates foreign-registered vessels entering Indian ports to hold third-party liability
cover against maritime claims, such as wreck removal and oil pollution
16
.
ln 2009, Lhe DC Shippinq exLended Lhe validiLy ol provisional reqisLraLion ol deep sea lshinq vessels lrom six
months to one year. These vessels are still required to undergo annual inspection every year. Fishing vessels
LhaL are more Lhan 20 meLers in lenqLh are also required Lo comply wiLh MerchanL Shippinq {lndian lshinq
boat inspection) Rules, 1988.
ln AuqusL 2008, Lhe DC Shippinq issued new quidelines LhaL provided exempLions under Lhe MerchanL
Shippinq AcL lor Lhe consLrucLion, survey, cerLilcaLion and operaLion ol riversea vessels. 1he new requlaLion
14
Measures Being Taken for Prevention of Oil Spills, Press Information Bureau, Government of India, http://pib.
nic.in/newsite/erelease, 7 December 2010.

15
Accession to the 1997 Protocol adding Annex VI (Regulations for the Prevention of Air Pollution) to the
Convention for the Prevention of Pollution from Ships 1973/78 (MARPOL 73/78) of the IMO, Press Information
Bureau, Government of India, http://pib.nic.in/newsite/erelease, 21 July 2011.

16
Sn||n not|ces, 0C Sn||n weos|te, ntt://www.csn||n.com/csn|/hna|/not|ces, 11 January 2013
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exempts ships, other than passenger ships, oil tankers and offshore support vessels, from operating on
the Indian coast within the countrys territorial waters. The key objectives of the legislation are to provide
sLandards ol consLrucLion, sale operaLion and cerLilcaLion rules lor riversea vessels plyinq on lndia's coasL
and facilitate the safe integration of seaborne trade from inland waters to coastal waters and vice versa.
Under Lhe new rules, a vessel will be builL, reqisLered and cerLiled and will carry a Lype noLaLion lor Lhe
service for which it is intended.
A ship can be reqisLered in KolkaLa, Madras, Mumbai or any oLher auLhorized porL. An applicaLion lor
reqisLraLion has Lo be submiLLed Lo Lhe Principal Ollcer {Lhe ReqisLrar) ol Lhe MercanLile Marine DeparLmenL
of the aforementioned port. The Registrar arranges for the ship to be surveyed by a surveyor to determine
tonnage and any other particulars relating to the identity of the ship as may be prescribed. The Registrar also
arranges for the ship to be marked permanently and visibly to its satisfaction. The person who wishes to be
registered as the owner of the ship is required to draw up a declaration of ownership in the prescribed form,
with particulars, such as when and where the ship was built. Once the requirements for the registry have
been completed, the particulars of the ship, such as the name of the ship and the port to which it belongs, are
noted by the Registrar in the permanent records, and on completion of these formalities, the Registrar issues
a cerLilcaLe ol reqisLraLion.
1here are no provisions lor parallel reqisLraLion in Lhe MerchanL Shippinq AcL, 1958. 1here is a provision lor
single registration only.
.3.4 Requirements fcr cfhcers and crew servin cn vesseIs
1he MerchanL Shippinq AcL, 1958, conLains provisions relevanL lor requiremenLs lor Lhe ollcers and crew
serving on vessels registered in India.
1he rules and requlaLions ol Lhe lMO are adhered Lo in Lhis respecL.
6.3.6 Special requirements or rules relating to registration
There are no special requirements or rules regarding registration.
Indonesia
1. Tax
In Indonesia, a value added tax (VAT) exemption is applicable to:
lmporLaLion and local procuremenL ol ocean vessels, river LransporL vessels, lake vessels and lerries,
piloL boaLs, LuqboaLs, lshinq vessels, barqes and spare parLs, as well as naviqaLional saleLy equipmenL or
human saleLy equipmenL by naLional commercial shippinq companies or naLional lshinq companies lor
operational activities
Services received by naLional commercial shippinq companies, naLional lshinq companies, naLional
seaport operators or national river, lake crossing and ferry operators, covering vessel charter, port
services, tugboat services, piloting, berthing and anchoring services and vessel maintenance or docking
services
There are no tax facilities for seafarers.
1.3 Tax treaties
1he lndonesian qovernmenL has raLiled Lax LreaLies wiLh Lhe lollowinq 65 counLries:
Algeria, Australia, Austria, Bangladesh, Belgium, Brunei Darussalam, Bulgaria, Canada, China, Croatia *,
Czech Republic, Denmark, Egypt, Finland, France, Germany, Hong Kong, Hungary, India, Italy, Iran, Japan,
Jordan, Kuwait, Luxembourg, Malaysia, Morocco, Mexico, Mongolia, Netherlands, New Zealand, North
Korea, Norway, Pakistan, Papua New Guinea *, Philippines, Poland, Portugal, Qatar, Romania, Russian
Federation, Seychelles, Singapore, Slovak Republic, South Africa, South Korea (ROK), Spain, Sri Lanka,
Sudan, Suriname *, Sweden, Switzerland, Syria, Taiwan (ROC), Thailand, Tunisia, Turkey, Ukraine, United
Arab, Emirates, United Kingdom, United States of America, Uzbekistan, Venezuela, Vietnam, Zimbabwe *.
* 1ne tax treaty |s suoject to excnane of rat|hcat|on cocuments oy ootn overnments.
Some tax treaties provide relief on income of non-Indonesian shipping companies from shipping operations in
inLernaLional Lrallc.
In addition to the above treaties, Indonesia has entered into agreements for the reciprocal exemption of taxes
and duLies on air LransporL wiLh Banqladesh, CroaLia, Laos, Morocco, Saudi Arabia and SouLh Alrica.
1.4 Freight taxes
No freight taxes apply in Indonesia.
1he reqisLraLion ol vessels in lndonesia does noL enLail any special Lax benelLs lor Lhe shipowner.
None.
2. Human capital
In general, national labor law provides comments on several employment issues, such as:
Ceneral provisions
Basis, principle and ob|ecLive
Lqual opporLuniLy and LreaLmenL
Manpower planninq and inlormaLion
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VocaLional Lraininq
Manpower placemenL
Lxpansion ol |ob opporLuniLy
AssiqnmenL ol expaLriaLes
Workinq relaLions
ProLecLion, waqe and wellare
lndusLrial relaLions
DisconLinuaLion ol workinq relaLions
FosLerinq
Criminal provisions and adminisLraLive sancLions
1he labor law was released on 25 March 2003 and revoked Lhe previous laws. 1he law is broadly applicable Lo
all employment affairs in Indonesia, including crew members, in the shipping industry.
In general, minimum wages are regulated and adapted on a routine basis by the provincial government.
Collective labor agreements between seafarers and entrepreneurs are reviewed on an annual basis. The
aqreemenLs musL be reporLed Lo Lhe MinisLry ol Manpower and 1ransmiqraLion and harbor masLers.
Registration of local employees in the employee social security insurance program is mandatory for
employers.
2. Mannin issues with Byin the !ndcnesian Ba
1here is a limiLaLion on employinq loreiqn sealarers lor vessels lyinq Lhe lndonesian laq, and cerLain
positions are reserved for local employees only.
The most commonly used legal structures for the operation of shipping activities are a limited liability
company and a branch ol a loreiqn shippinq company {permanenL esLablishmenL). Specilc loreiqn
ownership is requlaLed. ln accordance wiLh PresidenLial RequlaLion No. 36/2010 reqardinq Lhe lisL ol business
lelds closed Lo capiLal invesLmenL and Lhose LhaL are open buL sub|ecL Lo requiremenLs, Lhe limiL lor loreiqn
ownership in a shipping service is 49% maximum.
1he corporaLe income Lax ol a shippinq company is calculaLed based on an esLimaLed prolL. 1he corporaLe
income tax payable by a domestic shipping company (i.e., a company established under Indonesian law)
is 1.27 ol Lhe company's qross income. Cross income is delned as income received/earned by a domesLic
shipping company from transportation of passengers or cargo from one port to another port in Indonesia
or from one port in Indonesia to another port outside Indonesia and vice versa. The corporate income tax
payable by a permanent establishment of a foreign shipping company is 2.64% of its gross income. The
qross income is delned as income received/earned by a loreiqn shippinq company lrom LransporLaLion ol
passengers or cargo from one port to another port in Indonesia or from one port in Indonesia to another port
overseas. The effective tax rate is likely to change, affected by the reduction of corporate tax rate introduced
under Lhe 2008 amendmenL ol Lhe lncome 1ax Law. AlLhouqh Lhe ellecLive Lax raLe is likely Lo chanqe as a
resulL ol Lhe reducLion ol Lhe corporaLe Lax raLe, no Lax requlaLion has been issued Lo conlrm Lhis.
ProlL disLribuLions in Lhe lorm ol dividends Lo corporaLe shareholders domiciled in lndonesia may be exempL
from tax provided that the dividends are paid out of retained earnings and the company receiving the
dividends holds at least 25% of the shares of the company paying the dividend. No withholding tax applies
Lo LaxexempL dividends. ll Lhe condiLions are noL saLisled, Lhe dividends are Laxable in Lhe hands ol Lhe
corporate shareholders and the company paying dividends is required to deduct withholding tax at a rate
of 15%, which represents prepaid tax of the shareholders. Dividend distributed to an individual resident
shareholder is subject to income tax at a rate to be determined by a government regulation with a maximum
raLe ol 107. 1he currenLly prevailinq Lax raLe is 107. 1his Lax is lnal in naLure.
If the shareholders are nonresidents (either individual or corporate shareholders), the applicable withholding tax
rate is 20% or a reduced rate, depending on the relevant double tax treaty, provided that the shareholder is the
benelcial owner ol Lhe dividend income and a cerLilcaLe ol Lax residence ol Lhe loreiqn shareholder is provided.
Net income after tax of a permanent establishment is, in general, subject to 20% withholding tax (branch
prolL Lax). For shippinq indusLries, Lhis is included in Lhe 2.6^7 income Lax as menLioned in secLion 3.1.
No subsidies exist.
1he invesLmenL incenLives lor shippinq companies and/or Lhe shipbuildinq indusLry esLablished under Lhe
recommendation of the Foreign Investment Coordination Board are as follows:
LxempLion/reliel lrom imporL duLy and levies:
On Lhe imporLaLion ol capiLal qoods, e.q., machinery, equipmenL, spare parLs and auxiliary componenLs
On Lhe imporLaLion ol raw maLerials lor Lhe purpose ol Lwo years' lull producLion
LxempLion lrom Lhe Lransler ol ownership lee lor ship reqisLraLion {deed/cerLilcaLe) made lor Lhe lrsL
time in Indonesia
Income tax allowance incentives are granted to companies engaging in certain business sectors or regions.
The tax incentives include:
AcceleraLed depreciaLion and amorLizaLion
Carrylorward ol a Lax loss lor a period ol 10 years, sub|ecL Lo cerLain condiLions
Reduced dividend wiLhholdinq Lax ol 107 on dividends paid ollshore or a lower Lax raLe prescribed by an
applicable tax treaty
lnvesLmenL allowance in Lhe lorm ol a neL income reducLion by 307 ol Lhe amounL ol capiLal invesLed in
land and buildings and in plant and equipment, to be claimed at a rate of 5% each year over a six-year
period
To qualify for the above tax incentives, the investment must be a new investment or an investment for
Lhe purpose ol expandinq a currenL business. CovernmenL RequlaLion No. 52/2011 sLaLes LhaL Lhe Lax
facilities can only be utilizied after the taxpaying entity has realized at least 80% of its investment plan. This
provision is only applicable Lo eliqible new invesLmenL alLer Lhe enacLmenL ol CovernmenL RequlaLion No.
52/2011. Companies exisLinq aL Lhe Lime Lhe requlaLion was issued may sLill apply, sub|ecL Lo saLislacLion ol
requirements.
1axpayers LhaL have obLained invesLmenL approval prior Lo Lhe enacLmenL ol CovernmenL RequlaLion No.
52/2011 are eliqible lor Lhe above Lax incenLives il Lhey meeL Lhe lollowinq criLeria:
Have a new invesLmenL plan ol a minimum ol lDR1 Lrillion
Have noL enLered inLo commercial producLion by Lhe daLe ol ellecL ol CovernmenL RequlaLion No. 52/2011
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Under CovernmenL RequlaLion No. 52/2011, Lhere are 52 caLeqories ol business secLors and 77 Lypes
of investment, in particular sectors and regions that may qualify for the incentives. This includes the
manufacturing or assembling of certain types of ships and boats, as well as repair and maintenance of certain
types of vessels.
For a six-year period that begins with the granting of the tax incentives, certain restrictions apply to the use
and Lransler ol lxed asseLs Lo which Lhe incenLives had been applied. 1he incenLives can be revoked il Lhese
rules are violated. Implementation of government regulation is evaluated within two years from the date on
which the approval is granted. A monitoring team will be established for this purpose.
No such incentives exist.
4.4 !ssues with Byin the !ndcnesian Ba
Foreiqnlaqqed vessels are permiLLed Lo operaLe in inLernaLional Lrallc services. DomesLic Lrallc is allowed lor
naLional leeLs {lndonesianlaqqed vessels), which can be carried ouL by lndonesian shippinq companies only.
CovernmenL RequlaLion No. 20/2010 reqardinq qoods LransporLaLion, which was amended by CovernmenL
RequlaLion No. 22/2011 reqardinq waLer LransporLaLion, sLaLes LhaL a loreiqnlaqqed vessel is sLill allowed
Lo carry ouL acLiviLies LhaL do noL include passenqer and/or qoods LransporL acLiviLies in Lhe domesLic sea
lreiqhL acLiviLies in lndonesia waLers on Lhe condiLion LhaL an lndonesianlaqqed vessel is noL available or has
noL sullcienL availabiliLy. Based on MinisLry ol 1ransporLaLion RequlaLion No. ^8/2011 {Lhe implemenLaLion
ol CovernmenL RequlaLion No.22/2011), loreiqnlaqqed vessels LhaL will perlorm acLiviLies as menLioned
above musL have permission lrom Lhe MinisLry ol 1ransporLaLion. AddiLionally, Lhe operaLion ol Lhe loreiqn
laqqed vessel musL be perlormed by an lndonesian naval/shippinq company. PermiLs lor Lhe use ol loreiqn
laqqed vessels are provided lor a maximum period ol Lhree monLhs and can be exLended alLer evaluaLion.
1he lollowinq are Lhe acLiviLies lor which Lhe use ol loreiqnlaqqed vessels is allowed {based on ALLachmenL
Number ll ol MinisLry ol 1ransporLaLion RequlaLion Number ^8 Year 2011):
Oil and qas survey {unLil December 201^)
Seismic survey
Ceophysics survey
CeoLechnical survey
Drillinq {unLil December 2015)
Jack up riq
Semisubmersible riq
DeepwaLer drill ship
1ender assisL riq
Swamp barqe riq
Ollshore consLrucLion
Derrick/crane, pipe/cable/subsea umbilical riser lexible {SURF) layinq barqe/vessel {unLil December
2013)
Divinq supporL vessel {expired December 2012)
Ollshore operaLions supporL {expired December 2012)
Anchor handlinq Luq supply vessel more Lhan 5000 bhp wiLh dynamic posiLion {DP2/DP3)
PlaLlorm supply vessel
Divinq supporL vessel
Dredqinq {unLil December 2013)
Draqhead sucLion hopper dredqer
1railinq sucLion hopper dredqer
Salvaqe and underwaLer works {unLil December 2013)
Heavy loaLinq crane
Heavy crane barqe
Survey salvaqe
No subsidies exist, nor are any likely to appear in the near future.
5.1 Infrastructure
5.1.1 Major ports
Islands Provinces Ports
Irian Jaya Irian Jaya Jayapura
Java Central Java Tanjung Emas, Semarang
Tanjung Intan, Cilacap
East Java Tanjung Perak
Tanjung Wangi, Banyuwangi
(Ketapang)
Jakarta Tanjung Priok
West Java Anyer
Cigading
Kalimantan East Kalimantan Balikpapan
Bontang
Samarinda
Tanjung Bara
South Kalimantan Banjarmasin
West Kalimantan Pontianak
Sulawesi North Sulawesi Bitung
South Sulawesi Soekarno Hatta
Sumatra Aceh Lhokseumawe
Bengkulu Bengkulu
Jambi Jambi
Lampung Panjang
North Sumatra Belawan
Riau Kijang
Sekupang
Yos Sudarso
South Sumatra Palembang
West Sumatra Teluk Bayau
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The following port facilities are available:
Dockinq
SLoraqe
Provision supporL {loqisLics)
MariLime educaLion is provided by:
Colleqe ol MariLime Science {Sekolah 1inqqi llmu Pelayaran), previously MariLime LxperLs LducaLion and
1raininq {Pendidikan Dan LaLihan ahli Pelayaran), in JakarLa
PolyLechnic ol MariLime Science {PoliLeknik llmu Pelayaran), previously MariLime LducaLion and 1raininq
School {Balai Pendidikan Dan LaLihan Pelayaran), in Semaranq and U|unq Pandanq
1hese schools are adminisLered under Lhe educaLion and Lraininq division ol Lhe MinisLry ol 1ransporLaLion.
Compliance wiLh Lhe requiremenLs ol Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code by shippinq
companies is required in Indonesia. The Indonesian government will issue two documents for shipping
companies LhaL comply wiLh Lhe lSM Code, namely Lhe documenL ol compliance {DOC) and Lhe saleLy
manaqemenL cerLilcaLe {SMC). 1hese documenLs will be issued alLer Lhe shippinq companies pass an audiL
performed by the appropriate authority.
Industry safety rules concerning manning are considered by some in the industry as less strict in Indonesia
Islands Provinces International airports Nearest ports
Irian Jaya Irian Jaya Sentani Jayapura
Java East Java Juanda Tanjung Perak
Jakarta Soekarno Hatta Tanjung Priok
Kalimantan East Kalimantan Sepinggan Balikpapan
South Kalimantan Syamsudin Noor Banjarmasin
West Kalimantan Supadio Pontianak
Sulawesi South Sulawesi Hasanudin Ujung Pandang
Sumatra North Sumatra Polonia Belawan
Riau Hang Nadim Batam
South Sumatra Sultan M. Badaruddin II Palembang
West Sumatra Tabing Padang
than in other countries.
ArLicles 35, 36, 65 and 66 ol CovernmenL RequlaLion No. 21/1992, which qovern Lhe mariLime indusLry,
requlaLe saleLy and Lhe environmenL in Lhe area ol shippinq. CovernmenL RequlaLion No. 21/2010 is Lhe new
regulation regarding maritime environment safety; it does not automatically cancel the previous regulation as
long as the previous regulation is not contradicted by the new regulation.
5.3 Registration
1he reqisLraLion requiremenLs lor a ship Lo ly Lhe lndonesian laq are as lollows:
1he ships musL have a qross Lonnaqe ol aL leasL seven qross Lons {C1).
1he ships musL be owned by an lndonesian ciLizen or a corporaLion esLablished in lndonesia and under
Indonesian law.
1he ships musL be owned by an lndonesian leqal enLiLy in Lhe lorm ol a |oinL venLure company wiLh shares,
the majority of which are owned by an Indonesian citizen.
Ownership can be reqisLered aL Lhe head ollce ol Lhe DirecLoraLe Ceneral ol Sea 1ransporLaLion, supporLed
by the following documents:
CerLilcaLe ol ownership
Lvidence ol owner's idenLiLy
Ship measuremenL cerLilcaLe
Lvidence ol Lransler duLy paymenL
DereqisLraLion or cancelaLion leLLer lor ships reqisLered in oLher counLries
Parallel registration is possible. There are no special rules regarding parallel registration.
Ollcers and crew servinq on vessels are required Lo have cerLain sealarer cerLilcaLes lrom Lhe relevanL
authorities (harbor master or port administration).
Indonesia follows international conventions for shipping registration.
Information is not available.
5.4 Consequent implementation of cabotage and imposition regulations with respect
to the national shipping industry (Presidential Instruction Republic of Indonesia
[Inpres] No. 5, dated 28 March 2005)
5.4.1 Trade
lnLerseaporL LransporL ol qoods/lreiqhL in lndonesia musL be carried ouL by lndonesianlaqqed vessels ol
national shipping companies.
5.4.2 Finance
1ax:
The existing tax facilities provided to the national shipping industry will likely be improved, and penalties
are expected to be imposed on national shipping companies that have already received incentives but are
making investments in other sectors.
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Finance insLiLuLions:
SupporL will likely be provided Lo naLional bankinq insLiLuLions and oLher nonbank lnance insLiLuLions,
and proper funding schemes are anticipated to be set up for the national shipping industry.
lnsurance:
Lach vessel, includinq Lhe people and qoods/lreiqhL, should be lully insured.
5.4.3 Communication
Sea LransporLaLion:
The existing system is expected to be improved in all aspects.
PorL:
Indonesia will likely improve and develop the existing structure and infrastructure to achieve an optimal
service level for the port and facilities.
5.4.4 Industry
The Indonesian shipping industry is expected to develop and continue to improve.
5.4.5 Energy and mineral resources
The availability of fuel for the operation of vessels is likely to be guaranteed.
5.4.6 Education and training
The development of educational and training centers is an issue that receives a lot of attention.
Ireland
1. Tax
Tonnage tax regime
Introduction
lreland received lormal approval lor iLs Lonnaqe Lax reqime lrom Lhe Luropean Union {LU) in December
2002. As a result, effective 1 January 2003, qualifying companies involved in international shipping activities
have the option to remain subject to the normal tax regime in Ireland (see paragraph titled Corporation tax
qeneral" below), i.e., corporaLion Lax ol 12.57 on Laxable prolLs, or Lhey may elecL Lo be Laxed under Lhe
new tonnage tax regime.
A qualifying company is a company that is subject to Irish corporation tax, operates qualifying ships and
carries on the strategic and commercial management of those ships in Ireland.
Irish-resident shipping companies that are shipowners, charterers or ship managers in receipt of relevant
shipping income can qualify for the regime. Shipping companies electing into the regime are not assessed
lor Lax on Lheir shippinq prolLs buL insLead on "noLional" prolL based on Lhe neL Lonnaqe ol Lhe owned/
charLered vessels operaLed by Lhe company. 1he Lonnaqe Lax reqime only applies Lo prolLs lrom qualilyinq
shipping activities.
Relevant shipping income
Relevant shipping income means a companys income from:
1he carriaqe ol passenqers by sea in a qualilyinq ship operaLed by Lhe company
1he carriaqe ol carqo by sea in a qualilyinq ship operaLed by Lhe company
1owaqe, salvaqe or oLher marine assisLance by a qualilyinq ship operaLed by Lhe company, excludinq
income from any such work undertaken in a port or an area under the jurisdiction of a port authority
1ransporL in connecLion wiLh oLher services ol a kind necessarily provided aL sea by a qualilyinq ship
operated by the company
1he provision on board a qualilyinq ship operaLed by Lhe company ol qoods or services ancillary Lo Lhe
carriage of passengers or cargo, but only to the extent that such goods or services are provided for
consumption on board the qualifying ship
1he qranLinq ol riqhLs by virLue ol which anoLher person provides or will provide such ancillary services on
board a qualifying ship operated by the company
OLher shiprelaLed acLiviLies LhaL are a necessary and inLeqral parL ol Lhe business ol operaLinq Lhe
companys qualifying ships
1he charLer ol a qualilyinq ship lor use lor Lhe carriaqe by sea ol passenqers and carqo where Lhe
operation of the ship and the crew of the ship remain under the direction and control of the company
1he provision ol ship manaqemenL services lor qualilyinq ships operaLed by Lhe company
CerLain dividends lrom overseas qualilyinq companies
Foreiqn currency qains relaLed Lo Lhe Lonnaqe Lax Lrade
Cenerally, invesLmenL income is noL LreaLed as relevanL shippinq income.
Followinq submissions lrom LrnsL & Younq, Lhe lrish Revenue, in iLs 1ax Brielnq 1B 65 daLed December
2006, provided clarilcaLion as Lo wheLher income lrom Lhe lollowinq specilc acLiviLies can be included as
relevant shipping income:
Forward lreiqhL aqreemenLs {FFAs) lncome lrom FFAs may be included il Lhe aqreemenLs are used lor
hedqinq purposes only {i.e., Lo hedqe aqainsL raLe lucLuaLions in Lhe company's Lonnaqe Lax Lrade, raLher
than speculative purposes) and if the agreements relate at all times to contracts undertaken by the
company using its own qualifying ships or qualifying ships that have been chartered in.
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ConLracLs ol allreiqhLmenL {COAs) lncome lrom COAs may be included provided Lhe company uses
its own qualifying ships or qualifying ships that have been chartered in, and that vessels of an excluded
kind are excluded under tonnage tax arrangements.
Foreiqn currency qains As noLed above, loreiqn currency qains relaLed Lo Lhe Lonnaqe Lax Lrade may be
included. However, income from interest rate swaps does not qualify.
Qualifying ship
A qualilyinq ship is a sellpropelled, seaqoinq vessel ol 100 Lons or more qross Lonnaqe, which is cerLilcaLed
for navigation at sea by the competent authority of any country or territory.
CerLain vessels, such as lshinq vessels, harbor lerries, ollshore insLallaLions, dredqers and sporL/recreaLional
vessels, are excluded from being a qualifying ship.
Ca|cu|at|on of tonnae tax rohts
NoLional prolL is calculaLed as lollows:
Net tonnage of each vessel is broken down into 100 ton increments and the following daily rates are applied
to each increment:
Sample calculation for a 19,500 net ton vessel:
DeducLions are noL available lrom Lhese lxed amounLs lor normal Lrade deducLions, e.q., expenses or capiLal
allowances.
Exemption from capital gains tax
Reliel is provided lrom capiLal qains Lax {CC1) on Lhe disposal ol asseLs used lor a conLinuous period ol aL
least one year for the purpose of tonnage tax activities. Apportionments are made where the assets were not
used throughout the entire period of ownership in the tonnage tax activity or where they are partly used for a
tonnage tax activity and partly for a non-tonnage tax activity.
Transfer pricing
There are transfer pricing provisions to ensure that transactions between a company within the tonnage
tax regime and related companies are at arms length. In addition, where a company carries on tonnage tax
activities and other activities, arms length rules apply to ensure that a disproportionate amount of expense is
not allocated to the other activities.
Total net tonnage Daily rate ()
First 1,000 net tons t1.00
Between 1,000 net tons and 10,000 net tons t0.75
Between 10,000 net tons and 25,000 net tons t0.50
Above 25,000 net tons t0.25
1hese Laxes would be subsumed inLo CenLral
CS1 {CCS1).
These taxes would be subsumed into
SLaLe CS1 {SCS1).
1,000 net tons: 1000/100 = 10 x 1.00 x 365 = 3,650.00
9,000 neL Lons: 9000/100 = 90 x t0.75 x 365 = 24,637.50
9,500 neL Lons: 9500/100 = 95 x t0.50 x 365 = 17,337.50
AnnuaI taxabIe tcnnae prcht 60.25 645,25.00
The Irish corporation tax rate of 12.5% is applied to
calculate the tax bill for the vessel
t5,703.12
Election into tonnage tax regime
ln order Lo benelL lrom Lhe Lonnaqe Lax reqime, an elecLion musL be made Lo Lhe lrish Revenue. An elecLion
may be made if a company becomes a qualifying company where it had not previously been a qualifying
company. The election must be made within 36 months of the company becoming a qualifying company. A
tonnage tax election shall take effect from the beginning of the accounting period in which it is made.
If one qualifying company in a group makes an election to enter the tonnage tax regime, all qualifying
companies within that group must also enter the regime.
Once an election is made to enter the tonnage tax regime, it remains in force for 10 years. If a company
opts out of the tonnage tax regime before the expiry of the 10-year period, it cannot re-enter the tonnage
Lax reqime lor a period ol 10 years. A clawback ol CC1 reliel obLained on Lhe sale ol a vessel may also occur
where the company ceases to be a tonnage tax company.
Summary ol Lhe benelLs ol Lhe Lonnaqe Lax reqime:
ALLracLive corporaLion Lax raLe ol 12.57
A wide ranqe ol income qualiles.
LxempLion lrom CC1 on Lhe sale ol vessels and oLher charqeable asseLs used lor Lonnaqe Lax acLiviLies
Ship manaqemenL companies qualily, i.e., no ownership requiremenL
Shipowners and charLerers qualily
1here are no resLricLions on leasinq/lnancinq Lo an lrish Lonnaqe Lax company.
No Lraininq requiremenLs
No vessel reqisLraLion requiremenL
LlecLion inLo Lhe reqime secures Lonnaqe Lax benelLs lor a period ol 10 years and qualilyinq companies
can reelecL Lo ensure LhaL benelLs conLinue lor a lurLher 10 years lollowinq Lhe expiry ol Lhe previous
period.
Finance Act 2006 changes
A number ol amendmenLs were inLroduced as a resulL ol Lhe Finance AcL 2006. 1he mosL siqnilcanL
chanqe was Lhe proposed removal ol Lhe requiremenL LhaL noL more Lhan 757 ol leeL Lonnaqe be charLered
in. However, Lhis proposal was sub|ecL Lo a commencemenL order by Lhe MinisLer lor Finance. Such a
commencement order has not been introduced and, as such, the proposed new rule has not been adopted
inLo lrish leqislaLion. 1herelore, Lhe requiremenL remains LhaL noL more Lhan 757 ol leeL Lonnaqe be
chartered-in.
In order to enter the tonnage tax regime, forms prescribed by the Irish Revenue are required to be completed
and the following information must be included with any tonnage tax election:
DocumenLaLion on leqal sLaLus, memorandum and arLicles ol associaLion and cerLilcaLe ol incorporaLion
of the company
Business plans or similar documenLs ol Lhe company
1he name and address ol each ol Lhe direcLors ol Lhe company
1he name and address ol each ol Lhe benelcial shareholders ol Lhe company and Lhe number and class ol
shares held by each
DeLails ol Lhe qualilyinq ships owned or leased by Lhe company
ParLiculars ol how Lhe sLraLeqic and commercial manaqemenL ol Lhe qualilyinq ships is carried on by Lhe
company in Ireland
ln Lhe case ol a qroup elecLion, parLiculars ol all Lhe companies in Lhe qroup, Lheir respecLive
shareholdinqs, and Lhe low ol lunds beLween all ol Lhe companies in Lhe qroup
Finance Act 2012 changes
The Finance Act 2012 has not introduced any changes to the existing Irish tonnage tax regime.
CorporaLion Lax qeneral
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Those companies that do not opt into the tonnage tax regime are subject to the normal corporation tax
regime in Ireland.
1he Lax raLe applicable Lo Lradinq prolLs is 12.57. NonLradinq income, e.q., invesLmenL income, is sub|ecL Lo
Irish corporation tax at a rate of 25%.
lreland can be an aLLracLive locaLion lrom which Lo lnance Lhe acquisiLion ol vessels. ll sLrucLured properly,
Lhe lnance company can obLain capiLal allowances on Lhe ship and a Lax deducLion lor inLeresL on any
borrowinqs. FurLher, Lhe prolLs ol Lhe lnance company, assuminq iL is carryinq on a Lrade, are sub|ecL Lo
corporaLion Lax aL 12.57. 1hese benelLs can siqnilcanLly reduce Lhe overall cosL ol lnancinq.
Value added tax
1he supply, modilcaLion, repair, mainLenance and hirinq ol seaqoinq vessels ol a qross Lonnaqe ol more Lhan
15 tons, that is, vessels used or to be used for the carriage of passengers for reward, the purposes of a sea
lshinq business, commercial or indusLrial purposes and rescue or assisLance aL sea are zeroraLed lor value
added tax (VAT) purposes.
Since 1 January 2010, the place of supply of leasing services by an Irish lessor to a non-Irish business
customer is where the customer is established.
Stamp duty
Instruments for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise,
of any ship or any part, interest, share or property of, or in any ship or vessel, are exempt from stamp duty.
1.2 Tax relief for seafarers
A sealarer reliel ol t6,350 is available Lo individuals aqainsL Lheir sealarinq income. 1o obLain Lhis reliel, Lhe
seafarer must be at sea on a voyage on a seagoing ship to or from a foreign port for at least 161 days in any
particular tax year.
A seaqoinq ship means a ship LhaL is reqisLered in an LU Member SLaLe and is used solely lor Lhe Lrade ol
carryinq passenqers or carqo by sea lor reward. A mobile or lxed insLallaLion in loreiqn waLers may be
treated as a foreign port for this purpose.
Wage costs are tax-deductible for the employer.
1.3 Tax treaties
Ireland has an extensive network of 64 tax treaties, most of which are based on the Organization for
Economic Cooperation and Development (OECD) model treaty for the avoidance of double taxation.
Ireland has a tax treaty with the following countries:
Albania, Armenia, Australia, Austria, Bahrain, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria,
Canada, Chile, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia,
Germany, Greece, Hong Kong, Hungary, Iceland, India, Israel, Italy, Japan, Korea (ROK), Kuwait, Latvia,
Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldova, Montenegro, Netherlands, New
Zealand, Norway, Pakistan, Panama, Poland, Portugal, Romania, Russian Federation , Saudi Arabia,
Serbia, Singapore, Slovak, Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, United
Arab Emirates, United Kingdom, United States of America, Vietnam, Zambia.
1reaLies wiLh LqypL, Morocco, OaLar and UzbekisLan have been siqned buL are noL yeL in lorce. Under chanqes
introduced in the Finance (No. 2) Act 2008, the preferential tax treatments available where a double tax
treaty is in force have been extended to where treaties have been signed but are currently not in force.
1reaLies are under neqoLiaLion wiLh ArqenLina, Azerbai|an, 1hailand, 1unisia and Ukraine.
1.4 Residence
A company incorporated in Ireland shall generally be regarded as resident in Ireland for tax purposes.
However, this assumption of residence by reference to incorporation will not apply where:
1he company or a relaLed company carries on a Lrade in lreland and Lhe company is ulLimaLely conLrolled
by persons residenL in an LU Member SLaLe or in a LreaLy counLry and is noL conLrolled by persons noL so
resident
1he company or a relaLed company carries on a Lrade in lreland, and Lhe company is or is relaLed Lo a
company, the principal class of shares of which is substantially and regularly traded on one or more
recoqnized sLock exchanqes in an LU Member SLaLe or LreaLy counLry
1he company is reqarded as residenL in Lhe oLher counLry under Lhe Lerms ol a LaxaLion LreaLy beLween
Ireland and the other country
In order to comply with certain provisions of Irish company law (namely Sections 43 and 44 of the
Companies [AmendmenL| AcL 1999), all lrish companies musL have, aL all Limes, one ol Lhe lollowinq:
A bond in place in Lhe prescribed lorm, in lorce Lo Lhe value ol t25,000
AL leasL one lrish residenL direcLor
CerLilcaLe lrom Lhe Revenue commissioners, Lo conlrm LhaL Lhe company has "a real and conLinuous
link with one or more economic activities being carried on in Ireland
Where a company is not resident in Ireland for tax purposes by virtue of the incorporation test, the center of
management and control of the company is an important criterion for determining whether it is subject to
tax in Ireland. A company that is managed and controlled in Ireland is resident in Ireland for tax purposes and
therefore subject to taxation in Ireland.
Subject to the terms of a particular double tax treaty, if a company is registered abroad but the center of
management and control is in Ireland, the company will be resident in Ireland and subject to Irish tax. The
center of management and control is determined on the basis of all relevant facts and circumstances.
1.5 Freight taxes
There are no freight taxes in Ireland.
1. SpeciaI vesseI reistraticn benehts fcr the shipcwner
1here are no special vessel reqisLraLion benelLs lor Lhe shipowner.
Following the introduction of the tonnage tax regime, no major changes are expected.
2. Human capital
In the case of a ship registered in Ireland, Irish labor law applies to crew members.
1here are no specilc procedures LhaL musL be lollowed when hirinq personnel oLher Lhan requesLinq a
cerLilcaLe ol compeLence.
Normal collective labor agreements, where unionized, cover rates of pay, holiday, time off, pension and
working hours.
Social securiLy wiLhin Lhe LU and Lhe Luropean Lconomic Area {LLA), excludinq SwiLzerland, is qoverned by
LU Council requlaLions, which prevenL double paymenL ol conLribuLions on Lhe same income. ln qeneral, wiLh
Lhe excepLion ol shorLLerm inLerqroup assiqnmenLs {less Lhan 12 monLhs), persons residenL in one Member
SLaLe ol Lhe LU buL employed in anoLher Member SLaLe are sub|ecL Lo Lhe social securiLy rules in Lhe Member
State in which they are employed.
Ireland has concluded bilateral agreements with the following non-EU countries:
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AusLralia
Canada {includinq Ouebec)
New Zealand
SwiLzerland
UniLed SLaLes ol America
These cover social security contributions, where an individual who is resident in one contracting state is
employed and working in the other contracting state. In summary, these agreements avoid double payment
of contributions on the same income and allow short-term transferees to remain in their home country
sysLems. CerLain condiLions need Lo be saLisled in order Lo be covered by an aqreemenL.
lL should be noLed LhaL Lhe absence ol a bilaLeral aqreemenL wiLh an LU counLry does noL necessarily
mean that appropriate co-operation is not possible. For example, there have been numerous examples of
jurisdictions not listed above agreeing, on a case-by-case basis, to forego their right to apply social security
taxes to the income of an individual employed in Ireland.
2.5 Mannin issues with Byin the !rish Ba
Ireland has strict safety requirements for crewing. Irish crew are highly skilled, trained and familiar with
stringent safety restrictions.
The most commonly used legal structure is the limited company.
Dividends received from overseas by companies resident in Ireland are treated as ordinary income and taxed
at the rate of either 12.5% or 25%, with relief for foreign tax suffered. Where the dividend is received from a
"Lradinq" subsidiary LhaL is residenL in Lhe LU or in a counLry wiLh which lreland has a double Lax aqreemenL,
the rate of applicable tax is 12.5%.
In certain circumstances, dividends received by a tonnage tax company from an overseas qualifying company
lorm parL ol Lonnaqe Lax prolLs and, Lherelore, are noL sub|ecL Lo Lhe 257 Lax raLe.
Dividends paid by an Irish resident company are subject to withholding tax at the standard rate of income tax
(currently 20%) except where the shareholder is:
An lrish residenL company, pension lund, chariLy or collecLive invesLmenL underLakinq, eL al.
An individual Lax residenL in anoLher LU Member SLaLe or in a LerriLory wiLh which lreland has a Lax LreaLy
A company residenL in an LU Member SLaLe or in a counLry wiLh which lreland has a Lax LreaLy and Lhe
company is not under the control of Irish residents
A company noL residenL in lreland where Lhe company is ulLimaLely conLrolled by shareholders residenL in
anoLher LU Member SLaLe or in a counLry wiLh which lreland has a Lax LreaLy
A company noL residenL in lreland and Lhe principal class ol Lhe shares ol Lhe company, or anoLher
company ol which Lhe company is a 757 subsidiary, is Lraded on a recoqnized sLock exchanqe in an LU
Member SLaLe or a counLry wiLh which lreland has a Lax LreaLy
In order to qualify for the above exemptions, certain documentation has to be completed.
4.1 Specihc and/cr eneraI subsidies fcr shippin ccmpanies
Funding is available for deck and engineering cadet training from the Department of Transport.
The corporation tax rate is 12.5%. A tonnage tax regime is available to shipowners, charterers and ship
managers (see section 1.1 for details).
4.4 !ssues with Byin the !rish Ba
1here are no resLricLions on naLionaliLy ol crew servinq on lrishlaqqed vessels, oLher Lhan compliance
wiLh Lhe lnLernaLional ConvenLion on SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq lor Sealarers
(STCW) 1995.
5.1 Infrastructure
5.1.1 Major ports
Cork
Dublin
Dun Laoqhaire
Foynes/Limerick {Shannon LsLuary)
Rosslare
WaLerlord
Dockinq
SLoraqe
Cork AirporL is close Lo Cork and WaLerlord {as is, lor WaLerlord, WaLerlord AirporL).
Dublin AirporL is close Lo Dublin, Dun Laoqhaire and Rosslare. 1he porL Lunnel links Dublin PorL direcLly Lo
a motorway that leads to Dublin Airport.
Shannon AirporL is close Lo Limerick.
5.1.4 Support services for the shipping industry in Ireland
Ship manaqemenL
A cenLralized business uniL which will deliver compleLe 2^hour ouLolollce assisLance lor ship
registration
The major maritime educational institution in Ireland historically was the Nautical Enterprises Centre.
However, this has now evolved into an advisory and research center.
ln 200^, Lhe new NaLional MariLime Colleqe ol lreland opened aL Rinqaskiddy in CounLy Cork. 1he colleqe,
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a publicprivaLe parLnership, represenLs an invesLmenL ol t57 million, providinq sLaLeolLhearL Lraininq
facilities and accommodating 750 students. This is now the primary Irish center of maritime education.
1he lrish MariLime DevelopmenL Ollce's {lMDO) MariLime SaleLy CommiLLee prepared and adopLed Lhe
lnLernaLional SaleLy ManaqemenL {lSM) Code. All lrish shippinq companies currenLly comply wiLh Lhe
lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS) requiremenLs reqardinq Lhe lSM Code.
The safety rules regarding manning can be characterized as strict.
Ireland is a signatory to all international maritime safety conventions.
5.3 Registration
The Irish government is currently reviewing changes to the mercantile marine laws governing the Irish
Ship Register. Changes to legislation are being updated in line with government policy and will facilitate an
overhaul of the Register, bringing the administration and services up to international best practices.
Ships owned by a body corporaLe, esLablished under Lhe law ol an LU Member SLaLe and which has iLs
principal place ol business in an LU Member SLaLe, or by a naLional ol an LU Member SLaLe, may reqisLer Lo ly
Lhe lrish laq.
In addition, Irish-owned ships may register on a foreign register (subject to the provisions of the relevant
foreign jurisdiction).
Under currenL rules, belore reqisLerinq in Lhe lrish reqisLer, Lhe lollowinq condiLions musL be complied wiLh:
1he owner musL be qualiled Lo own an lrish ship {i.e., a body corporaLe or naLional ol an LU Member
SLaLe as ouLlined in secLion 5.3.1) and musL apply in wriLinq Lo reqisLer Lhe ship under Lhe MercanLile
Marine AcL 1955.
1he name ol Lhe vessel musL be approved.
Lvidence ol LiLle, LoqeLher wiLh a builder's cerLilcaLe, musL be provided.
1he vessel musL be surveyed by Lhe marine surveyors' ollce.
1he vessel musL be marked and carved.
A declaraLion ol ownership musL be provided.
1he appropriaLe reqisLraLion lee musL be paid.
Where the vessel is owned by a company, the following additional information is required:
Oriqinal cerLilcaLe ol incorporaLion ol Lhe company
Memorandum and arLicles ol associaLion ol Lhe company
1he company musL appoinL an ollcer Lo make declaraLions on iLs behall
1he company musL appoinL a manaqer
It is expected that parallel registration will be available following the review of current legislation.
AL presenL, in order Lo work in various ollcer capaciLies on lrish merchanL ships, iL is necessary Lo hold a
cerLilcaLe ol compeLence {CoC) issued or accepLed by Lhe lrish DeparLmenL ol 1ransporL.
An lrish cerLilcaLe ol equivalenL compeLence {CLC) may be issued, on applicaLion, Lo ollcers holdinq valid
S1CW cerLilcaLes issued by oLher S1CW convenLion sLaLes. 1his will qenerally be issued where Lhe lrish
auLhoriLies are saLisled LhaL Lhere are no siqnilcanL dillerences beLween Lhe sLandard seL by lreland and
LhaL represenLed by oLher cerLilcaLes. 1he CLC will carry Lhe same riqhLs and obliqaLions as Lhe CoC. Like
the CoC, it will require periodic revalidation and holders will be subject to statutory procedures relating
Lo Lheir conducL. A CLC will remain valid only as lonq as Lhe oriqinal S1CW cerLilcaLe remains valid. For
Lhe benelL ol PorL SLaLe ConLrol inspecLors and employers, Lhe oriqinal S1CW cerLilcaLe musL always be
carried with the CEC.
MosL ma|or inLernaLional convenLions have been raLiled by lreland.
5.3. SpeciaI requirements/ruIes reardin reistraticn
1here are no special requiremenLs/rules reqardinq reqisLraLion.
5.3.7 Registration fees
1here is a oneoll lee ol t252 lor reqisLraLion ol a vessel over 1,500 Lons {t202 lor a vessel under 1,500
tons) in the Irish Ship Register. This does not include survey fees.
lMDO
ConLacL: Mr. Clenn Murphy
DirecLor, lMDO
80 Harcourt Street, Dublin 2
Ireland
1el.: +353 1 ^76 65 00
Fax: +353 1 ^78 ^9 88
Lmail: qlenn.murphymarine.ie
Website: www.imdo.ie
1he MinisLer lor Lhe Marine esLablished Lhe lMDO in July 2000. 1his indicaLes a sLronq commiLmenL Lo Lhe
shippinq services secLor and can be inLerpreLed as a sLaLemenL ol inLenL by Lhe qovernmenL. 1he lMDO
{which is lreland's lrsL dedicaLed developmenL, promoLional and markeLinq aqency lor shippinq, shippinq
services and seafarer training) has a very broad statutory remit to promote the expansion of Irish shipping
and relaLed indusLries. One ol iLs sLaLed aims is Lo idenLily opporLuniLies in Lhe secLor, includinq Lhe "lnancinq
of new and second-hand ships, building on the proven experience of the IFSC (International Financial
Services Centre).
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Isle of Man
1. Tax
A company is residenL in Lhe lsle ol Man by virLue ol incorporaLion or il Lhe cenLral manaqemenL and conLrol
ol Lhe company is exercised in Lhe lsle ol Man. Companies residenL in Lhe lsle ol Man are sub|ecL Lo income Lax
on their worldwide income, but relief from double taxation is available although limited to the tax suffered.
A nonresidenL company wiLh a branch carryinq on a Lrade in Lhe lsle ol Man is sub|ecL Lo income Lax on Lhe
prolLs ol Lhe branch.
1he sLandard raLe ol corporaLe income Lax on Lhe lsle ol Man is 07. Companies LhaL derive income lrom
land and properLy in Lhe lsle ol Man {e.q., properLy developmenL, renLal/leLLinq and mininq/quarryinq) and
licensed Manx banks are boLh sub|ecL Lo a Manx Lax aL 107. 1radinq companies may also elecL Lo be Laxed aL
the 10% rate.
Annual return
ResidenL companies pay an annual reLurn lee ol t^30 lor Lhe 201213 Lax year.
Withholding tax
ln qeneral, Lhere is no wiLhholdinq Lax on dividends, inLeresL and royalLies paid by lsle ol Man residenL
companies. WiLhholdinq Lax is imposed on Manx renLs paid Lo nonresidenL companies {107) and nonresidenL
individuals (20%).
Capital gains tax and transfer tax
1here is no Lax on capiLal qains on Lhe lsle ol Man, nor are any Lransler Laxes levied.
Comutat|on of taxao|e roht
1axable prolLs are calculaLed in Lhe same manner and are based on Lhe prolL lrom Lhe sLaLuLory lnancial
statements, subject to certain adjustments and provisions.
Expenses must be incurred wholly and exclusively for business purposes and in acquiring the companys
income.
Capital allowances (tax depreciation)
A qenerous lrsL year allowance ol up Lo 1007 on planL and machinery may be claimed. Annual wriLinq down
allowances ol 257 may also be claimed. 1he purchase ol a ship and relaLed expendiLure usually qualiles lor
1007 lrsL year allowances, as do cerLain survey cosLs.
Upon disposal ol asseLs on which capiLal allowances have been claimed, an ad|usLmenL is made by addback
or lurLher allowance Lo relecL Lhe neL cosL Lo Lhe company ol Lhe asseL.
Relief for trading losses
Trading losses may be used to offset other income in the year in which the loss was incurred or trading
income of the preceding year if the same trade was carried on. Alternatively, the losses may be carried
lorward wiLhouL Lime limiL lor ollseL aqainsL luLure income lrom Lhe same Lrade. Losses cannoL be Lranslerred
between 0% and 10% business.
Value added tax
Many supplies in connecLion wiLh shippinq are zeroraLed {exempL wiLh crediL), includinq:
1he supply ol qualilyinq ships {qross Lonnaqe qreaLer Lhan15 Lons and noL desiqned or adapLed lor
recreation or pleasure)
1he supply ol parLs and equipmenL ol a kind ordinarily insLalled or incorporaLed in Lhe propulsion,
navigation or communications systems, or the general structure of a qualifying ship and for the
incorporation or installation in a qualifying ship
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1he supply ol saleLy equipmenL lor qualilyinq ships
1he repair or mainLenance ol qualilyinq ships
1he repair and mainLenance ol parLs or equipmenL ol a qualilyinq ship provided Lhe repair is carried ouL
on board or the part or equipment is removed for repair and is then replaced in the same ship
1he modilcaLion or conversion ol a qualilyinq ship provided LhaL when so modiled or converLed iL will
remain a qualifying ship
1he supply ol services under charLer ol qualilyinq ships
RenLinq or hire ol qualilyinq ships
Handlinq services provided lor qualilyinq ships sub|ecL Lo condiLions and excludinq Lhe renLinq on hire ol
goods
Salvaqe and Lowaqe services, whaLever Lhe Lype ol ship
Surveyinq or classilcaLion ol qualilyinq ships are normally zeroraLed or ouLside Lhe scope ol value added
tax (VAT)
PiloLaqe services, whaLever Lhe Lype ol ship
Provision of passenger transport is generally zero-rated.
Waqes will noL be sub|ecL Lo Manx Lax deducLions il duLies are perlormed ouLside Manx waLers.
1.3 Tax treaties
1he lsle ol Man has enLered inLo double LaxaLion aqreemenLs {D1As) wiLh Bahrain, Belqium {awaiLinq
raLilcaLion), LsLonia and MalLa and has a lonqsLandinq D1A wiLh Lhe UniLed Kinqdom.
1he lsle ol Man has enLered inLo Lax inlormaLion exchanqe aqreemenLs {1lLAs) wiLh ArqenLina {awaiLinq
raLilcaLion), AusLralia, Canada, China, Czech Republic , Denmark, Lhe Faroe lslands, Finland, France,
Cermany, Creenland, lceland, lndia, lndonesia {awaiLinq raLilcaLion), lreland, Japan, Mexico, Lhe
NeLherlands, New Zealand, Norway, Poland, PorLuqal, Slovenia , Sweden, 1urkey, Lhe UniLed Kinqdom and Lhe
UniLed SLaLes ol America.
Besides Lhe above LreaLies and aqreemenLs, Lhere are specilc aqreemenLs on Lhe LaxaLion ol shippinq income
wiLh Denmark, Lhe Faroe lslands, Finland, France, Cermany, Creenland, lceland, Lhe NeLherlands, Norway,
Sweden and Lhe UniLed SLaLes ol America.
1.4 Freight taxes
No freight taxes are levied.
1.5 Tonnage tax
1he lsle ol Man does noL operaLe a Lonnaqe Lax sysLem buL an annual reqisLraLion lee ol t1,200 applies.
2. Human capital
1he lormaliLies lor hirinq personnel are described in Lhe MerchanL Shippinq {MasLers and Sealarers) AcL
1979 and Lhe MerchanL Shippinq {Crew AqreemenLs, LisLs ol Crew and Discharqe ol Seamen) RequlaLions
1991.
NaLional labor law is applicable il crew members sail in Manx waLers.
1he lsle ol Man lollows all recoqnized inLernaLional sLandards.
Crew agreements and contracts in general
1he MerchanL Shippinq {Crew AqreemenLs, LisLs ol Crew and Discharqe ol Seamen) RequlaLions 1991,
which apply Lo ManxreqisLered ships, require sealarers employed on Lhose ships Lo be enqaqed on an
approved agreement. This requirement does not, however, apply to masters and persons employed in
consLrucLion work, oil/qas exploraLion work and enLerLainmenL and Lo members ol Lhe armed lorces while on
a ship.
1he provisions and lorm ol a crew aqreemenL musL be approved by Lhe Marine AdminisLraLion DeparLmenL
(the Department). In practice, the agreements have been standardized and if used without amendment, no
further approval is required.
The department has two standard crew agreements that are:
For use on ships lormerly operaLinq under NaLional MariLime Board condiLions, i.e., lederaLed ships
For use on nonlederaLed ships where Lhe currenL nonlederaLed conLracLual clauses lorm Lhe basic
clauses for an agreement and may stand on their own or be supplemented or even substituted with
company contracts
Lmployers who wish Lo use aqreemenLs oLher Lhan Lhe sLandard lorms, or who wish Lo use modiled
versions of such forms, will be required to submit them to the Department for approval not less than
12 days before commencement of the agreement to ensure that the seafarers are as adequately
protected under these agreements as they would be under the provisions set out in the standard
forms of agreement. Approval will not be given to such agreements unless they comply with
lnLernaLional Labour OrqanizaLion {lLO) ConvenLion 22 {Seamen's ArLicles ol AqreemenL) and
contain the required information.
List of the crew
The list of crew required under the 1991 Regulations should be incorporated in the agreement. In addition
Lo Lhe parLiculars ol Lhe sealarers, Lhere musL be provisions lor Lhe inserLion ol raLes ol pay, cerLilcaLes and
endorsement and for the signature of each seafarer as party to the agreement. Company pay scales may be
annexed to the agreement.
In addition to the crew list on board the vessel, an accurate copy of the crew list is to be kept at an address
in Lhe lsle ol Man by Lhe represenLaLive. 1he masLer is required Lo noLily Lhe owner/manaqer ol any crew
changes.
1here are no LreaLies reqardinq social securiLy obliqaLions. 1he lsle ol Man is covered by reciprocal
aqreemenLs wiLh Lhe UniLed Kinqdom LhaL in Lurn cover Lhe UniLed Kinqdom's reciprocal aqreemenLs wiLh
numerous LerriLories Lo prevenL double social securiLy charqes and assure benelL coveraqe.
2. Mannin issues with Byin the !sIe cf Man Ba
1here are no siqnilcanL issues reqardinq manninq when lyinq Lhe lsle ol Man laq.
2.7 Major changes in shipping legislation anticipated in the near future
ln AuqusL 2012, Lhe lLO's MariLime Labour ConvenLion 2006 was raLiled and is due Lo come inLo lorce in
AuqusL 2013. 1his will have a siqnilcanL ellecL on all commercial shippinq as iL will consolidaLe and updaLe
more than 65 international labor standards related to seafarers.
Ships are usually owned by limited companies or limited partnerships.
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ln qeneral, shippinq prolLs can be disLribuLed lree ol wiLhholdinq Lax.
1he lsle ol Man qovernmenL is always commiLLed Lo encouraqinq new business Lo come Lo Lhe lsle ol Man. 1he
Department of Economic Development can offer generous grants in certain circumstances.
1he qovernmenL ol Lhe lsle ol Man wishes Lo promoLe Lhe conLinuinq qrowLh and diversilcaLion ol Lhe
industrial sector. Extremely generous assistance and incentives are available.
Capital grants
Capital grants of up to 40% for the costs of new buildings, building improvements and new plant and
machinery can be provided. While all of the grants and loans are discretionary, and are awarded only to
companies satisfying certain environmental and commercial criteria, in practice, the average grants offered
to projects on the island are far higher than those offered for similar projects in most European countries.
Expansion grants
Capital grants of up to 40% of the costs of buildings and plant and machinery can be given for subsequent
invesLmenL by companies on Lhe lsle ol Man.
Operating grants
1he lsle ol Man is one ol lew places where operaLinq qranLs are available. For example, qranLs ol up Lo
^07 are available lor nonrecurrinq seLLinqup expenses incurred in Lhe lrsL year, lor markeLinq cosLs lor
new ventures, employing consultants to advise on methods of applying microprocessing technology to
manufacturing processes and for the costs of pursuing quality assurance standards, such as BS5750 (British
standard of excellence in quality management).
Training costs
CranLs ol 507 are available lor employers operaLinq approved Lraininq schemes.
Loans on favorable terms
Loans ol up Lo hall a company's pro|ecLed workinq capiLal requiremenL, aL modesL inLeresL raLes and wiLh
capital repayment deferred for up to two years, may be offered in addition to the grants.
Rent reductions
Should a company with an approved project wish to rent a new factory privately, rather than build its own
wiLh qranL aid, a renL allowance can be ollered Lo relecL Lhe qranL loreqone.
No special incentives for environmental awareness are currently available.
4.4 !ssues with Byin the !sIe cf Man Ba
Flyinq Lhe lsle ol Man laq enLails:
1he riqhL Lo ly Lhe "Red Lnsiqn" and access Lo Lhe supporL ol BriLish consular services and naval
protection worldwide
1he prolessional Marine AdminisLraLion providinq a hiqh qualiLy ol service
FlexibiliLy in Lhe requiremenLs lor reqisLered owners includinq accepLance ol limiLed parLnerships
1he availabiliLy ol demise reqisLry boLh "in" and "ouL"
Low cosLs and no annual Lonnaqe dues
Full poliLical supporL lor shippinq
A ranqe ol prolessional services desiqned Lo supporL shippinq
Nonlaq ol convenience {FOC) sLaLus
No major changes are currently expected in the near future.
5.1 Infrastructure
5.1.1 Major ports
The major port is Douglas. The port is essentially used for passenger and freight transport to and from the
island, rather than international trade.
Castletown, Peel and Ramsey are the other major ports.
Dockinq
SLoraqe
Cranes lor every size ol vessel {Douqlas porL)
Ronaldsway, Lhe lsle ol Man airporL, is 10 miles lrom Douqlas.
5.1.4 Support services for the shipping industry on the Isle of Man
Lxperienced ship manaqers
There are no maritime educational institutions.
Full compliance wiLh Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code is required.
Safety rules can be characterized as strict, and there is a wide range of regulations covering safety-related
issues.
1he lsle ol Man lollows Lhe lSM Code and has lully implemenLed and adheres Lo Lhe quidance ol Lhe
lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS) ChapLer Xl coverinq mariLime securiLy. 1his
also incorporates the amendments to the International Ship and Port Facility Security (ISPS) Code.
5.3 Registration
ManxreqisLered ships are BriLish ships. 1hey are, however, under Lhe separaLe |urisdicLion ol Lhe lsle ol
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Man Marine AdminisLraLion.
1he ma|oriLy inLeresL in Lhe ship {e.q. aL leasL 33/6^ shares) musL be owned by one ol Lhe lollowinq:
Companies incorporaLed in Lhe lsle ol Man and havinq Lheir principal place ol business in Lhe lsle ol Man
(there are no nationality requirements for ownership of such companies)
Companies incorporaLed in Lhe UniLed Kinqdom, Channel lslands and any BriLish DependenL 1erriLory` and
having their principal place of business in any such territory
Companies incorporaLed in Member SLaLes ol Lhe Luropean Union {LU) and Luropean Lconomic Area
(EEA) countries and having their principal place of business in any such country. It should be noted that
Lhe company may be incorporaLed in any ol Lhe above LerriLories or LU Member SLaLes and have iLs principal
place ol business in any oLher ol Lhe above LerriLories or LU Member SLaLes
LimiLed parLnerships esLablished and reqisLered in Lhe lsle ol Man in accordance wiLh Lhe ParLnership AcL
1909 and the International Business Act 1994 and in certain prescribed countries as detailed in Registry
Advice NoLice RAN05
British citizens, British Dependent Territories, British subjects under the British Nationality Act 1981, or
British nationals (overseas)
Citizens of Member States of the EU and EEA countries
Prescribed relevanL counLries`` as deLailed in ReqisLry Advice NoLice RAN02
A minoriLy inLeresL in a ship {e.q. up Lo 31 shares) may be owned by nonqualiled persons.
MerchanL ships Lo be reqisLered in Lhe lsle ol Man should be classed wiLh one ol Lhe approved
classilcaLion socieLies.
ln addiLion Lo Lhe above, iL is a requiremenL LhaL a represenLaLive person musL be appoinLed as deLailed in
ReqisLry Advice NoLice RAN15.
1he BriLish Red Lnsiqn is Lhe laq LhaL is normally lown on Manx ships. However, reqisLered owners
residenL in Lhe lsle ol Man may, il Lhey wish, ly on Lheir BriLish ships Lhe Red Lnsiqn incorporaLinq Lhe
"1hree Leqs ol Man" {Lhe symbol ol Lhe lsle ol Man).
* British Dependent Territories are:
Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, British Virgin Islands,
Cayman, Islands, Falkland Islands, Gibraltar, Montserrat, Pitcairn Islands, St. Helena and Dependencies,
Turks and Caicos Islands.
**Prescribed countries are:
Australia, Bahamas, Canada, China, Hong Kong, India, Japan, Liberia, Marshall Islands, New Zealand,
Pakistan, Panama, Russia, Singapore, South Africa, United Arab Emirates, United States of America.
5.3.2 Bareboat charter registration
Bareboat charter registration was introduced in 1991, whereby a shipowner can demise charter register a
vessel boLh in and ouL ol Lhe lsle ol Man and so separaLe Lhe lnancial and operaLional |urisdicLions.
Advantages
Demise charLer reqisLraLion provides a more lexible and aLLracLive packaqe, reqardinq lor example:
MorLqaqinq laciliLies
Manninq requiremenLs
National laws may permit tax advantages
A shipowner may still be able to obtain subsidies if the owner of the vessel remains in the original state,
alLhouqh Lhe vessel may be "laqqed ouL" Lo anoLher reqisLry.
Demise charLer reqisLraLion is only possible beLween Lhe lsle ol Man and compaLible reqisLries, i.e., Lhose
states whose national laws permit such arrangements.
1he maximum reqisLraLion period is lve years, buL Lhis can be renewed lor an addiLional period. Vessels
reqisLered in Lhe lsle ol Man in Lhis manner comply wiLh all requlaLions {oLher Lhan ownership naLionaliLy) as
il Lhey were on Lhe main lsle ol Man reqisLer.
Lvery ollcer, unless holdinq a UKissued cerLilcaLe ol compeLency, musL have an lsle ol Man endorsemenL
as required by RequlaLion l/10 ol lnLernaLional ConvenLion on SLandards ol 1raininq, CerLilcaLion &
WaLchkeepinq {S1CW) 1995 Lo accompany Lhe naLional CerLilcaLe ol CompeLency.
1he lsle ol Man does noL issue iLs own CerLilcaLes ol CompeLency; iL does, however, issue endorsemenLs
recoqnizinq a NaLional CerLilcaLe ol CompeLency. LndorsemenLs are required lor all ollcers sailinq on lsle ol
ManreqisLered vessels unless Lhey hold a CerLilcaLe ol CompeLency issued by Lhe UK under S1CW 95. UK
issued CerLilcaLes ol LquivalenL CompeLency are noL accepLable.
Ollcers servinq on lsle ol ManreqisLered vessels may be ol any naLionaliLy and any residency provided Lhey
are holders ol CerLilcaLes ol CompeLency issued by one ol Lhe S1CW 95 "whiLe lisL" counLries recoqnized by
Lhe lsle ol Man and lor which iL issues endorsemenLs aLLesLinq Lo Lhe recoqniLion ol such cerLilcaLes.
Ratings may be of any nationality provided they have completed the basic training as required under STCW
95 in the four key elements:
1. Personal survival
2. Basic lrsL aid
3. Basic lre lqhLinq
4. Personal safety and social responsibilities
Each rating must have documentary evidence of this training, which can be issued by any country that is a
signatory to the STCW Convention.
Lvery raLinq lorminq parL ol a waLch musL hold a valid deck or enqine room waLch raLinq cerLilcaLe, as
applicable. CerLilcaLes issued by Lhe raLinqs home counLry, provided LhaL iL is a siqnaLory Lo Lhe S1CW
Convention, are acceptable.
ln Lhe case ol raLinqs who do noL have cerLilcaLes buL who can demonsLraLe Lhe required compeLence in line
with the STCW Convention, it is possible for the vessels master or chief engineer to make the assessment of
compeLence and issue a provisional lsle ol Man WaLch raLinq cerLilcaLe. A provisional cerLilcaLe is valid lor
three months.
1o ensure LhaL all lsle ol ManreqisLered vessels are sullcienLly, ellcienLly and salely manned wiLh properly
Lrained and cerLiled personnel, a minimum sale manninq documenL, issued under Lhe provisions ol ChapLer
V/1^.2 {SaleLy ol NaviqaLion) ol SOLAS 197^, as amended, musL be carried by all vessels Lo which ChapLer l
ol SOLAS applies, includinq merchanL vessels over 500 qross Lonnaqe and commercial yachLs over 500 qross
tonnage.
SOLAS ChapLer l does noL apply Lo pleasure yachLs, and as such, Lhese vessels do noL require a minimum sale
manning document.
All ma|or inLernaLional convenLions have been exLended Lo Lhe lsle ol Man.
5.3.5 SpeciaI requirements/ruIes reardin reistraticn
Survey requirements prior to registry
An owner or manaqer seekinq Lo reqisLer a ship in Lhe lsle ol Man should iniLially make conLacL wiLh Lhe
registrar to ensure there are no impediments to registry and with the principal surveyor to discuss the
requirements for survey.
The requirement for a pre-registration survey will depend on the age of the vessel and its Port State Control
{PSC) hisLory. Cenerally vessels under 10 years old will noL require a prereqisLraLion survey il Lheir PSC
history is acceptable.
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The requirement for a pre-registration survey on a new build will depend on the shipyard where the vessel is
beinq builL and wheLher Lhe owner has ships already reqisLered wiLh Lhe lsle ol Man Ship ReqisLry. Cenerally,
new builds cominq lrom shipyards LhaL have delivered Lo lsle ol Man laq requiremenLs previously will noL
require a pre-registration survey.
New building of ships
DeleqaLion ol conLinuinq inspecLion durinq consLrucLion may be made Lo approved classilcaLion socieLies.
Some visiLs may be made by a surveyor lrom Lhe adminisLraLion Lo conlrm compliance wiLh Lhe requlaLions
and subsequenL accepLance ol Lhe vessel lor reqisLraLion and Lhe issue ol inLernaLional cerLilcaLes. 1his will
only be Lo a new shipyard, Lhe lrsL in a series ol new builds or aL Lhe owner's requesL.
Existing ships
Where ships are reqisLered in an LU Member SLaLe or an LLA counLry, Lhe lsle ol Man adminisLraLion will
issue inLernaLional cerLilcaLes lor Lhe unexpired period ol validiLy ol Lhe exisLinq cerLilcaLes, sub|ecL Lo
a saLislacLory inspecLion ol Lhe ship by Lhe lsle ol Man surveyor and submission ol copies ol appropriaLe
exisLinq cerLilcaLes.
Cert|hcat|on
1he lollowinq inLernaLional cerLilcaLes are issued as appropriaLe by Lhe adminisLraLion lollowinq Lhe
satisfactory completion of surveys:
Passenqer Ship SaleLy CerLilcaLe
SaleLy ManaqemenL CerLilcaLe
Ship SecuriLy CerLilcaLe
Sale Manninq CerLilcaLe
Civil LiabiliLy lor Oil PolluLion Damaqe/Bunker CerLilcaLes
1he lollowinq inLernaLional cerLilcaLes are issued by approved classilcaLion socieLies on behall ol Lhe lsle ol
Man qovernmenL, lollowinq Lhe saLislacLory compleLion ol surveys:
Carqo Ship SaleLy ConsLrucLion CerLilcaLe
lnLernaLional Load Line CerLilcaLe {1966)
lnLernaLional 1onnaqe CerLilcaLe {1969)
SaleLy LquipmenL CerLilcaLe
SaleLy Radio CerLilcaLe
All lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion From Ships {MARPOL) CerLilcaLes
1he senior reqisLrar has a requiremenL Lo visiL each merchanL ship on Lhe reqisLer aL leasL once every lve
years. 1his will normally be aL Lhe same Lime as an SaleLy ManaqemenL CerLlcaLe audiL.
Fees are charqed by Lhe Marine AdminisLraLion lor conducLinq surveys and inspecLions and Lhe issuance ol
relaLed convenLion cerLilcaLes and, in addiLion, Lhe cosLs ol Lravel and subsisLence associaLed wiLh visiLinq
ships are charged to shipowners or ship managers. Where a survey is delegated to another organization, the
lees and cosLs are seLLled by arranqemenL beLween Lhe shipowner/manaqer and LhaL orqanizaLion.
Shipping regulation
1he Marine AdminisLraLion was esLablished by Lhe lsle ol Man qovernmenL in 198^ alLhouqh Lhe lsle ol Man
has had a lonqesLablished mariLime indusLry since 1786 and has iLs own Leam ol experienced, prolessional
surveyors.
1he only lees charqed by Lhe Marine AdminisLraLion are Lhose relaLinq Lo reqisLraLion, survey and cerLilcaLion
ol ships. 1here is no addiLional Lonnaqe Lax levied on ManxreqisLered shippinq. However, Lhere is an annual
reqisLraLion lee ol t1,200 payable on 1 April irrespecLive ol Lhe size ol Lhe vessel.
1he lsle ol Man Marine AdminisLraLion is qenerally reqarded by Lhe shippinq indusLry as proqressive in ouLlook
and works in close consultation with the shipping industry to ensure that sensible, well-balanced, effective
and, moreover, workable regulations are developed.
Shipping overview
1he lsle ol Man has developed lrom a mainly BriLish Lo an inLernaLional shippinq cenLer. Many ol Lhe world's
major owners and ship managers have companies on the island, thereby creating one of the leading ship
management centers in the British Isles.
Ship management activity is supported by numerous shipping-related service providers. Consequently, the
island is able to offer broad services to the owners and operations of ships worldwide.
Shipping taxation
1he lsle ol Man ollers company leqislaLion, a lscal environmenL and a Lax reqime LhaL are well suiLed lor
shipping activities.
Isle of Man ship register
1he lsle ol Man ollers a qualiLy, lowcosL reqisLer, which has a Marine AdminisLraLion LhaL is approachable
and likely Lo apply pracLical soluLions while mainLaininq inLernaLional sLandards. As Lhe lsle ol Man shippinq
reqisLer is a member ol Lhe BriLish Red Lnsiqn Croup, Lhe ships reqisLered in Lhe lsle ol Man are BriLish ships.
AlLhouqh Manx ships come under Lhe separaLe |urisdicLion ol Lhe lsle ol Man Marine AdminisLraLion, as BriLish
vessels, Lhey are enLiLled Lo ly Lhe Red Lnsiqn.
Isle of Man commercial yacht register
Commercial yachLs ol 2^ meLers in lenqLh and more can be reqisLered in Lhe lsle ol Man. 1his reqisLer has
become a register of choice for the worlds mega-yachts.
Any commercial yacht proposed for registry must be 24 meters in length or more and must be classed with
one ol Lhe classilcaLion socieLies recoqnized by Lhe lsle ol Man. Vessels musL also comply wiLh Lhe UniLed
Kinqdom Meqa YachL Code.
Applicable legislation:
MerchanL Shippinq {ReqisLraLion) AcL 1991
MerchanL Shippinq {ReqisLraLion) RequlaLions 1996
MerchanL Shippinq {YachL in Commercial Use) Order 2002
Isle of Man ship registry:
hLLp://www.qov.im/ded/shipreqisLry

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Italy
1. Tax
The Imposte sul Reddito delle Societ (IRES) is the Italian corporate income tax.
Companies are sub|ecL Lo lRLS based on Lheir sLaLuLory income, ad|usLed lor nonLaxable revenues and/or
non-deductible costs according to IRES provisions.
IRES is levied at the ordinary rate of 27.5%.
Fiscal losses deLermined lor lRLS purposes can be used wiLhouL Lime limiL Lo ollseL up Lo 807 ol each lscal
year's Laxable basis. SLarLup losses {i.e., losses qeneraLed in Lhe lrsL Lhree years ol acLiviLy) can be used Lo
ollseL 1007 ol each lscal year's Laxable basis. No loss carryback is allowed.
Companies are also subject to Imposta regionale sulle attivit produttive (IRAP), a regional tax on business
activities, which is determined by applying a tax rate of 3.9% to the income statement operating margin
(without deducting, however, labor costs, bad debts and accruals for risks). Financial revenues, as well as
extraordinary incomes, are not taxable for IRAP purposes.
As of tax year 2005, shipping companies may opt for tonnage taxation, which applies for 10 years and is
available lor "qualiled" vessels {Lhose reqisLered in Lhe lLalian inLernaLional shippinq reqisLer). ll Lhe Lonnaqe
tax regime is not elected, the ordinary regime for these vessels states that the income attributable to them is
abated by a special deduction of 80%.
lurtnermore, |P/P coes not a|y to qua||hec vesse|s.
Tonnage taxation depends on the net tonnage of the vessel and is determined as follows:
Tonnage taxation applies to:
Oualiled owned vessels
Oualiled bareboaL charLeredin vessels
CharLeredin {also nonqualiled) vessels, buL only up Lo 507 ol Lhe Lonnaqe ol all Lhe employed vessels.
Income from chartered-in vessels with tonnage in excess of 50% is taxed under the ordinary rules
lLalian parLnerships {similar Lo Cerman KommandiLqesellschalL [KC| sLrucLures)
Oualiled vessels employed in naLional Lrallc
While parLnerships are Lax LransparenL enLiLies, lor qualiled vessels employed in naLional Lrallc, only
partners are eligible to be taxed under tonnage tax rules.
Ca|ta| a|ns anc |osses on transact|ons on qua||hec vesse|s are |nc|ucec |n tne aoove hxec |ncome.
Shipping groups should apply this taxation to every vessel owned by group companies (the current
undersLandinq is LhaL Lhe law applies only Lo lLalian companies/permanenL esLablishmenLs).
Under cerLain condiLions, income lrom bareboaLouL qualiled vessels may noL be sub|ecL Lo Lhe Lonnaqe Lax
but can be abated by 80%.
Tonnage Daily hxed income per ton {6)
01,000 0.0090
1,00110,000 0.0070
10,00125,000 0.0040
More than 25,000 0.0020
1
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Shipping companies are exempt from the payment of social contributions and withholding tax on seafarers
embarked on vessels registered in the Italian international shipping register.
Italy has a large network of tax treaties.
The place of effective management is the main issue in the tax treaties regarding shipping companies.
1.4 Freight taxes
Freight tax does not apply in Italy.
See sections 1.1 and 3.2.
1ax lease sLrucLures apply Lo lLalian corporaLe Laxpayers. Lessors may deducL up Lo a 357 depreciaLion raLe
for leased vessels.
1he Lax lease reqime will apply once auLhorizaLion is obLained lrom Lhe Luropean Union {LU) compeLenL
authorities.
2. Human capital
Italian legislation protects seafarers from discrimination on the grounds of sex, race, disability or trade union
membership.
The following legislation is in force:
Law ^ April 1977 No. 135, reqardinq Lhe prolessionalism ol a ship's aqenLs {lasL modilcaLion by
LeqislaLive Decree 26 March 2010, No. 59)
ArLicle 29 ol Law 1^ June 1989 No. 23^, concerninq Lhe union aqreemenL reqardinq Lemporary deleLion
of a vessel from the Italian register of ships (see section 5.3.3)
LeqislaLive Decree 30 December 1997 No. ^57, modiled by Law 27 February 1998 No. 30 {lasL
modilcaLion by Law 27 February 2011, No. 183), reqardinq sealarers employed on lLalian vessels lisLed
in the Italian international register (see section 5.3.3)
lnLernaLional Labour OrqanizaLion {lLO) convenLions on sealarers implemenLed by lLaly
CollecLive labor aqreemenL lor sealarers
Worker's FundamenLal RiqhLs CharL {Law 20 May 1970, No 300)
The employment of an Italian seafarer on an Italian ship is governed by Italian law.
1he employmenL ol an lLalian sealarer on a ship under a loreiqn laq and Lhe employmenL ol a loreiqn
sealarer on a ship under Lhe lLalian laq are qoverned by ArLicle 8 ol Lhe Luropean RequlaLion n. 593/2008
of 17 June 2008 (the so-called Regulation Rome 1 that has replaced the Convention of Rome 1980), which
considers four possibilities:
1. 1he law lxed by conLracL, provided such a law qranLs sealarers Lhe benelLs ol Lhe alLernaLe choice
2. The law of the country where the seafarer habitually performs work
3. The law of the country of hiring (this may be the site where the shipping company is based)
4. Other law that might have a different connection with the employment relationship
No special regulations apply.
Shipping is generally highly unionized.
Minimum waqe and oLher mandaLory paymenLs, lree days, LerminaLion ol employmenL, rules reqardinq
working hours and the arrangement of national health insurance depend on matters such as trade and gross
tonnage of the ship.
Waqes paid Lo sealarers workinq on a vessel lyinq Lhe lLalian laq are sub|ecL Lo lLalian pension and social
security contributions. Pension contributions should be paid to INPS (Istituto Nazionale Previdenza Sociale,
the National Security Institute). Social security contributions (e.g., health insurance, maternity, accident at
work, prolessional disease) are manaqed by lPSLMA {LIstituto Di Previdenza Per Il Settore Marittimo, the
Insurance Institute for the Maritime Sector).
1he 1reaLy ol Rome covers reciprocal obliqaLions lor LU Member SLaLes reqardinq social securiLy benelLs
across Lhe LU.
1o prevenL double social securiLy LaxaLion and ensure benelL coveraqe, lLaly has concluded aqreemenLs wiLh
several countries that traditionally supply seafarers to foreign vessels.
ln relaLion Lo social securiLy leqislaLion applicable in Lhe LU, accordinq Lo Lhe Luropean RequlaLion n.
883/200^, arLicle 11, an acLiviLy as an employed person on board a vessel aL sea lyinq Lhe laq ol a Member
SLaLe shall be deemed Lo Lhe social securiLy ol Lhe said Member SLaLe. 1his LU RequlaLion also indicaLes LhaL
when remuneraLion is paid by a company residinq in a dillerenL Member SLaLe, Lhe applicable social securiLy
law will be Lhe one relaLed Lo Lhe Member SLaLe in which Lhe Company resides, e.q., when Lhe company
resides in Italy, the Italian social security legislation will be applicable.
WiLh reqard Lo social securiLy LaxaLion lor nonLU counLries, iL will be necessary Lo apply Lhe appropriaLe
aqreemenL concluded beLween lLaly and Lhe nonLU counLry in order Lo avoid Lhe double social securiLy
taxation.
2. Mannin issues with Byin the !taIian Ba
AdvanLaqes relaLed Lo Lhe manaqemenL ol a vessel in lLaly depend on Lhe opporLuniLies ollered by Law 1^
June 1989 No. 23^ {"bareboaL charLer," see secLion 5.3.3) and by Law 27 February 1998 No. 30 {"lLalian
international register, see section 5.3.3).
1he mosL common leqal sLrucLure lor shippinq operaLions is Lhe SocieL a responsabiliL limiLaLa {S.r.l) or
SocieL per azioni {S.p.A.).
Outbound dividends
Dividends distributed to foreign parent companies are subject to a statutory 20% withholding tax, which is
usually reduced under the application of tax treaties.
Dividends disLribuLed Lo qualiled LU parenL companies are sub|ecL Lo a 1.3757 wiLhholdinq Lax. Dividends
paid out to Italian companies are exempt from withholding tax.
Dividends disLribuLed Lo qualiled LU parenL companies in compliance wiLh Lhe requiremenLs lor Lhe
application of the Parent-Subsidiary Directive are exempt from withholding tax.
Inbound dividends
95% of inbound dividends distributed by non-CFC (controlled foreign corporations) companies are exempt.
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lLalian leqislaLion currenLly does noL provide lor any siqnilcanL subsidies or qranLs lor Lhe shippinq indusLry.
1he lasL law enacLed in Lhis area is Law 9 January 2006, No. 13, which provides LhaL Lhe successive budqeL
laws can relnance Lhe lunds ol Lhe sLaLe budqeL. 1he laLesL lnance law has noL allocaLed any resources lor
Lhis conLribuLion, which, however, is sLill open lor relnancinq.
FurLhermore, Lhe CovernmenL provides lunds lor shippinq companies involved in Lrade wiLh Lhe domesLic
islands. These subsidies are intended to offer comprehensive shipping services to inhabitants of the Italian
islands. 1he subsidies are qranLed Lo a lew idenLiled companies on Lhe basis ol an aqreemenL LhaL was
scheduled to remain in force until 2009 (whether it is still in force is unclear).
On 27 June 2002, DirecLive CL No. 1177/2002, implemenLed by Lhe BudqeL Law 2008, was issued
reqardinq lnancial supporL ol up Lo 67 ol Lhe conLracL value lor Lhe supporL ol Lhe lollowinq Lypes ol vessels:
ConLainer ships
Chemical carriers
Oil Lankers
Liqueled naLural qas {LNC) carriers
1he successive budqeL laws can relnance Lhe lunds ol Lhe sLaLe budqeL. 1he laLesL lnance law has noL
allocaLed any resources lor Lhis conLribuLion, which, however, is sLill open lor relnancinq.
See section 5.2.3.
4.4 !ssues with Byin the !taIian Ba
Besides Lhe advanLaqes LhaL come lrom lLaly beinq a Member SLaLe ol Lhe LU, lyinq Lhe lLalian laq does noL
enLail any specilc advanLaqes or disadvanLaqes.
No major changes are anticipated.
5.1. Infrastructure
5.1.1 Major ports
Italy has a vast network of ports of which the most important are:
Ancona, Augusta, Bari, Brindisi, Cagliari, Civitavecchia, Genoa, Gioia Tauro, La Spezia, Livorno, Marina di
Carrara, Naples, Palermo, Piombino, Ravenna, Salerno, Savona, Taranto, Trieste, Venice.
Private investors own the main terminals in the container business. The activity of the most important
Lerminal porLs as ol 31 December 2011 {source: ConlLarma) is as lollows:
Port Terminal activity in 2011 in 20-foot equivalent
units (in thousands)
Cioia 1auro 2,304
Cenoa 1,847
La Spezia 1,307
Taranto 604
Besides Lhe main MediLerranean hub Cioia 1auro, 1aranLo has been operaLional wiLh a new conLainer Lerminal
since September 2001 and is expected to increase its terminal activity in the next few years.
Ferry services are operational on both the west and east coast of the country in the following ports:
Ancona, Brindisi, Cagliari, Civitavecchia, Genoa, Livorno, Naples, Olbia, Palermo, Porto, Savona.
In the cruise business, the main ports are:
Ancona, Civitavecchia, Genoa, Livorno, Naples, Palermo, Savona, Venice.
The following facilities are available in all major ports:
Dockinq
SLoraqe
Airports close to major ports are:
Capodichino {Naples)
Ciampino {Rome)
CrisLoloro Colombo {Cenoa)
Calileo Calilei {in Pisa) {Livorno)
Leonardo da VinciFiumcino {in Rome) {CiviLavecchia)
LinaLe {Milan)
Malpensa {Milan)
Marco Polo {in Venice) {1essera)
PunLa Raisi {Palermo)
S. Lulemia {in Lamezia 1erme) {Cioia 1auro)
The following support services are readily available:
ClassilcaLion socieLies {RlNA, BV, CL) recoqnized by Lhe lLalian laq AdminisLraLion
Genoa and Naples have the largest concentration of maritime services and expertise in Italy.
There are various maritime educational institutions in Italy. The most important are:
1he UniversiLy ol Cenoa, MariLime and 1ransporL Lconomy and MariLime Lnqineerinq
1he UniversiLy ol Naples "Federico ll," MariLime Lnqineerinq
1he UniversiLy ol 1riesLe, MariLime Lnqineerinq
Port Terminal activity in 2011 in 20-foot equivalent
units (in thousands)
Cagliari 603
Livorno 638
Naples 235
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5.2.1 International and national rules
Under lLalian law, Lhe lollowinq rules apply Lo ships reqisLered in Lhe counLry:
lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS), includinq Lhe lnLernaLional SaleLy
ManaqemenL Code
lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion From Ships {MARPOL)
lnLernaLional ConvenLion on Load Lines {LL)
lnLernaLional ConvenLion on SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq lor Sealarers {S1CW)
1969 Brussels ConvenLion Lo minimize marine polluLion and Lhe relaLed 1971 Brussels ConvenLion Lo
institute an international fund
Law 31 December 1982 No. 979 Lo prevenL sea polluLion
LeqislaLive Decree 27 July 1999 No. 271 Lo ensure saleLy and healLh ol sealarers on board ships
LeqislaLive Decree 6 November 2007, n. 193 lor lood hyqiene. 1he violaLions menLioned in Lhis decree
have been modiled Lo "illiciL adminisLraLive acLions" in LeqislaLive Decree 30 December 1999 No. 507
Accordinq Lo LeqislaLive Decree 2^ March 2003, n. 53 {see secLion 5.2.3), Lhe saleLy rules reqardinq
manning can be considered strict.
lLaly has Laken measures Lo implemenL DirecLive 2009/16/CL, concerninq porL sLaLe conLrol, by means ol
LeqislaLive Decree 2^ March 2011, n. 53.
Law 7 March 2001 No. 51, modiled by Law 1 AuqusL 2002 No. 166 and Law 9 January 2006, n.13,
introduced new rules to prevent oil pollution, providing incentives to demolish single-hull tankers of more than
20 years ol aqe. 1he leqislaLive measure, moreover, encouraqes Lhe uLilizaLion ol Lhe vessel Lrallc sysLem and
Lhe Clobal MariLime DisLress and SaleLy SysLem Lo improve mariLime Lrallc saleLy.
5.3 Registration
1o qeL on Lhe lLalian reqisLer, a ship musL be owned by an lLalian or an LU enLiLy {individual or company).
New buildinqs or ships previously reqisLered in a nonLU reqisLer can be reqisLered in lLaly by nonLU enLiLies,
provided that such an entity has a permanent establishment in Italy and the management of the ship is
enLrusLed Lo an lLalian or LU enLiLy.
Registration is granted upon presentation to the local authorities of (i) a document constituting proof of
ownership {builder's cerLilcaLe or bill ol sale), {ii) documenLaLion relaLinq Lo requiremenLs menLioned in
secLion 5.3.1 above, {iii) a Lonnaqe cerLilcaLe and {iv) a deleLion cerLilcaLe {il Lhe ship was previously
registered in a foreign register).
Botn ha|n |n anc ha|n out are oss|o|e uncer |aws No. 234/1989 anc No. 30/1998.
Ships reqisLered in a loreiqn reqisLer and bareboaL charLered Lo an lLalian {or LU) enLiLy can be Lemporarily
registered in the Italian international register. Furthermore, an Italian ship can be bareboat chartered to
a foreign entity and be temporarily suspended (but not deleted) from the Italian register in order to be
temporarily registered in a foreign register. The above requires government authorization, which is granted
on the basis of both satisfactory guarantees being provided to creditors and an agreement with the unions.
Such a laqouL does noL allecL morLqaqes reqisLered on Lhe ship. However, iL allecLs Lhe number ol lLalian
seafarers on board the vessel.
Sealarers on lLalian ships musL be lLalian or LU ciLizens.
Different rules apply to ships registered in the Italian international register and to ships bareboat chartered in
accordance wiLh Law No. 23^/89.
ln boLh cases, Lhe number ol nonLU sealarers on board has Lo be neqoLiaLed wiLh Lhe unions.
There are no international conventions in force in Italy regarding the registration of ships.
No special requirements apply.
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Japan
1. Tax
1.1.1 General corporate tax rule
In general, shipping companies are subject to taxation under the ordinary corporate tax regime, which
includes corporation tax, local inhabitants tax and enterprise tax. The current effective tax rate (the sum of
the aforementioned taxes) is approximately 38%, and the current effective tax rate (38%) will be reduced to
approximately 36%, effective for tax years beginning on or after 1 April 2015.
1.1.2 The Japanese tonnage tax system
The Japanese tonnage tax system was introduced on 17 July 2008 as an entirely new taxation system for
shippinq companies, Lhe inLenLion beinq Lo subsLanLially increase Lhe number ol Japaneselaqqed vessels
and Japanese crews.
Under Lhe sysLem, income derived lrom inLernaLional shippinq acLiviLies conducLed by Japaneselaqqed
vessels with certain operational requirements can qualify for an alternative tax treatment to the general rules
described above {under Lhe 2013 Lax relorm, semiJapaneselaqqed vessels can also qualily lor Lhe sysLem;
see 1.1.3 2013 tax reform). The taxable basis under this system is calculated by reference to the qualifying
daily net tonnage of each ship operated by the shipping company per the table below. In order to qualify,
shippinq companies had Lo apply lor approval Lo Lhe MinisLry ol Land, lnlrasLrucLure, 1ransporL and 1ourism
{MLl1) under Lhe MariLime 1ransporLaLion AcL belore 31 March 2010. 1he Lonnaqe Lax sysLem is applicable
to the local inhabitants tax and enterprise tax of the qualifying company.
For Japaneselaqqed vessels>
To apply the tonnage tax system for the income derived from international shipping activities conducted by
Japaneselaqqed vessels, shippinq companies had Lo submiL cerLain applicaLions Lo Lheir Lax ollces by Lhe
day belore 31 March 2010 and aLLach cerLain schedules Lo Lheir Lax reLurns durinq Lhe applicable periods.
Cenerally, Lhe Lonnaqe Lax sysLem should Lhen apply conLinuously lor Lhe lve years immediaLely lollowinq
approval. 1he Lonnaqe Lax sysLem may Lhen be exLended lor lve more years, provided LhaL cerLain condiLions
are meL and LhaL Lhe shippinq company receives approval lrom MLl1. 1he maximum applicable period ol Lhe
Lonnaqe Lax sysLem is 10 years in LoLal. One siqnilcanL condiLion required Lo exLend Lhe applicaLion ol Lhe
Lonnaqe Lax lor Lhe second lveyear period is Lhe doublinq ol qualilyinq vessels lrom Lhe iniLial applicaLion.
1here are also condiLions relaLinq Lo Japanese laqqinq requiremenLs ol qualilyinq vessels.
ln addiLion, in cases where approval under Lhe MariLime 1ransporLaLion AcL is wiLhdrawn durinq Lhe applicable
period, the normal corporate tax regime would apply, and thus the amount already treated as non-taxable
income under the tonnage tax system would be added back to the normal taxable income of shipping
companies at the time of withdrawal.
1.1.3 2013 tax reform
On 2^ January 2013, Lhe 2013 Lax relorm ouLline was released. Under Lhe 2013 Lax relorm,
income derived lrom inLernaLional shippinq acLiviLies conducLed by noL only Japaneselaqqed
Total net tonnage Deemed proht per day per 100 net tons {JPY)
Up Lo 1,000 120
1,001 10,000 90
10,001 25,000 60
Over 25,000 30
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vessels buL also semiJapaneselaqqed vessels can qualily lor Lhe Japanese Lonnaqe Lax sysLem.
SemiJapaneselaqqed vessels are delned as nonJapaneselaqqed vessels wiLh cerLain operaLional
requiremenLs held by corporaLions conducLinq inLernaLional shippinq acLiviLies under Lhe MariLime
Transportation Act. To apply the new tonnage tax system for the income derived from international
shippinq acLiviLies conducLed by Japaneselaqqed vessels/semiJapaneselaqqed vessels, shippinq
companies have Lo receive approval durinq 1 April 2013 Lo 31 March 201^ lor cerLain schedules
lrom MLl1. 1he Laxable basis ol semiJapaneselaqqed vessels is calculaLed by Lhe shippinq
company per the table below.
For semiJapaneselaqqed vessels
1he Lable ol Japaneselaqqed vessels may noL chanqe under 2013 Lax relorm. Some ol Lhe relorms may be
subject to change, deletion or addition as the law passes through the Diet.
In general, a Japanese seafarer is subject to individual income tax at the standard progressive rate,
with a current maximum rate of 50% (including national and local tax). However, certain daily
allowance payments, based on the labor agreement, as well as certain medical stipends, are exempt
lor individual income Lax purposes. Under Lhe 2013 Lax relorm, a maximum raLe may rise lrom 507 Lo
55% in 2015.
Japan has raLiled Lax LreaLies wiLh more Lhan 53 counLries. MosL LreaLies have special arLicles lor
international shipping income.
According to domestic Japanese tax rules, a corporate body is deemed to be resident in Japan if
iL is reqisLered {incorporaLed) in Japan. Under mosL ol Japan's Lax LreaLies, a corporaLe body's
income derived lrom shippinq operaLions is qenerally sub|ecL Lo prolLs Lax in Lhe place ol residence
(incorporation) instead of the place of effective management.
In addition to these tax treaties, Japan also has reciprocity rules with certain foreign jurisdictions
under which Japan may grant exemptions for shipping income earned by such foreign resident
companies.
1.4 Freight tax
There are no freight taxes levied in Japan.
1.5 Consumption tax (Japanese value-added tax)
Shipping companies should be treated as normal corporations for Japanese consumption tax
purposes, and be subject to consumption tax at the rate of 5%. This tax rate is scheduled to be
increased pursuant a two-phase schedule: Phase One from 5% to 8% on 1 April 2014, and Phase
Two from 8% to 10% on 1 October 2015. Domestic transportation fees are considered to be taxable
income, while international transportation fees are considered to be exempt income.
1. SpeciaI vesseI reistraticn benehts fcr the shipcwner
Registration and license tax is reduced with respect to registration of ownership of a vessel in Japan.
Total net tonnage Deemed proht per day per 100 net tons {JPY)
Up Lo 1,000 180
1,001 10,000 135
10,001 25,000 90
Over 25,000 45
2. Human capital
In general, the following conditions have to be met and standards have to be respected in order to hire
personnel:
Lqual employmenL opporLuniLies lor men and women
No aqe discriminaLion
Workinq hour limiLaLion
Period ol labor conLracL
Holiday allowance
AmounL ol waqes
1he Labor SLandards Law and Lhe Seaman Law apply Lo crew members ol reqisLered ships in Japan.
2.3 Labor union law
There is a major collective labor agreement, which regulates the minimum wage and working conditions,
among other things, between all Japanese seafarers unions and employers, comprising most of Japans
shipping companies.
There are treaties relating to social security contributions (the International Social Security Agreement) with
1^ counLries, includinq Lhe UniLed Kinqdom and Lhe UniLed SLaLes ol America. SeparaLely, LreaLies wiLh Lwo
other countries are currently in the process of implementation. Furthermore, treaties with four additional
countries are under negotiation or are to be negotiated in the future.
2.5 Mannin issues with Byin the Japanese Ba
Under Japanese law, Lo qualily lor a license/LiLle ol sealarer, iL is necessary Lo pass a naLional examinaLion
and lnish a Lraininq proqram desiqnaLed by MLl1. Accordinq Lo Lhe Current State of Japanese Shipping, as
drawn up by the Japanese Shipowners Association (JSA), it is generally regarded as very expensive to
employ Japanese crews.
A majority of shipping companies adopt the joint stock corporation (kabushiki-kaisha) as their legal
structure.
Dividends distributed by domestic corporations to domestic and foreign companies are generally subject to a
20.42 % withholding tax (a 2.1% surtax is levied on the 20% of the withholding tax rate) until 31 December
2037. The tax rate will be 20% thereafter. However, withholding tax on dividends distributed to foreign
companies may be reduced by applicable income tax treaties.
There are some subsidies available for shipping companies in Japan. For instance, the government subsidizes
companies that ship daily necessities to isolated islands.
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There are some major incentives for shipping companies for tax purposes, such as a special depreciation rate
available for ships and a deferral of capital gains arising from the replacement of ships. Also, some incentives,
such as the special depreciation regime, may be available to certain shipbuilding companies.
4.3 !ssues with Byin the Japanese Ba
Cenerally, Lhe cosL ol lyinq Lhe Japanese laq is hiqher Lhan in oLher counLries. JSA sLaLed on iLs websiLe LhaL
Lhis is due Lo Lhe hiqh raLes ol reqisLraLion Lax and lxed asseLs Lax, Lhe requiremenL ol employinq Japanese
crews, which are expensive, and strict regulations for vessels and equipment.
No changes are noted.
5.1 Infrastructure
5.1.1 Major ports
Kobe
Naqoya
Osaka
1okyo
Yokohama
The following support facilities are usually available in major ports in Japan:
Dockinq
SLoraqe
CenLral Japan lnLernaLional AirporL is close Lo Lhe porL ol Naqoya.
Kansai lnLernaLional AirporL is close Lo Lhe porLs ol Osaka and Kobe.
NariLa lnLernaLional AirporL is close Lo Lhe porL ol 1okyo.
The following support facilities for the shipping industry are usually available in Japan:
Kobe UniversiLy
NaLional colleqe{s) ol marine Lechnoloqy
1okai UniversiLy {1okyo)
1okyo UniversiLy ol Marine Science and 1echnoloqy
The universities and colleges provide specialized courses in maritime science, technology and engineering
and oceanography.
5.2.1 Implementation of the International Safety Management (ISM) Code
All passenger ships that sail internationally and all oil tankers with a total weight exceeding 500 tons are
required Lo implemenL Lhe lSM Code. OLher domesLic vessels LhaL are noL obliqed Lo implemenL Lhe lSM Code
are also strongly requested to comply with the Code on a voluntary basis.
Japanese saleLy requlaLions, such as Lhe Labor SLandard Law and Lhe Seaman Law, are qenerally considered
to require the maintenance of a high standard.
Japan is a parLy Lo Lhe MARPOL ConvenLion {lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom
Ships), which regulates the standards for construction of vessels and facilities on a technological basis and
Lhe lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS), which requlaLes Lhe securiLy ol lile aL sea.
5.3 Registration
The maritime authority requires all Japanese ships weighing 20 tons or more and able to sail on their own to
be reqisLered, while iL delnes Japanese ships as lollows:
Ships owned by Lhe qovernmenL ol Japan or a Japanese public ollce
Ships owned by a Japanese naLional
Ships owned by a corporaLion esLablished under Japanese law {i.e., kabushiki-kaisha, godo-kaisha, goshi-
kaisha and gomei-kaisha) and more than two-thirds of whose representatives are Japanese nationals
Also, the maritime authority stipulates the rights and obligations of Japanese ships.
An owner of a ship that meets the requirements in Japan applies to register for each local authorization after
compleLinq Lhe reqisLraLion aL Lhe Leqal Allairs Bureau.
Parallel registration is not permitted.
1he capLain and Lhe chiel enqineer ol a Japanese ship musL be Japanese naLionals. Minimum educaLion and
prolessional qualilcaLions are required lor ollcers and crew. ln order Lo become a naviqaLion ollcer, ship
piloL or ship ollcer, iL is necessary Lo pass a naLional exam.
There are no international conventions in force in Japan regarding the registration of ships.
1here is no inlormaLion available on any oLher special requiremenLs/rules reqardinq reqisLraLion oLher Lhan
Lhe requiremenLs/rules sLaLed above.
1he JSA has a websiLe aL hLLp://www.|saneL.or.|p/e/index.hLml, where uselul shippinqrelaLed inlormaLion is
available in English.
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Luxembourg
1. Tax
Tax rate
Luxembourq does noL have a Lonnaqe Lax reqime. 1hus, a Luxembourq shippinq company, as delned by
Lhe MariLime AcL ol 199^, is sub|ecL Lo corporaLe income Lax {Cl1) and municipal business Lax {MB1).
Cl1 ranqes lrom 207 Lo 217, dependinq on Lhe level ol Laxable income. MB1 ranqes lrom 6.757 Lo 127,
depending on the municipality in which the shipping company is established. Income derived from the
operaLion and leasinq ol seaqoinq vessels used in inLernaLional Lrallc is, however, exempL lrom MB1. Cl1 is
increased by a contribution to the employment fund of 7% of the CIT due.
1hus, Lhe maximum aqqreqaLe ellecLive Lax raLe applicable Lo income derived by a Luxembourq shippinq
company from the operating and leasing of seagoing vessels amounts to 22.47%.
General minimum tax
A new minimum tax for all taxpayers subject to CIT (except certain holding companies subject to a different
minimum Lax) has been inLroduced as ol 2013. 1he Lax will ranqe lrom t500 Lo t20,000 {plus conLribuLion
Lo Lhe employmenL lund), dependinq on Lhe balance sheeL LoLal as aL Lhe lnancial year's closinq daLe.
Investment tax credit
A Luxembourq company may benelL lrom an income Lax crediL lor invesLmenL in cerLain qualilyinq asseLs,
i.e., the investment tax credit. The credit is deductible from the CIT due by the company and may thus
conLribuLe Lo a subsLanLial reducLion ol Lhe ellecLive Lax raLe applicable Lo income derived by a Luxembourq
shipping company from the operation and leasing of seagoing vessels.
The investment tax credit comprises two parts:
A complemenLary invesLmenL Lax crediL compuLed on Lhe dillerence beLween Lhe neL book value ol Lhe
qualilyinq asseLs as ol Lhe end ol a relevanL lscal year and Lhe averaqe book value ol Lhe qualilyinq asseLs
as ol Lhe end ol Lhe lve precedinq lscal years, i.e., Lhe complemenLary invesLmenL:
1he complemenLary invesLmenL Lax crediL qranLed is 127 ol Lhe complemenLary invesLmenL.
A qlobal invesLmenL Lax crediL compuLed based on Lhe acquisiLion price ol Lhe qualilyinq asseLs acquired
durinq Lhe relevanL lscal year:
1he qlobal invesLmenL Lax crediL qranLed is 77 ol Lhe invesLmenLs up Lo t150,000 and 27 ol Lhe
exceeding amount of investments.
Investments qualify for the investment tax credit if they meet a certain number of conditions, notably:
1he invesLmenL musL be in Lanqible lxed asseLs LhaL are depreciaLed over aL leasL Lhree years.
1he asseLs acquired musL be new.
1he invesLmenL musL be physically operaLed in a Luropean Union {LU) Member SLaLe or in Lhe Luropean
Lconomic Area {LLA), which comprises LU Member SLaLes, lceland, LiechLensLein and Norway. ln Lhe
case of an investment used abroad, this investment may only qualify for the investment tax credit to the
exLenL LhaL Lhe invesLmenL is used in an esLablishmenL locaLed in Luxembourq. 1he lasL Lwo condiLions do
noL need Lo be lulllled in relaLion Lo seaqoinq vessels operaLed in inLernaLional Lrallc. ln Lhe case ol Lhe
investment in used seagoing vessels, however, the shipping company must demonstrate that the vessel
did noL benelL lrom Lhe invesLmenL Lax crediL in Lhe pasL.
1he invesLmenL Lax crediL is also available under cerLain condiLions lor qualilyinq asseLs lnanced by leasinq.
ln Lhe case ol seaqoinq vessels used in inLernaLional Lrallc and lnanced by leasinq, only Lhe lessee may claim
the investment tax credit. The unused tax credit may be carried forward for 10 years.
Tax treatment of capital gains on the sale of vessels
CapiLal qains arisinq lrom Lhe Lransler or disposal ol asseLs are considered as ordinary prolLs, Laxable aL
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standard income tax rates.
Under cerLain condiLions, capiLal qains realized by a Luxembourq shippinq company on Lhe Lransler ol
seaqoinq vessels used in inLernaLional Lrallc may, however, be rolled over by reinvesLinq Lhe proceeds lrom
Lhe Lransler inLo qualilyinq lxed asseLs. BoLh Lhe vessel and Lhe qualilyinq asseLs need Lo be invesLed in a
Luxembourq business. 1hus, Lhe LaxaLion ol capiLal qains realized upon Lhe disposal ol seaqoinq vessels used
in inLernaLional Lrallc may be delerred.
Provisions for large-scale repair and maintenance work to vessels
ln principle, provisions lor losses or debL recorded by a Luxembourq company are only deducLible lor income
Lax purposes il Lhey are deLermined precisely and cover expenses LhaL are Lriqqered in Lhe lscal year in
which the provision is recorded. As a consequence, provisions for large-scale repair and maintenance work
may be disallowed. ln Lhe case ol a Luxembourq shippinq company, Lax auLhoriLies, however, usually accepL
provisions for large-scale repair and maintenance work as fully tax deductible in the year they are booked.
Depreciation rules
A shipping vessel can be depreciated by using the straight-line (or linear) depreciation method or, subject to
a certain number of conditions, the declining balance (or accelerated depreciation) method.
Depreciation of a vessel is based on the useful life of the vessel. Where the declining balance method is used,
the depreciation rate may not exceed three times the straight-line depreciation rate (e.g., 25% in the case of
a depreciation period of 12 years) or 30%.
A shipping business making eligible investments aiming to protect the environment and the rational usage
of energy, as well as the equipment of working places for disabled persons, may elect for an accelerated tax
amorLizaLion ol Lhe eliqible invesLmenLs durinq Lhe year ol acquisiLion and Lhe lour lollowinq lscal years. 1he
accelerated depreciation may not exceed 80% of the acquisition cost.
Carrying forward of losses
Losses incurred durinq previous accounLinq periods, which have noL yeL been seL oll aqainsL Lhe Laxable
income ol Lhe currenL accounLinq period, may be carried lorward indelniLely.
1here is no carryback ol losses available under Luxembourq Lax law.
Indirect tax
MosL ol Lhe LransacLions perlormed by Luxembourq shippinq companies are, qenerally, noL sub|ecL Lo
Luxembourq valueadded Lax {VA1). For insLance, Lhe charLerinq and hirinq ol vessels used lor hiqh sea
navigation; the transport of goods and ancillary transactions, such as loading or unloading of goods where
Lhese are direcLly connecLed wiLh exporLs ol qoods lrom Luxembourq Lo a place ouLside Lhe LU; and Lhe
LransporL ol persons by shippinq companies are exempL lrom or ouLside Lhe scope ol Luxembourq VA1, under
certain conditions.
ln principle, LransacLions perlormed lor Lhe needs ol sea naviqaLion supply, modilcaLion, repair and
maintenance (with the exception of ships provisions) are also exempt from VAT.
Shipping companies are usually entitled to deduct the VAT incurred on costs relating to these transactions.
ln a lrsL sLep, Lhe allocaLion ol LaxaLion riqhL needs Lo be deLermined. 1o do so, iL musL be relerred Lo double
Lax LreaLies concluded beLween Luxembourq and Lhe counLry ol residency ol Lhe sealarer {il any).
ll LaxaLion riqhL belonqs Lo Luxembourq, Lhe lollowinq applies:
Luxembourq residenL crew members are sub|ecL Lo Lhe common Luxembourq LaxaLion reqime lor
individuals. 1he Luxembourq shippinq company has Lo wiLhhold Lax and social securiLy conLribuLions on
the salary payments.
1he remuneraLion paid Lo Luxembourq nonresidenL crew members employed by a Luxembourq shippinq
company in inLernaLional mariLime Lrallc is sub|ecL Lo a 107 laL Lax raLe in Luxembourq. 1his laL Lax raLe
applies Lo 907 ol Lheir qross remuneraLion, less a lump sum deducLion ol t1,800 per monLh or t72 per
day.
Luxembourq has concluded 6^ double Lax LreaLies, wiLh Lhe lollowinq counLries:
Armenia, Austria, Azerbaijan, Bahrain, Barbados, Belgium, Brazil, Bulgaria, Canada, China, Czech
Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland,
India, Indonesia, Ireland, Israel, Italy, Japan, Latvia, Liechtenstein, Lithuania, Malaysia, Malta, Mauritius,
Mexico, Moldova, Monaco, Mongolia, Morocco, Netherlands, Norway, Panama, Poland, Portugal, Qatar,
Romania, Russian Federation, San Marino, Singapore, Slovak Republic, Slovenia, South Africa, South
Korea (ROK), Spain, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, United Arab
Emirates, United Kingdom, United States, Uzbekistan, Vietnam.
Following treaty negotiations, treaty drafts have been initialed with Albania, Argentina, Cyprus, Croatia,
LqypL, KazakhsLan, KuwaiL, KyrqyzsLan, Lebanon, Macedonia, MonLeneqro, New Zealand, Oman, PakisLan,
Saudi Arabia, Serbia, Seychelles, Sri Lanka, Syria, 1a|ikisLan, Ukraine and Uruquay.
The double tax treaties were concluded in compliance with the Organisation for Economic Co-operation and
DevelopmenL model LreaLy, which provides LhaL "prolLs lrom Lhe operaLion ol ships in inLernaLional Lrallc
shall be taxable only in the Contracting State in which the place of effective management of the enterprise is
situated.
Under Luxembourq Lax law, Lhe place ol ellecLive manaqemenL is Lhe place where Lhe manaqemenL decisions
are Laken and where conLrol over Lhe allairs ol a company is carried ouL. WiLh relerence Lo Luxembourq
jurisprudence, the place of effective management is thus, in principle, deemed to be where the board of
directors or the management board, as well as the shareholder meetings, convene.
ln a consLanLly evolvinq inLernaLional environmenL, Lhese criLeria may, however, noL be sullcienL in Lhe
eyes ol a loreiqn Laxinq auLhoriLy Lo esLablish Lhe place ol ellecLive manaqemenL in Luxembourq, and
additional substance may be required. In the case of a fully operational shipping company duly registered in
Luxembourq, sullcienL subsLance should, however, exisL.
Should no Lax LreaLy apply, a loreiqn Lax crediL is available under Luxembourq domesLic law lor loreiqn source
income that has been subject to an equivalent income tax abroad. The maximum tax credit may not exceed
Lhe Luxembourq Cl1 charqeable on Lhe loreiqn income. Any loreiqn Lax LhaL may noL be crediLed aqainsL Cl1
is deductible as an expense when computing taxable income.
1.4 Freight taxes
No lreiqhL Laxes are levied in Luxembourq.
1he reqisLraLion ol vessels in Luxembourq does noL provide parLicular Lax benelLs lor Lhe shipowner.
No further major changes are anticipated in the current legislation.
2. Human capital
1here is no condiLion ol naLionaliLy lor crew members Lo be lulllled when employinq personnel. 1he masLer
{sub|ecL Lo Lhe relevanL qualilcaLions) ol a Luxembourqlaqqed ship has Lo be a ciLizen ol Lhe LU. However,
Lhe MinisLer ol Lconomy and Foreiqn 1rade {hereinalLer, MinisLer) may qranL exempLions under cerLain
circumstances.
From the start of the employment, crew members must have a written employment contract. The contract
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must state the identity of both parties, the start date and place of employment, whether the contract is for
a limited or unlimited term, job description, wages, social security regime applicable, etc. All seafarers must
undergo a medical check before boarding.
2.2 Labor law
2.2.1 National labor law
Any employment contract between a shipowner and a crew member for intended or current service on board
a ship lyinq Lhe Luxembourq laq qualiles as a mariLime employmenL conLracL, sub|ecL Lo Lhe provisions ol
Lhe Luxembourq MariLime AcL.
1he law ensures LhaL crew members employed on a Luxembourqlaqqed ship will receive a saLislacLory level
ol social securiLy benelLs.
2.2.2 Collective labor law
MosL ships lyinq under Lhe Luxembourq laq benelL lrom a collecLive barqaininq aqreemenL.
ln accordance wiLh Luxembourq law on collecLive barqaininq aqreemenLs, shipowners may, in Lhe common
inLeresL ol Lhe crew on board Lheir ships lyinq Lhe Luxembourq laq, conclude a collecLive barqaininq
agreement with a national representative trade union that can fairly claim to be representative of the crew
members, eiLher by direcL allliaLion or by a sLrucLural or conLracLual link wiLh a Lrade union represenLinq
seafarers.
A collective bargaining agreement determines:
1he qualiLy ol Lhe parLies
1he prolessional and LerriLorial leld ol applicaLion
1he daLe when Lhe aqreemenL comes inLo lorce and iLs duraLion
1he workinq condiLions, which comprise:
Hirinq and dismissal
Workinq hours
SupplemenLary work
Waqe level
ComplemenLary provisions LhaL are more lavorable Lo Lhe salaried Lhan Lhe sLaLuLory requlaLions
2.3 Social security regulations
2.3.1 International social security regulations
Luxembourq is sub|ecL Lo Lhe LU RequlaLions, which provide coordinaLion amonq Lhe social securiLy sysLems
ol LU counLries. 1hese requlaLions also apply Lo LLA counLries and SwiLzerland.
ln addiLion, Luxembourq has enLered inLo bilaLeral social securiLy aqreemenLs wiLh counLries ouLside Lhe LU,
and most of these agreements include clauses on seafarers from:
Bosnia-Herzegovina, Brazil, Canada, Cape Verde, Chile, Croatia, India, Macedonia, Moldavia, Morocco,
Quebec, Serbia and Montenegro (former), Slovakia, Slovenia, Tunisia, Turkey, United States, Yugoslavia
(former).
A bilateral social security agreement has been signed with Argentina and is expected to enter into force in
the near future.
2.3.2 Luxembourg social security regulations
The crew members employed on a Luxembourghagged ship must be aIhliated with the Luxembourg
social security scheme if one of the following is true:
1hey are Luxembourq naLionals.
1hey are naLionals ol a counLry LhaL has a bilaLeral social securiLy aqreemenL wiLh Luxembourq.
1hey are residenLs ol Luxembourq or an LU counLry.
ll none ol Lhe above condiLions is meL, Lhe owner ol Lhe Luxembourqlaqqed ship musL quaranLee social
protection to personnel working on his or her ship. In this respect, the shipowner must subscribe to an
insurance proqram coverinq benelLs such as healLh, unemploymenL, reLiremenL and disabiliLy.
1he Luxembourq auLhoriLies may waive Lhese obliqaLions il Lhe shipowner can prove LhaL Lhe crew members
benelL lrom social securiLy proLecLion in Lheir respecLive counLry ol residence equivalenL Lo Lhe Luxembourq
social security scheme.
For crew members employed by a Luxembourq employer and workinq on board a ship wiLh a loreiqn laq, Lhe
Luxembourq social securiLy sysLem does noL apply.
2.4 Mannin advantaes/disadvantaes cf Byin the Luxembcur Ba
1he main Lax advanLaqe when lyinq Lhe Luxembourq laq is explained in secLion 1.2. Moreover, crew
members ol ships lyinq Lhe Luxembourq laq are also covered by Luxembourq labor law and an
advantageous social care system, unless diverging provisions are imposed by treaty (e.g., the treaty with
India).
Operational vehicles
A Luxembourq shippinq company as delned by Lhe MariLime AcL ol 17 June 199^ musL be undersLood as
relerrinq Lo any person or leqal enLiLy, wheLher ol Luxembourq or loreiqn naLionaliLy, whose business is Lhe
buyinq and sellinq, Lhe charLerinq in and ouL, and Lhe manaqemenL ol seaqoinq ships, as well as Lhe lnancial
and commercial operations that relate directly or indirectly to such activities.
Common acLiviLies Lypical lor Luxembourq shippinq companies include mariLime LransporL and nonLransporL
activities, such as dredging, drilling and pipeline-laying.
1he reqime does noL limiL in any way Lhe choice ol Lhe leqal lorm ol Lhe company. Cenerally, mosL operaLinq
shipping companies are incorporated as joint-stock companies (i.e., Socit Anonyme or S.A., Socit
responsabilit limite or S. r.l. and Socit en Commandite par Actions or S.C.A.).
Luxembourq companies are in qeneral Laxable aL Cl1 amounLinq Lo 22.^77 and MB1 carryinq lrom 6.757
{raLe lor Luxembourq CiLy) Lo 127 dependinq on Lhe municipaliLy where Lhe company is esLablished. 1he
Laxable base is calculaLed on Lhe business prolLs alLer Lhe deducLion, amonq oLhers, ol qeneral expenses,
depreciaLion insLallmenLs, lnancial charqes, provision lor necessary or larqescale repairs, and carried
forward tax losses. Investment tax credits will reduce the CIT.
Luxembourq shippinq companies are noL sub|ecL Lo MB1 on qualilyinq income. 1he ellecLive applicable Lax
rate for qualifying shipping companies will therefore in most cases be 22.47%.
Finally, Luxembourq companies are liable lor neL worLh Lax {NW1) amounLinq Lo 0.57 ol Lhe ad|usLed neL
asseL value. However, NW1 may be reduced up Lo Lhe Cl1 il cerLain condiLions are lulllled.
Groups of companies
A Luxembourq company or Lhe Luxembourq permanenL esLablishmenL ol a nonresidenL company may,
under cerLain condiLions, be lscally inLeqraLed or consolidaLed wiLh iLs Luxembourq subsidiaries. 1he Lax
consolidaLion allows Lhe allliaLed subsidiaries Lo combine Lheir respecLive Lax resulLs wiLh Lhe Lax resulL ol Lhe
parent company of the consolidated group.
OLher condiLions noLwiLhsLandinq, Lax consolidaLion is only available il Lhe Luxembourq parenL {company
or permanent establishment) owns directly or indirectly at least 95% of the capital of its subsidiaries (the
holdinq Lhreshold may be reduced Lo 757 in excepLional siLuaLions). Moreover, Lhe Luxembourq subsidiaries
must be resident joint-stock companies that are fully subject to tax. In the case of a permanent establishment
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of a nonresident company, the nonresident company must be a joint-stock company fully subject to a tax
comparable Lo Luxembourq Cl1.
|nvest|n anc hnanc|n ven|c|es
Besides Lhe lavorable Lax reqime ol operaLinq shippinq companies, Luxembourq ollers diversiled invesLmenL
vehicles and/or sLrucLures Lo dillerenL Lypes ol poLenLial lnancial invesLors, lor boLh direcL and indirecL {via
an inLermediary holdinq company in Luxembourq or abroad) invesLmenLs, as shown below.
Luxembourg holding company
lnvesLmenLs in shippinq companies may be sLrucLured usinq a Luxembourq residenL holdinq company
(soc|ete ce art|c|at|ons hnanc|eres {SOPARFl)), which is a lully Laxable company. lL benelLs lrom Lhe
parenLsubsidiary exempLion and Lhe double Lax LreaLies siqned by Luxembourq. 1he aim ol a SOPARFl is
holdinq parLicipaLions and providinq lnancinq Lo iLs subsidiaries and relaLed parLies.
1he SOPARFl sLrucLure is, in principle, used Lo reduce or even eliminaLe Lhe LaxaLion ol prolLs disLribuLed by
the shipping company and capital gains realized on the transfer of a shareholding in a shipping company to
Lhe exLenL LhaL Lhe condiLions ol Lhe Luxembourq parLicipaLion exempLion are meL.
The SOPARFI is:
A Luxembourq |oinLsLock company or a qualilyinq corporaLe enLiLy lully sub|ecL Lo Lax in Luxembourq
A Luxembourq permanenL esLablishmenL ol an enLiLy LhaL is residenL in anoLher LU sLaLe and is covered
by Article 2 of the European Community (EC) Parent-Subsidiary Directive
A Luxembourq permanenL esLablishmenL ol a |oinLsLock company residenL in a sLaLe wiLh which
Luxembourq has enLered inLo a Lax LreaLy
A Luxembourq permanenL esLablishmenL ol a |oinLsLock company or cooperaLive company residenL in an
LLA sLaLe oLher Lhan an LU sLaLe
1he SOPARFl owns aL leasL 107 ol Lhe share capiLal ol Lhe shippinq company, or Lhe acquisiLion cosL ol
Lhe shareholdinq is aL leasL t1.2 million in Lhe case ol a dividend disLribuLion or t6 million in Lhe case ol a
capital gain realized upon the transfer.
1he SOPARFl holds Lhe minimum parLicipaLion in Lhe shippinq company lor aL leasL 12 monLhs. 1he
12-month period does not need to be completed at the time of the distribution of the dividends if the
Investor A
Vessel 1 Vessel 2
Intermediary holding
company
Vessel 3
Investor B
Investment vehicle (Lux.):
- SOPARFI
- SPF
- SICAR
- SIF and Part II UCI
Investor C
SOPARFI commits itself to hold the minimum participation for the required period.
1he shippinq company is a residenL |oinLsLock company or oLher qualilyinq enLiLy lully sub|ecL Lo Lax,
a nonresidenL |oinLsLock company lully sub|ecL Lo a Lax comparable Lo Luxembourq Cl1 or an enLiLy
residenL in an LU Member SLaLe LhaL is covered by ArLicle 2 ol Lhe LC ParenLSubsidiary DirecLive.
Lxpenses in direcL relaLion Lo Lhe parLicipaLion holdinq are only Lax deducLible Lo Lhe exLenL LhaL Lhey
exceed the tax exempt income coming from the participation.
1he exempLion lor dividends also applies Lo dividends on parLicipaLions held Lhrouqh qualilyinq lscally
transparent entities. Certain restrictions may apply, however, with respect to the dividends received and the
capital gain realized.
As ol 1 January 2013, a SOPARFl is sub|ecL Lo a minimum LaxaLion ol t3,210 {includinq a conLribuLion Lo
the employment fund). This minimum taxation is only applicable when the SOPARFI is reporting a tax loss.
Tax losses incurred for those years when the minimum taxation is applicable can be carried forward and used
Lo ollseL luLure Laxable prolLs. 1his rule is applicable Lo SOPARFls holdinq lnancial asseLs {parLicipaLions,
securities, cash) exceeding 90% of the total assets.
AL Lhe beqinninq ol 2011, Lhe Luxembourq Lax auLhoriLies issued Lwo adminisLraLive circulars in order Lo
provide quidance on Lransler pricinq consideraLions applicable Lo inLraqroup lnancinq acLiviLies. 1hese
circulars provide guidance on how to determine an arms-length price to be realized by an intra-group
lnancinq company. An advance pricinq aqreemenL on Lhe annual remuneraLion realized on inLraqroup
lnancinq LransacLions may be obLained Lo Lhe exLenL Lhe inLraqroup lnancinq companies meeL cerLain
subsLance criLeria in Luxembourq and ellecLively bear Lhe risks relaLed Lo Lhe lnancinq LransacLions.
Private asset management company
In 2007, a new law on private asset management vehicles (Socit de gestion de patrimoine familial (SPF))
was implemenLed by Lhe Luxembourq auLhoriLies Lo replace Lhe lormer holdinq 29 company. 1he SPF is a
vehicle benelLinq lrom a prelerenLial Lax reqime LhaL is inLended lor privaLe wealLh and asseL manaqemenL ol
individuals by Lhe passive holdinq ol shares or oLher lnancial insLrumenLs.
Accordinq Lo Lhe Lax reqime, Lhe SPF is noL sub|ecL Lo Cl1, MB1 or NW1. FurLhermore, Lhe disLribuLions ol a
SPF are exempt from withholding tax (WHT). However, the SPF is subject to the subscription tax at a rate
of 0.25% on the total of the paid-up capital, the share premium and the amount of the debt exceeding eight
times the sum of the paid-up capital and share premium as of 1 January. For SPFs, the subscription tax is
capped aL t125,000.
Investment company in risk capital
The investment company in risk capital (socit dinvestissement en capital risque (SICAR)) was created
in 2004 and is a dedicated vehicle for private equity and venture capital investments. It can be set up as a
limited partnership or as a corporate company. The SICAR is approved and supervised by the Commission
lor Lhe Supervision ol Lhe Financial SecLor {CSSF), buL iL is sub|ecL Lo lew resLricLions. lL may have a lexible
invesLmenL policy wiLh no diversilcaLion rules or leveraqe resLricLions.
1he lollowinq condiLions have Lo be lulllled lor a company Lo qualily as a SlCAR:
lL is seL up wiLh a share capiLal ol aL leasL t1 million.
lLs purpose is Lo invesL in securiLies represenLinq risk capiLal.
lnvesLmenL in Lhe SlCAR is only possible lor insLiLuLional invesLors, prolessional invesLors and any oLher
wellinlormed invesLor as delned by Lhe law {e.q., invesLinq a minimum capiLal ol t125,000) {see also
SIF below).
1he arLicles expliciLly provide LhaL Lhe company is sub|ecL Lo Lhe SlCAR law.
The tax treatment differs depending on the legal form of the SICAR (i.e., tax transparent partnership or non-
LransparenL corporaLe company). ll Lhe SlCAR is seL up as a corporaLe company, iL is sub|ecL Lo Cl1 and MB1.
However, Lhe SlCAR benelLs lrom a lavorable Lax LreaLmenL lor income derived lrom Lranslerable lnancial
asseLs. lncome derived lrom Lhese asseLs is exempL lrom Cl1 and MB1. Moreover, Lhe SlCAR benelLs lrom Lhe
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Luxembourq parLicipaLion exempLion and lrom Lhe double Lax LreaLies concluded by Luxembourq.
ln addiLion, Lhe SlCAR is noL liable lor subscripLion Lax or NW1 and is sub|ecL Lo a lxed capiLal duLy ol t75
payable upon incorporation.
Dividends disLribuLed by a lully Laxable Luxembourq company Lo a SlCAR may benelL lrom Lhe Luxembourq
parent-subsidiary WHT exemption.
Dividends disLribuLed by a SlCAR are exempL lrom Luxembourq WH1.
Securitization company
Securitization companies can take the form of regulated investment funds or companies that, depending on
their activities, may or may not be regulated. These vehicles are available for securitization transactions in
Lhe broadesL sense and are noL sub|ecL Lo NW1. 1hey are sub|ecL Lo Cl1 and MB1. However, commiLmenLs Lo
investors (dividend and interest payments) are deductible from the tax base.
Undertakings for collective investments
Luxembourq also ollers various invesLmenL lunds, such as:
UnincorporaLed coownership ol asseLs {Fonds commun de placemenL {FCP))
lnvesLmenL company wiLh variable capiLal {SocieLe d'invesLissemenL capiLal variable {SlCAV))
lnvesLmenL company wiLh lxed capiLal SocieLe d'invesLissemenL capiLal lxe {SlCAF))
All are sub|ecL Lo a very lavorable Lax reqime. 1he lunds need Lo be auLhorized by Lhe Luxembourq
Commission for the Supervision of the Financial Sector (CSSF). These entities are subject to subscription
Lax levied on Lheir LoLal neL asseL value, excludinq invesLmenLs in oLher Luxembourq invesLmenL lunds.
DisLribuLions made by Lhese lunds are noL sub|ecL Lo WH1. UnderLakinqs lor collecLive invesLmenLs {UCl) seL
up under ParL ll ol Lhe Luxembourq law on underLakinqs lor collecLive invesLmenL have a proven Lrack record
lor Lhe sLrucLurinq ol Luxembourqbased, open and closedended shippinq lunds.
Specialized investment funds (SIFs) are more lightly regulated investment funds for informed investors. In
this context, an informed investor is one of the following:
An insLiLuLional invesLor
A prolessional invesLor
Any oLher Lype ol invesLor who has declared in wriLinq LhaL he or she is an inlormed invesLor, and eiLher
invesLs a minimum ol t125,000 or has an appraisal lrom a bank, an invesLmenL lrm or a manaqemenL
company (from a European country), certifying that the investor has the appropriate expertise,
experience and knowledge to adequately understand the investment made in the fund
SlFs are sub|ecL Lo siqnilcanLly simpliled rules lor seLLinq up lund sLrucLures such as hedqe lunds, real esLaLe
lunds and privaLe equiLy lunds and represenL a proven vehicle lor Lhe sLrucLurinq ol Luxembourqbased
shippinq lunds. lnvesLmenL lunds in Lhe lorm ol SlFs are noL sub|ecL Lo any Luxembourq Laxes on capiLal
gains or income. They are subject only to a subscription tax at an annual rate of 0.01% calculated on the
quarterly net asset value of the fund, excluding investments in funds already subject to the subscription tax.
Distributions by SIFs are not subject to WHT.
Range of investment vehicles
5oparh SIF
Flexible +
+
-
-Regulated
SPF SICAR Securitization UCI
|s|am|c hnance |nvestment structures
As lslamic lnance is much more locused on asseLs and lendinq Lo businesses, Lhe shippinq indusLry could
become an imporLanL secLor lor Lhe lslamic lnance indusLry {vessels beinq by naLure ShariacomplianL
investments).
Luxembourq has a lonq experience wiLh lslamic lnance, hosLinq numerous ShariacomplianL invesLmenLs
lunds. 1he Luxembourq SLock Lxchanqe was also Lhe lrsLever Luropean sLock exchanqe Lo lisL and
Lrade sukuk {bonds). 1he CovernmenL encouraqes lslamic companies and lnancial insLiLuLions Lo seL up
operaLions in Luxembourq.
ln LhaL respecL, Lhe Luxembourq 1ax AuLhoriLies released quidance clarilyinq Lhe Lax LreaLmenL applicable Lo
insLrumenLs ol lslamic lnance {in parLicular cosLplus lnancinq Murabaha and leasinq sLrucLures l|ara). 1his
will reinlorce Lhe repaLriaLion mechanism ol Luxembourq's ShariacomplianL lnancinq insLrumenLs, as well as
structuring capacities.
Dividends paid by a Luxembourq shippinq company are, in principle, sub|ecL Lo a sLaLuLory WH1 raLe ol 157,
unless a reducLion or exempLion provided lor by a double Lax LreaLy or Lhe Luxembourq parenLsubsidiary
exemption applies.
Under Lhe Luxembourq parenLsubsidiary exempLion, dividends may be exempL il Lhe lollowinq condiLions are
met:
1he recipienL holds direcLly, or Lhrouqh a qualilyinq lscally LransparenL enLiLy, lor aL leasL 12 monLhs aL
least 10% of the share capital of the shipping company, which must be a fully taxable resident joint-stock
company or other qualifying corporate entity, or the shareholding owned by the recipient in the shipping
company had an acquisiLion cosL ol aL leasL t1.2 million. 1he holdinq period requiremenL does noL need Lo
be completed at the time of the distribution if the recipient commits itself to eventually hold the minimum
participation for the required 12-month period.
1he recipienL saLisles one ol Lhe lollowinq addiLional requiremenLs:
lL is a lully Laxable residenL |oinLsLock enLiLy.
lL is an enLiLy residenL in anoLher LU Member SLaLe and is covered by ArLicle 2 ol Lhe LC ParenLSubsidiary
Directive.
lL is a |oinLsLock company residenL in SwiLzerland LhaL is lully sub|ecL Lo Lax in SwiLzerland wiLhouL Lhe
possibility of exemption.
lL is a Luxembourq permanenL esLablishmenL ol an enLiLy LhaL is residenL in anoLher LU Member SLaLe and
is covered by Article 2 of the EC Parent-Subsidiary Directive.
lL is a |oinLsLock company residenL in a sLaLe wiLh which Luxembourq has enLered inLo a Lax LreaLy and is
sub|ecL Lo a Lax comparable Lo Lhe Luxembourq corporaLe income Lax, or iL is a Luxembourq permanenL
establishment of such a company.
lL is a |oinLsLock company residenL in an LLA Member SLaLe and is sub|ecL Lo a Lax comparable Lo Lhe
Luxembourq Cl1, or iL is a Luxembourq permanenL esLablishmenL ol such a company.
Luxembourq provides a larqe ranqe ol qeneral qranLs and incenLives, eiLher Lax or nonLax relaLed. 1hose are
all available Lo Luxembourq shippinq companies should Lhe company comply wiLh Lhe qualilyinq condiLions.
A Luxembourq shippinq company or shippinq business is enLiLled Lo obLain qeneral invesLmenL Lax crediLs as
discussed under section 1.1.
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The rates for the global investment tax credit, as described in section 1.1, are increased from 7% to 8% and
from 2% to 4% for certain investments intended to protect the environment.
Moreover, Lhe Luxembourq CovernmenL is acLively supporLinq acLiviLies LhaL losLer Lhe proLecLion ol Lhe
environment and the rational use of energy. Aid in the form of a capital grant or an interest allowance may be
available in the case of investments made to improve environmental standards and the saving of energy.
An additional incentive is granted to businesses investing in environmental or energy-saving initiatives in the
form of a special depreciation rate. Here, a maximum accelerated depreciation rate of 80% of the eligible
investment is permitted to companies in the year of investment.
4.4 Advantaes/disadvantaes cf Byin the Luxembcur Ba
1here is no lurLher advanLaqe or disadvanLaqe in lyinq Lhe Luxembourq laq. More qenerally, Luxembourq is
currenLly encouraqinq any new qualilyinq invesLmenL, which would diversily Lhe Luxembourq economy and
foster research and development and innovation.
5.1 Infrastructure
5.1.1 Major ports
1he ma|or porL locaLed in MerLerL qives access Lo carqo ships {up Lo 110m lenqLh) lrom Lhe Rhine.
Luxembourq Lhus has direcL access Lo Lhe porL in RoLLerdam. For smaller ships, iL is connecLed Lo oLher porLs
in France Lhrouqh Lhe Canal de l'LsL and Lhe Canal de la Marne.
Dockinq
SLoraqe
LoqisLics direcL access Lo mulLimodal LransporLaLion services {Lurohub)
1he inLernaLional airporL ol Luxembourq is abouL 30km lrom Lhe porL ol MerLerL and presenLs one ol Lurope's
major cargo hubs.
New secured inLerneL porLal ol Lhe Luxembourq adminisLraLion open Lo prolessionals ol Lhe shippinq
industry
MariLime educaLion is provided by Lhe Commission ol MariLime Allairs, which is parL ol Lhe MinisLry ol
Transport.
5.2.1 Implementation of the International Safety Management (ISM) Code on board vessels
1he ma|oriLy ol Lhe shippinq companies respecL Lhe lSM Code on board, which is compulsory lor all vessels.
1he saleLy rules reqardinq manninq are sLricL. ln lacL, every ship seekinq reqisLraLion in Luxembourq musL be
inspecLed by Lhe inspecLion auLhoriLy ol an LU Member SLaLe or by Lhe Luxembourq Commission ol MariLime
Affairs.
1he law includes a number ol provisions desiqned Lo quaranLee saleLy sLandards on board all ships lyinq Lhe
Luxembourq laq:
lnsurance: Lhe shipowner musL provide Lhe Commission ol MariLime Allairs wiLh evidence ol adequaLe
third-party insurance, covering all categories of risk associated with operating a ship.
lnLernaLional LreaLy condiLions: no ship lyinq Lhe Luxembourq laq may seL Lo sea il iL is noL in compliance
wiLh Lhe saleLy condiLions seL ouL in inLernaLional LreaLies raLiled by Luxembourq.
Vessels are sub|ecL Lo reqular Lechnical inspecLion. 1he lollowinq classilcaLion socieLies have been
auLhorized: American Bureau ol Shippinq, Bureau VeriLas, DeL Norske VeriLas, Cermanischer Lloyd,
Lloyd's ReqisLer ol Shippinq, NKK and RlNA.
Aqe limiL: no ship more Lhan 15 years old may be reqisLered in Luxembourq lor Lhe lrsL Lime.
5.3 Registration
Requirements for registration of ships
1he law provides lor Lhe compulsory reqisLraLion ol ships lyinq Lhe Luxembourq laq in order Lo esLablish Lhe
ships legal status and to provide a single basic record for the registration of property rights and real rights.
All ships of at least 25 tons and that are less than 15 years old that are carrying out commercial shipping
acLiviLies can be reqisLered in Luxembourq. 1he MinisLer is auLhorized Lo deviaLe lrom Lhe aqe limiL provided
LhaL Lhe ship has underqone siqnilcanL desiqn chanqes and iL conlorms Lo Lhe sLandards applicable Lo new
ships laid down in Lhe inLernaLional convenLions Lo which Luxembourq is a parLy.
Only ships LhaL are ma|oriLyowned {more Lhan 507) by individuals who are naLionals ol an LU Member
SLaLe or by companies whose place ol manaqemenL is in an LU Member SLaLe can be reqisLered wiLh Lhe
Luxembourq shippinq reqisLer.
All, or a siqnilcanL parL, ol Lhe manaqemenL ol Lhe ship musL be carried ouL lrom Luxembourq. 1his
siqnilcanL parL ol Lhe manaqemenL is noL delned in Lhe law, which means LhaL Lhe lullllmenL ol Lhis
requiremenL is lelL Lo Lhe MinisLer's inLerpreLaLion. ln pracLice, some companies have seL up Lhe necessary
sLrucLures in Luxembourq; oLhers have siqned manaqemenL conLracLs wiLh accrediLed shippinq manaqemenL
companies.
Requirements for registration of shipping companies
ReqisLraLion: Lhe law provides lor Lhe compulsory reqisLraLion ol shippinq companies wiLh Lhe
Luxembourq compeLenL auLhoriLies belore Lhe commencemenL ol any acLiviLies.
Commercial acLiviLy: a shippinq company will have a commercial acLiviLy consisLinq ol Lhe purchase, sale,
lreiqhLinq, charLerinq and manaqemenL ol vessels, as well as relaLed lnancial and commercial operaLions.
No capiLal duLy: capiLal duLy was abolished ellecLive 1 January 2009 {only lump sum reqisLraLion duLy ol
t75 lor some LransacLions).
There are no legal restrictions with regard to the nationality or the residence of the shareholder(s)
ol a Luxembourq shippinq company. lLs share capiLal may be denominaLed in any currency
(including the euro).
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For Lhe purpose ol requesLinq Lhe enLry ol a vessel in Lhe Luxembourq shippinq reqisLer, an applicaLion should
be senL Lo Lhe MinisLer. 1he applicaLion musL be submiLLed by Lhe owner, by Lhe charLerer {in Lhe case ol
bareboat registration) or by the operator of the ship in whose name the ship is to be entered in the register.
1he applicaLion lor reqisLraLion, LoqeLher wiLh Lhe auLhorizaLion ol Lhe MinisLer {or his/her deleqaLe), shall be
presented to the registrar of mortgages within 30 days of the granting of authorization of the registration of
the ship.
1he Commissioner ol MariLime Allairs will lorward Lhe reqisLraLion cerLilcaLe Lo Lhe reqisLrar ol morLqaqes,
who shall issue it to the declarant, in return for a receipt, at the time of formal entry in the register.
1he period ol validiLy ol Lhe cerLilcaLe may noL exceed Lwo years, and Lhe acLual duraLion shall be shown in
Lhe reqisLer. 1he reqisLrar ol morLqaqes shall lorward wiLhouL delay a copy ol Lhe reqisLraLion cerLilcaLe Lo
Lhe Commissioner ol MariLime Allairs.
A provisional cerLilcaLe, valid lor a maximum ol one year, may be issued lor a ship LhaL is sLill under
construction or in cases where it has not proved possible to supply all the information required by the
application for registration.
1he issue ol a reqisLraLion cerLilcaLe is evidence LhaL Lhe vessel is auLhorized Lo ly Lhe Luxembourq laq.
Parallel registration is not possible.
Command of vessels
1he command ol a vessel lyinq Lhe Luxembourq laq shall be enLrusLed Lo a naLional ol an LU Member
SLaLe who is Lhe holder ol a diploma awarded by a school ol naviqaLion LhaL is recoqnized by Luxembourq.
LxempLion lrom Lhis naLionaliLy requiremenL may be qranLed by a specilc auLhorizaLion ol Lhe MinisLer,
particularly where the needs of commerce or of seafaring justify such exemption, or else in light of the origin
of the ships that are applying for registration.
Crewmens qua||hcat|ons
All sealarers' diplomas and cerLilcaLes recoqnized in an LU Member SLaLe shall be likewise recoqnized in
Luxembourq, provided LhaL Lhey are in accordance wiLh Lhe sLandards seL ouL in Lhe lnLernaLional ConvenLion
on SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq lor Sealarers ol 1978.
Composition of the crew
A cerLilcaLe ol sale manninq, aLLached Lo Lhe reqisLraLion cerLilcaLe, will be issued by Lhe Commissioner ol
MariLime Allairs.
1he masLer or Lhe ollcer on duLy will enLer Lhe names, addresses and ranks ol Lhe members ol Lhe crew in
the ships log.
All ol Lhe lnLernaLional MariLime OrqanizaLion's {lMO) inLernaLional convenLions reqardinq reqisLraLion have
been adopted.
ReqisLraLion duLies vary lrom t0.50 Lo t1 per Lon, dependinq on Lhe aqe and Lonnaqe ol Lhe ship.
Registration of maritime mortgages is exempt from all duty, except for a nominal amount, which goes toward
the payment of the mortgage registrars salary.
Furthermore, all acts of conveyance or transfer inter vivos of a vessel, or a vessel under construction, are
exempt from all pro rata transfer and registration fees.
For all ships, an annual reqisLraLion lee ol t2,000 will be payable. An addiLional lee {t0.^0 Lo t0.65 per Lon)
will be payable based on the size and the age of the ship.
Vessels reqisLered in Luxembourq are sub|ecL Lo public conLrol by Lhe Commission ol MariLime Allairs. Prior Lo
reqisLraLion in Luxembourq, vessels musL underqo a survey carried ouL by a recoqnized classilcaLion socieLy.
Services provided or unexpected surveys carried out by the Commission are free of charge.
Commission of Maritime Affairs
1he Luxembourq Commission ol MariLime Allairs is acLively parLicipaLinq in a qualiLy manaqemenL sysLem
leadinq Lo lnLernaLional OrqanizaLion lor SLandardizaLion 9001: 2000 cerLilcaLion. ln 200^ and 2005,
Lhe Commission ol MariLime Allairs was Lhe only public adminisLraLion Lo parLicipaLe in a naLional qualiLy
management competition and to obtain a distinction.
FurLher, Luxembourq parLicipaLed in Lhe lMO Flaq SLaLe audiL scheme {sellassessmenL lorm) in July 2000
and is a volunteer for the new audit scheme.
ln 2002, Lhe Luxembourq leeL ranked amonq Lhe lrsL 10 counLries Lo benelL lrom Lhe American Oualship
21 label. Luxembourq is also on Lhe WhiLe LisL ol Lhe Paris Memorandum ol UndersLandinq.
All shipping industry-related information (e.g., the law, the registration procedures, application forms) can
be lound on Lhe homepaqe ol Lhe Commission ol MariLime Allairs {Commissariat aux Affaires Maritimes) at:
hLLp://www.mariLime.lu.
Luxembourg Maritime Cluster
Founded in 2008, wiLh LrnsL & Younq Luxembourq as one ol iLs loundinq members, Lhe Luxembourq
MariLime ClusLer's mission is Lo conLribuLe Lo Lhe developmenL ol Lhe mariLime secLor and mariLimerelaLed
services in Luxembourq Lhrouqh Lhe implemenLaLion ol promoLion and communicaLion sLraLeqies boLh in
Luxembourq and abroad.
Further details, including an overview of all member companies can be found at:
hLLp://www.clusLermariLime.lu.
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Malaysia
1. Tax
1.1.1 Malaysian resident shipping companies
PursuanL Lo Lhe Malaysian lncome 1ax AcL 1967 {Ml1A), shippinq companies LhaL are LaxresidenL in
Malaysia are sub|ecL Lo Malaysian corporaLe income Lax on Lheir worldwide income. 1he corporaLe income Lax
raLe in Malaysia is qenerally 257. 1ax reliel may be available lor income Laxes sullered overseas on income
LhaL is also Laxed in Malaysia, provided cerLain condiLions are meL.
NoLe LhaL Malaysian residenL shippinq companies meeLinq cerLain condiLions will qualily lor cerLain Lax
exemptions on their shipping income (see Section 1.5).
1.1.2 Nonresident shipping companies
A nonresidenL person carryinq ouL sea LransporL in Malaysia is sub|ecL Lo Malaysian income Lax only on qross
income derived lrom Malaysia. "Cross income derived lrom Malaysia" is delned as Lhe LoLal ol all sums lrsL
receivable by the operator in respect of transporting by sea passengers or cargo embarked or loaded in
Malaysia inLo ships owned or charLered by Lhe operaLor, excepL sums so receivable in respecL ol passenqers
or cargo:
a)BrouqhL Lo Malaysia, wheLher by Lhe operaLor or oLherwise, solely lor Lransler:
i) From one ship or aircraft to another
ii) From a ship to an aircraft
iii) From an aircraft to a ship
{b) So embarked or loaded inLo such a ship il Lhe call ol LhaL ship aL a porL in Malaysia lor LhaL embarkaLion
or loadinq is a "casual call" {usually where Lhere have been/will be no lurLher calls wiLhin a 2^monLh
period before or after the casual call)
Unless an "accepLable cerLilcaLe" is produced Lo Lhe lnland Revenue Board ol Malaysia {lRB), a nonresidenL
shipping companys statutory taxable income for a particular year will be deemed to be 5% of the gross
income derived lrom Malaysia {as previously delned) lor Lhe relevanL period. Such sLaLuLory Laxable income
{i.e., 57 ol Lhe qross income derived lrom Malaysia) will be sub|ecL Lo Lax aL prevailinq Malaysian corporaLe
income tax rates.
Where within three years (or any such further period as may be allowed by the IRB) after the
commencemenL ol a parLicular year Lhe shippinq company produces an accepLable cerLilcaLe Lo Lhe lRB,
Lhen Lhe Malaysian Lax liabiliLy or Lax loss lor LhaL year will be compuLed based on a proporLion ol Lhe world
income or world loss as relecLed in Lhe accepLable cerLilcaLe. An accepLable cerLilcaLe is a cerLilcaLe issued
by a loreiqn Lax auLhoriLy and produced Lo Lhe lRB, in which Lhe amounLs speciled have been compuLed by
meLhods noL subsLanLially dillerenL lrom Lhose provided lor in Malaysian Lax leqislaLion lor Lhe compuLaLion
ol analoqous lqures lor a similar business carried on by a residenL.
1.1.3 Labuan shipping companies
A shippinq company can also be seL up in Malaysia's inLernaLional bankinq and lnancial cenLer ol Labuan.
Labuan is parL ol Malaysia buL has an independenL requlaLory climaLe and also provides lor a prelerenLial Lax
reqime lor Labuan enLiLies, parLicularly Labuan enLiLies carryinq on a "Labuan business acLiviLy."
Where a Labuan shippinq company carries on a Labuan business acLiviLy, iL will be Laxed under Lhe Labuan
Lax reqime. 1he Labuan Lax reqime is seL ouL in Lhe Labuan Business AcLiviLy 1ax AcL ol 1990 {LBA1A).
Under Lhe LBA1A, a Labuan enLiLy carryinq on a Labuan business acLiviLy is sub|ecL Lo Lax aL prelerenLial raLes
in respecL ol such acLiviLies. "Labuan business acLiviLy" means a "Labuan Lradinq" or a "Labuan nonLradinq
acLiviLy" carried on, in, lrom or Lhrouqh Labuan in a currency oLher Lhan Lhe Malaysian currency by a Labuan
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enLiLy wiLh nonresidenLs or wiLh anoLher Labuan enLiLy. Shippinq operaLions consLiLuLe a Labuan Lradinq
activity provided that the aforementioned conditions are met and that such operations are carried out in
Labuan or ouLside Malaysia. Labuan Lradinq acLiviLies are sub|ecL Lo Lax aL 37 ol neL audiLed prolLs or, upon
elecLion, a laL Lax ol RM20,000 {approximaLely t5,000) per annum. NoLe LhaL acLiviLies oLher Lhan Labuan
business acLiviLies are noL eliqible Lo be Laxed under Lhe LB1A and would insLead be Laxed under Lhe Ml1A.
Dependinq on Lheir level ol income, persons exercisinq employmenL in Malaysia {includinq sealarers) may be
subject to what is known as a Schedular Tax Deduction scheme, under which part of the seafarers monthly
cash wages would be deducted as an advance tax toward their annual tax liability. The amounts deducted
would be based on a table prepared by the tax authorities, which in turn is based on the amounts earned by
the relevant individual. It is important to note that the Schedular Tax Deduction scheme generally applies to
all persons employed in Malaysia, noL |usL sealarers.
1he income ol an individual employed on board a ship used in a business operaLed by a Malaysian LaxresidenL
company who is a reqisLered owner ol a ship under Lhe MerchanL Shippinq Ordinance 1952 {MSO) is exempL
lrom Malaysian Lax. ln Lhis conLexL, "ship" means a seaqoinq ship oLher Lhan a lerry, barqe, LuqboaL, supply
vessel, crew boaL, liqhLer, dredqer, lshinq boaL or oLher similar vessel.
Malaysia has a wellesLablished Lax LreaLy neLwork, and Lhe Malaysian CovernmenL is consLanLly lookinq Lo
lurLher improve iLs Lax LreaLy neLwork. Malaysia's shippinq and air LransporL LreaLy neLwork is parLicularly
sLronq; lor example, Malaysia does noL have a comprehensive income Lax LreaLy wiLh Lhe US, buL iL has
concluded a limiLed LreaLy wiLh Lhe US specilcally coverinq shippinq and air LransporL operaLions.
1he wordinq ol Lhe shippinq and air LransporL arLicle in Malaysia's LreaLies varies. 1herelore iL is imporLanL lor
each treaty to be reviewed in detail before it is relied upon.
Overall, iL should be noLed LhaL Lhere is a lack ol ollcial quidance {e.q., Public Rulinqs) in Malaysia on Lax
LreaLy inLerpreLaLion consequenLly, each case musL be evaluaLed on iLs own lacLs. We would also hiqhliqhL
LhaL Labuan companies, in parLicular Lhose LhaL en|oy Lhe prelerenLial LBA1A Lax reqime, have been
specilcally excluded lrom cerLain Lax LreaLies concluded by Malaysia.
1.4 Freight taxes
Malaysia does noL have a lreiqhL Lax reqime. ln pracLice, some shippinq companies have been known Lo reler
to the income tax imposed on nonresident shipping operators (as described in Section 1.1) as a freight
Lax," alLhouqh Lechnically Lhis Lax is an income Lax imposed under Lhe income Lax laws ol Malaysia.
ln cerLain cases, Lhe reqisLraLion ol a ship in Malaysia by a Malaysian Lax residenL can provide Lax exempLions.
PursuanL Lo SecLion 5Â ol Lhe Ml1A, Lhe sLaLuLory income ol a Malaysian residenL company would en|oy a
tax exemption if it carries on the business of:
{i) 1ransporLinq passenqers or carqo by sea on a Malaysian ship
{ii) LeLLinq ouL on charLer a Malaysian ship owned by Lhe company on a voyaqe or Lime charLer basis
For Lhis purpose, a Malaysian ship is delned as a seaqoinq ship reqisLered as such under Lhe MSO, oLher Lhan
a lerry, barqe, LuqboaL, supply vessel, crew boaL, liqhLer, dredqer, lshinq boaL or oLher similar vessel.
Where the conditions in Section 54A are met, effective from the year of assessment 2014 the statutory
shippinq income ol Lhe company lrom Lhe Malaysian ship{s) would qualily lor a 707 Lax exempLion. Non
shippinq income {such as inLeresL income) and income lrom nonMalaysian ships will conLinue Lo be lully
subject to corporate income tax at prevailing rates.
1
Botn |aouan trac|n anc nontrac|n act|v|t|es are furtner cehnec |n tne |B/1/.
Important note on change in tax law
Prior Lo Lhe year ol assessmenL 2012, Lhe Ml1A provided LhaL Lhe sLaLuLory income ol a Malaysian
residenL company earned lrom Malaysian ships under condiLions i) and ii) above would be lully exempL
from tax. The tax law was then changed to reduce the tax exemption to 70%. The change in law was
effected through the Finance Act 2012, which was published on 9 February 2012. Based on the Finance
Act 2012, the change in law took effect from the year of assessment 2012. However, due to intense
lobbyinq lrom Lhe shippinq indusLry, Lhe Malaysian CovernmenL had aqreed Lo exLend Lhe lull Lax
exemption to the years of assessment 2012 and 2013. This extension was legislated via the Income Tax
(Exemption) (No. 2) Order 2012.
The changes made to Section 54A via the Finance Act 2012 are generally as follows:
i) The income tax exemption is reduced from 100% to 70% of statutory income.
ii) The balance of 30% of statutory income is deemed to be total income, which is subject to tax.
iii) 1he income derived lrom each Malaysian ship shall be LreaLed as income lrom a separaLe and disLincL
business source capiLal allowances {i.e., Lax depreciaLion) and Lax losses lrom one ship cannoL be used
Lo seL oll prolLs lrom anoLher ship.
iv) Any unabsorbed capiLal allowances ol a Malaysian ship shall be carried lorward Lo subsequenL years ol
assessment to be set off against the adjusted income of the same ship only and not other ships.
v) Any currenL year ad|usLed loss in respecL ol a Malaysian ship shall noL be available as a deducLion aqainsL
any oLher income {lor example, inLeresL income or income lrom nonMalaysian ships).
vi) Any unabsorbed losses lrom a Malaysian ship lor a year ol assessmenL shall be carried lorward Lo
subsequent years of assessment to be set off against exempt income from that ship only. Any losses
lrom a Malaysian ship cannoL be used aqainsL luLure Laxable income even lrom Lhe same ship, essenLially
resulLinq in Lhe Lax benelL ol Lhe loss beinq disreqarded.
Certain transitional rules were also prescribed.
WiLh Lhis chanqe in law, iL appears LhaL even where a Malaysian shippinq company only owns Malaysian ships,
effective from the year of assessment 2014 the company would be in a tax-payable position as long as one of
iLs ships is prolLable.
At this time, no major changes are anticipated in the near future. However, we would highlight that it is not
always possible to anticipate future changes to the tax law.
2. Human capital
1he domesLic leqislaLion qoverninq Lhe recruiLmenL ol sealarers is conLained wiLhin Lhe MSO {ParL lll MasLer
and Seamen).
From a tax perspective, where an employer is employing individuals who are carrying on employment in
Malaysia, Lhere are various Lax reqisLraLion and adminisLraLion requiremenLs. FurLher, Lhe employer may need
to comply with the Schedular Tax Deduction laws, discussed in Section 1.2.
1he sealarers servinq on board Malaysian ships are qoverned by Lhe MSO.
Malaysian labor law is qoverned under Lhe LmploymenL AcL 1955 lor employmenL in Peninsular Malaysia and
under Lhe Labour Ordinance, Sabah and Sarawak lor employmenL in Sabah and Sarawak {LasL Malaysia).
These labor laws are only applicable to any person who is engaged in any capacity on any vessel registered in
Malaysia and who:
a. ls noL an ollcer cerLiled under Lhe MerchanL Shippinq AcLs ol Lhe UK as amended lrom Lime Lo Lime
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b. ls noL Lhe holder ol a local cerLilcaLe as delned in ParL Vll ol Lhe MSO
c. Has noL enLered inLo an aqreemenL under ParL lll ol Lhe MSO
CollecLive aqreemenLs are qoverned under Lhe lndusLrial RelaLions AcL 1967 and Lhe 1rade Unions AcL 1959.
Malaysian workers and permanenL residenLs employed under a conLracL ol service or apprenLiceship and
earninq a monLhly waqe ol RM3,000 {t7^5) or less musL compulsorily reqisLer and conLribuLe Lo Lhe Social
Security Organization (SOCSO) regardless of employment status, i.e., whether it is permanent, temporary or
casual in nature.
2.5 Mannin advantaes/disadvantaes cf Byin the MaIaysian Ba
1he income ol an individual lrom beinq employed on board a ship used in a business operaLed by a Malaysian
LaxresidenL company LhaL is a reqisLered owner ol a ship under Lhe MSO is exempL lrom Malaysian Lax. {See
SecLion 1.2 lor Lhe delniLion ol ship in Lhis conLexL.)
The most commonly used legal structure for shipping companies is a private limited liability company
(Sendirian Berhad [Sdn. Bhd.|, where Lhe company is incorporaLed under Lhe Malaysian Companies AcL
1965).
1he Lax raLes imposed on shippinq companies operaLinq in Malaysia are discussed in SecLion 1.1.
Malaysia does noL impose any lorm ol dividend wiLhholdinq Lax. FurLher, wiLh ellecL lrom 1 January 2008,
Malaysia has adopLed whaL is known as Lhe "sinqle Lier" sysLem ol corporaLe LaxaLion. Under Lhe sinqle Lier
system, there are no tax costs or impediments to a company paying dividends. Note that from a corporate
law and accounLinq perspecLive, dividends may only be paid ouL ol prolLs.
See SecLion 1.5 lor inlormaLion on Lhe Lax exempLion LhaL is available Lo MalaysianresidenL shippinq
companies operaLinq Malaysian ships.
ln Malaysia, Lax incenLives are ollered Lo enLiLies involved in "promoLed acLiviLies." Shipbuildinq was
previously listed as a promoted activity where the shipbuilding operations were carried on in certain
desiqnaLed "promoLed areas" in Malaysia, buL iL is no lonqer lisLed as a promoLed acLiviLy. lncenLives
available for promoted activities include Pioneer Status, which is a partial or full tax exemption, and
Investment Tax Allowances, which represents additional tax depreciation claims on qualifying assets.
Malaysia has also inLroduced Lhe concepL ol a "prepackaqed" Lax incenLive under Lhis prepackaqed
system, an investor can make a request for special incentives that are out of the ordinary (for example, a
longer-than-usual Pioneer Status period). Such requests are evaluated by the authorities on a case-by-case
basis. Some of the factors considered by the authorities when evaluating such requests are the level of capital
invesLmenL in Malaysia, employmenL opporLuniLies LhaL will be creaLed in Malaysia, knowledqe Lransler Lo
Malaysia and Lhe mulLiplier ellecL Lo Lhe economy.
Malaysia has inLroduced cerLain Lax incenLives relaLinq Lo environmenLal awareness, buL Lhese incenLives
generally apply to all qualifying persons and are not limited to the shipping industry.
4.4 Advantaes/disadvantaes cf Byin the MaIaysian Ba
See Lhe discussion above on Lax exempLion available Lo Malaysian residenL shippinq companies operaLinq
Malaysian ships.
No major changes are anticipated. However, we would highlight that it is not always possible to anticipate
future changes to the law.
5.1 Infrastructure
5.1.1 Major ports
BinLulu PorL {www.bpa.qov.my)
NorLhporL, PorL Klanq {www.pka.qov.my)
PorL ol 1an|unq Pelepas {www.pLp.com.my)
WesLporLs, PorL Klanq {www.pka.qov.my)
Penanq PorL {www.penanqporL.qov.my)
Dockinq
SLoraqe
Kuala Lumpur lnLernaLional AirporL {PorL Klanq)
Kuchinq lnLernaLional AirporL {BinLulu PorL)
SulLan lsmail lnLernaLional AirporL, Senai {PorL ol 1an|unq Pelepas)
Penanq lnLernaLional AirporL {Penanq PorL)
MariLime educaLion is available aL various insLiLuLions, includinq Lhe lollowinq:
MariLime Academy ol Malaysia {ALAM) {www.alam.edu.my)
MariLime 1ransporL AdminisLraLion and ManaqemenL 1raininq lnsLiLuLe, Marine DeparLmenL Malaysia
(www.marine.gov.my)
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PoliLeknik Unqku Omar {www.puo.edu.my)
Ranaco Marine Sdn Bhd {www.reLi.edu.my)
SasLra MariLime Academy Sdn Bhd {www.smaswak.com.my)
Sri Bima 1raininq CenLre Sdn Bhd {SM1C) {www.sribima.com.my/abouLsribimamariLimeLraininq
centre.php)
5.2.1 Implementation of International Safety Management Code
Shippinq companies are required Lo comply wiLh Lhe requiremenLs ol Lhe lnLernaLional SaleLy ManaqemenL
{lSM) Code. 1he Malaysian CovernmenL issues Lwo documenLs lor shippinq companies LhaL comply wiLh
Lhe lSM Code: Lhe documenL ol compliance {DOC) and Lhe saleLy manaqemenL cerLilcaLe {SMC). 1hese
documents are issued after the shipping companies pass an audit performed by the appropriate authority.
Malaysia has relaLively sLricL saleLy rules reqardinq manninq. MosL ol Lhe mariLime leqislaLion {parLicularly
on saleLy issues) is seL ouL in Lhe MSO. 1he Board ol Lhe Marine DeparLmenL has auLhorized inLernaLionally
recoqnized classilcaLion socieLies Lo conducL audiL and cerLilcaLion ol MalaysianreqisLered vessels and
managing companies for compliance with the code.
ln addiLion, Malaysia is in compliance wiLh Lhe lnLernaLional ConvenLion on Lhe SLandards ol 1raininq,
CerLilcaLion and WaLchkeepinq lor Sealarers {S1CW), 1978, requlaLions.
Malaysia is a parLy Lo all ma|or inLernaLional convenLions on saleLy and polluLion prevenLion.
5.3. Registration
1he reqisLraLion ol ships is qoverned by Lhe MSO. Under SecLion 11 ol Lhe MSO, a ship is reqisLered as a
Malaysian ship il iL is owned by a Malaysian ciLizen or a corporaLion LhaL meeLs Lhe lollowinq condiLions:
1. lncorporaLed in Malaysia.
2. Principal ollce ol Lhe corporaLion is in Malaysia.
3. ManaqemenL ol Lhe corporaLion is mainly in Malaysia.
^. Ma|oriLy {normally more Lhan 517) ol Lhe direcLors and shareholdinq {includinq voLinq shares) ol Lhe
corporaLion is held by Malaysians, lree lrom any LrusL or obliqaLion.
NoLwiLhsLandinq SecLion 11 ol Lhe MSO, a Malaysian ship can be reqisLered under Lhe Malaysia lnLernaLional
Shippinq ReqisLry {i.e., Lhe Labuan reqisLry) only il Lhe ma|oriLy ol Lhe shares {includinq voLinq shares) are
noL held by Malaysian ciLizens.
1he porLs ol reqisLry in Malaysia are Kuchinq, Labuan, Penanq and PorL Klanq. Belore a ship can be
registered, the ships name has to be approved. The application for ship name can be made at any port of
reqisLry ollce. Upon Lhe approval ol Lhe name, applicaLion Lo reqisLer a ship can be made aL any porL ol
reqisLry ollce.
For lurLher deLails, see www.marine.qov.my/|lmenq/ConLenLdeLail.asp?arLicle_id=319&caLeqory_
id=1&subcaLeqory_id=23&subcaLeqory2_id=7
Parallel registration (both traditional and international ship registry) is not permitted.
1here is no resLricLion on Lhe naLionaliLy ol Lhe crew Lo be employed on board Malaysian ships. Foreiqn
sealarers may sail in any capaciLy on Malaysian ships as lonq as Lhey meeL Lhe sLandards laid down in Lhe
STCW 1978 regulations as amended.
ln accordance wiLh Lhe provisions ol RequlaLion l/10 ol S1CW 95, Malaysia has siqned Memoranda ol
UnderLakinq Lo recoqnize cerLilcaLes ol compeLency {COCs) wiLh Lhe lollowinq counLries:
Arab Republic of Egypt, Australia, Bangladesh, Belgium, Belize, Brazil, Brunei Darussalam, China, Croatia,
Finland, Germany, Ghana, Hong Kong, India, Indonesia , Ireland, Japan, Latvia, Liberia, Luxembourg,
Maldives, Myanmar, New Zealand, Pakistan, Panama, Papua New Guinea, Philippines, Poland, Romania,
Russian Federation, St. Vincent and the Grenadines, Singapore, South Africa, South Korea (ROK), Sri
Lanka, Thailand, Ukraine, UK, Vanuatu, Vietnam.
(Note: the list of countries that have signed a Memorandum of Undertaking with Malaysia will be updated from time to
time on www.marine.gov.my.)
Foreiqn ollcers or enqineers in possession ol valid loreiqn COCs lrom Lhe abovemenLioned counLries are
allowed Lo serve on Malaysian ships as lonq as Lheir cerLilcaLes are appropriaLe Lo Lhe capaciLy in which Lhey
are employed. No prior approval is required, but owners of vessels are required to apply for a seafarer identity
and cerLilcaLe ol recoqniLion {COR) Lo allow holders ol Lhe loreiqn cerLilcaLes Lo serve on Malaysian ships.
The validity of a COR shall not be longer than one year. If the validity of the COC is less than one year, the
validity of the COR will expire on the same day the COC expires. When applying for a COR, the validity of the
COC must not be less than six months for the application to be accepted and processed.
Malaysia lollows Lhe besL pracLice ol inLernaLional ship reqisLraLion, i.e., Lhe UniLed NaLions ConvenLion on
Lhe Law ol Lhe Sea {UNCLOS), 1982, and Lhe UniLed NaLions ConvenLion on CondiLions lor ReqisLraLion ol
Ships and Her Ma|esLy's SLaLionery Ollce {HMSO) UK AcL. ln addiLion, Malaysia is also a parLy Lo all ma|or
international conventions on safety, pollution prevention and liability and compensation (see Section 5.2.3).
For further information on ship mortgages, survey requirements and costs, please refer to www.marine.gov.
my/|lmenq/index.asp.
For further information, please refer to:
Marine DeparLmenL Malaysia {www.marine.qov.my)
Malaysian Shipowners' AssociaLion {www.masa.orq.my)
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Malta
1. Tax
No income tax is charged on income derived from shipping activities by a licensed shipping organization
provided that all registration fees and tonnage taxes have been paid and that, in the year to which the
exemption applies, separate accounts were kept, clearly distinguishing the payments and receipts by the
shipping organization with respect to shipping activities.
Similarly, no income tax is charged on any gains arising from the liquidation, redemption, cancellation or any
other disposal of shares, securities or any other interest. This includes goodwill held in any licensed shipping
organization with restricted objects owning, operating, administering or managing a tonnage tax ship while it
was a tonnage tax ship.
Shippinq acLiviLy is delned as Lhe inLernaLional carriaqe ol qoods or passenqers by sea or Lhe provision ol
other services to or by a ship as may be ancillary thereto or associated therewith, including the ownership,
chartering or any other operation of a ship engaged in all or any of the above activities or as otherwise may
be prescribed.
Any income derived by a ship manager from ship management activities is deemed to be income derived
from shipping activities and is exempt from income tax under the Income Tax Act provided that:
1he company keeps proper accounLs relaLinq Lo iLs shippinq acLiviLies
1he ship manaqer has paid Lo Lhe ReqisLrarCeneral an annual Lonnaqe Lax Lo be deLermined as lollows:
1. For any Lonnaqe Lax ship reqisLered under ParLs ll or llA ol Lhe MerchanL Shippinq AcL, an amounL
equivalent to 25% of the annual tonnage tax payable for the particular ship on the basis of the rates
sLipulaLed in Lhe FirsL Schedule Lo Lhe MerchanL Shippinq AcL
2. For any other ship not referred to in paragraph (1.) above, an amount equivalent to 25% of the
annual tonnage tax calculated by reference to the rates stipulated in the First Schedule to the Act that
would have been payable had the ship been registered under Parts II or IIA of the Act
AL leasL LwoLhirds ol Lhe Lonnaqe ol Lhe ships Lo which Lhe ship manaqer provides ship manaqemenL
activities is managed from the territory of the European Community (EC)
1he Lonnaqe ol Lhe ships lor which Lhe ship manaqer provides ship manaqemenL acLiviLies meeLs any ol
the following conditions:
1. AL leasL 607 ol said Lonnaqe is reqisLered under an LC laq.
2. 1he percenLaqe ol said Lonnaqe LhaL is LC laqqed immediaLely alLer Lhe ship manaqer beqins Lo
operate an additional ship is not less than the percentage of the ship managers tonnage which was EC
laqqed on Lhe laLer ol 11 June 2009 or one year lrom Lhe day on which Lhe ship manaqer beqan Lo
operate.
3. 1he percenLaqe ol said Lonnaqe LhaL is LC laqqed has noL decreased over a period ol Lhree years or
such lesser period in which the ship manager was in existence if said ship manager was in existence
for a period of less than three years. Provided that where the requirements of paragraphs (2.) or
{3.) are noL lulllled, Lhe provisions ol Lhe parLicular paraqraph shall sLill be deemed Lo be saLisled
where iL is proven Lo Lhe saLislacLion ol Lhe ReqisLrarCeneral LhaL a commiLmenL exisLs Lo increasinq
or aL leasL mainLaininq under Lhe laq ol one ol Lhe Luropean Union {LU) Member SLaLes Lhe share ol
Lonnaqe under such laqs in respecL ol which ship manaqemenL acLiviLies were beinq provided on Lhe
later of 11 June 2009 or one year from the day on which the ship manager began to operate.
lncome derived by a licensed shippinq orqanizaLion lrom Lhe sale/Lransler ol a Lonnaqe Lax ship or lrom
the disposal of the right to a ship that, when delivered or completed, would qualify as a tonnage tax ship is
exempt from tax.
ProlLs derived lrom Lhe lnancinq ol Lhe operaLions ol licensed shippinq orqanizaLions or Lhe lnancinq ol any
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tonnage tax ship are also exempt from income tax.
An orqanizaLion qualiles as a shippinq orqanizaLion il iL enqaqes in one or more speciled acLiviLies and il
iL obLains a license lrom Lhe ReqisLrarCeneral Lo enable iL Lo carry on such acLiviLies. 1he lollowinq are Lhe
speciled acLiviLies:
1he ownership, operaLion {under charLer or oLherwise), adminisLraLion and manaqemenL ol a ship
or ships reqisLered as a MalLese ship under Lhe MerchanL Shippinq AcL and Lhe carryinq on ol relaLed
lnancial, securiLy and commercial acLiviLies
1he ownership, operaLion {under charLer or oLherwise), adminisLraLion and manaqemenL ol a ship or
ships reqisLered under Lhe laq ol anoLher sLaLe and Lhe carryinq on ol relaLed lnancial, securiLy and
commercial activities
1he holdinq ol shares or oLher equiLy inLeresLs in MalLese or loreiqn enLiLies LhaL are esLablished lor any ol
Lhe purposes sLaLed in Lhe law and Lhe carryinq on ol relaLed lnancial, securiLy and commercial acLiviLies
1he raisinq ol capiLal Lhrouqh loans, Lhe issuance ol quaranLees or Lhe issuance ol securiLies by a
company if the purpose of such activity is to achieve the objects of the shipping organization itself or for
other shipping organizations within the same group
1he carryinq on ol such oLher acLiviLies wiLhin Lhe mariLime secLor LhaL are prescribed in requlaLions
A shipping organization may be established as a limited liability company (public or private), a foreign
corporaLe body LhaL has esLablished a place ol business in MalLa or anoLher Lype ol enLiLy speciled in Lhe law.
No duty is payable in respect of any instrument connected with or involving:
1he reqisLraLion ol a Lonnaqe Lax ship under ParL ll and ParL llA ol Lhe MerchanL Shippinq AcL and oLher
registrations relating to a tonnage tax ship made under said parts
1he issue or alloLmenL ol any securiLy or inLeresL ol a licensed shippinq orqanizaLion or Lhe purchase,
transfer, assignment or negotiation of any security or interest of any licensed shipping organization or
other company as above
1he sale or oLher Lransler ol a Lonnaqe Lax ship or any share Lhereol
1he reqisLraLion ol any morLqaqe or oLher charqe over or in relaLion Lo any ship or licensed shippinq
organization, any transfer or discharge thereof, any receipt relative thereto and any assignments granted
in connection therewith
1he assiqnmenL ol any riqhLs and inLeresLs or Lhe assumpLion ol obliqaLions in respecL ol any ship or
share thereof
Ships LhaL are reqisLered in MalLa are bound Lo pay reqisLraLion lees and Lonnaqe Laxes as per Lhe exLracL
lrom Lhe lrsL schedule ol Lhe MerchanL Shippinq AcL reproduced below.
1he lee on reqisLraLion and Lhe annual lee lor all ships shall be as lollows:
Secticn A
Ship Fee on registration
Annual
Basic fee Tonnage tax
(i) Ships less than 24 meters in length overall
a. Fishing vessels of category A, B and C 70 25 36
b. Commercial yachts 115 150 175
c. Pleasure yachts less than 50 gross
tonnage
115 25 175
All other ships less than 24 meters in length overall
d. Less than 50 gross tonnage 115 25 200
e. Of 50 gross tonnage or more 150
Sub|ecL Lo Lhe provisions ol ArLicle 7{^) ol Lhe MerchanL Shippinq AcL, when Lhere is a chanqe in Lhe
particulars or category of a registered ship and the new applicable fee payable on registration or annually is
hiqher Lhan LhaL already payable, Lhe provisions ol ArLicle 19{7) ol Lhis MerchanL Shippinq AcL lor laid up
vessels shall apply mutatis mutandis.
The rates per net tonnage payable on registration and annual tonnage tax when referred to in Section A:
Secticn B
Ship Fee on registration
Annual
Basic fee Tonnage tax
Ships of 24 meters in length overall or more:
(ii) Pleasure yachts 25 cents per net
tonnage subject to
minimum of
187.50
255
40 cents per net
tonnage subject to
minimum of
400
(iii) Commercial yachts which do not fall
under category (iv)
Rates as appear in
Section B
625 for year of
registration
Rates as appear in
Section B
1,095 thereafter
(iv) Non-propelled barges, bareboat
charter registered in a foreign registry,
laid up or under construction, excluding
ships in category (ii)
Rates as appear in
Section B subject to
reduction as appear
in Section C
150
Rates as appear in
Section B subject
to reduction as
appear in Section C
{v) Commercial vessels and hshing
vessels less than 2,500 gross tonnage,
and do not fall under categories (ii),
(iii) and (iv) above
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(vi) All other ships of 24 meters in length overall or more and do not fall under categories (ii), (iii), (iv) and
(v) above
Ship of net tonnage (NT) Fee on registration Annual tonnage tax
Exceeding Not exceeding
0 2,500 625 1,000
2,500 8,000 625 plus 25 cents for every NT in
excess of 2,500 NT
1,000 plus 40 cents for every NT
in excess of 2,500NT
8,000 10,000 2,000 plus 7 cents for every NT
in excess of 8,000 NT
Exceeding 50,000 4,940 plus 7 cents for every NT
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Reduction or increase on the rates per NT on registration and annual tonnage tax, when referred to in section
A:
SecLion C
Lmployees who wholly or mainly work ouLside MalLa are qenerally eliqible lor lavorable Lax LreaLmenL {157)
buL sealarers employed by MalLese companies are noL.
MalLa has enLered inLo Lax LreaLies wiLh Lhe lollowinq counLries:
Albania, Australia, Austria, Bahrain, Barbados, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech,
Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary,
Iceland, India, Ireland, Isle of Man, Italy, Jersey, Jordan, Korea, Kuwait, Latvia, Lebanon, Libya, Lithuania,
Luxembourg, Malaysia, Montenegro, Morocco, Netherlands, Norway, Pakistan, Poland, Portugal, Qatar,
Romania, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden,
Switzerland, Syria, Tunisia, United Arab Emirates, United Kingdom, United States of America, Uruguay.
MalLa has also siqned LreaLies wiLh Lhe lollowinq counLries LhaL have yeL Lo come inLo lorce:
Guernsey, Israel, Mexico, Norway, Turkey.
MalLa has also siqned proLocols wiLh Lhe lollowinq counLries LhaL have yeL Lo come inLo lorce:
Belgium, Luxembourg, South Africa.
ln addiLion, MalLese ships callinq aL US porLs benelL lrom an exempLion beLween MalLa and Lhe US, exempLinq
shipping and air operations from income tax.
Similarly, MalLese ships Lradinq in Creece benelL lrom an exempLion lrom Laxes on Lheir earninqs by way ol
reciprociLy. ln addiLion Lo Lhe doubleLaxaLion aqreemenLs, MalLa has concluded aqreemenLs on mariLime
LransporL wiLh China and Lhe Russian FederaLion, providinq various benelLs Lo MalLesereqisLered ships
calling at such ports.
MalLa also has a reciprocal leeL aqreemenL wiLh Lhe US on Lhe carriaqe ol empLy conLainers in Lhe US coasL
wide Lrade, exempLinq ships sailinq under Lhe MalLese laq lrom Lhe lees under Lhe Jones AcL.
1.4 Freight taxes
ProlLs arisinq lrom Lhe carriaqe ol passenqers, mail, livesLock or qoods shipped in MalLa by ships owned
or charLered by nonresidenLs are deemed Lo accrue in MalLa and are Lherelore sub|ecL Lo LaxaLion in MalLa.
1his does noL apply il Lhe counLry ol ciLizenship ol Lhe shipowner exLends a similar exempLion Lo MalLese
Age of ship Reduction of fee on
registration %
Reduction or increase
on annual tonnage tax %
Exceeding Not exceeding
Years
0 5 50 -30
5 10 25 -15
10 15 - -
15 20 - +5
20 25 - +10 Subject to
minimum
increase
of 1,500
25 30 - +25
Equal to or exceeding 30 - +50
shipowners. 1he exempLion also applies Lo qoods LhaL are brouqhL Lo MalLa solely lor LransshipmenL.
CompleLe Lax exempLion is qranLed Lo licensed shippinq orqanizaLions exclusively operaLinq MalLese ships ol
over l,000 NTs engaged in the international carriage of goods and passengers and other ancillary services,
provided that all registration fees and tonnage taxes are paid.
2. Human capital
There are no particular formalities with respect to the employment of the crew on board. A contract of
employment in the form of a crew agreement must be made between the master and seafarers and signed in
the presence of a shipping master.
ln MalLese porLs, Lhe Lerms ol Lhe aqreemenL should prelerably be endorsed by a MalLese shippinq ollcer and
in loreiqn porLs, by a reqisLrar or MalLese consular ollcer. An aqreemenL can be made lor a sinqle voyaqe or,
if the voyage is less than one year, it may be extended over two or more voyages.
MalLese companies LhaL manaqe ships lrom MalLa are required Lo obLain a work permiL lor Lheir employees
workinq in MalLa.
Crew members ol MalLese ships are sub|ecL Lo Lhe provisions ol Lhe MerchanL Shippinq AcL and ancillary
regulations.
When employing personnel, the provisions of the law and the regulations concerning the competence of
ollcers and sealarers musL be observed.
OperaLors ol ships sailinq under Lhe MalLese laq have concluded collecLive labor aqreemenLs wiLh Lhe Ceneral
Workers' Union, which is Lhe lnLernaLional 1ransporL Workers' FederaLion {l1F) allliaLe Lrade union. 1he
MalLese law LhaL requlaLes employmenL condiLions does noL apply Lo crews on seaqoinq vessels.
1he principal MalLese employmenL law is Lhe LmploymenL and lndusLrial RelaLions AcL and ancillary
requlaLions. A conLracL lor an indelniLe period ol Lime may be LerminaLed by Lhe employee by qivinq noLice
without giving any reasons and by the employer on grounds of redundancy. Employees whose employment is
terminated on grounds of redundancy alone are entitled to re-employment if the post formerly occupied by
them becomes available again within a period of one year from the date of termination of employment.
As ol 1 January 2013, Lhe naLional minimum waqe was increased Lo t162.19 per week.
Employees are entitled to a period of at least four weeks of leave a year and the normal working hours are a
40-hour week.
1o prevenL Lhe double paymenL ol social securiLy conLribuLions, MalLa has concluded lve social securiLy
LoLalizaLion aqreemenLs wiLh AusLralia, Canada, Libya, Lhe NeLherlands and Lhe UniLed Kinqdom. 1he social
securiLy LoLalizaLion aqreemenL {which is noL a reciprocal aqreemenL) wiLh Libya is lor renewable periods ol
Lhree years. 1his aqreemenL requlaLes Lhe paymenL ol conLribuLions ol Lhose MalLese workinq in Libya.
FurLhermore, MalLa has a LoLalizaLion aqreemenL wiLh all LU Member SLaLes under Council RequlaLions {LC)
1^08/71 and 57^/72.
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2. Mannin issues with Byin the MaItese Ba
Manninq requiremenLs are considered sLricL and compare well wiLh inLernaLional sLandards.
The most commonly used legal structure for the operation of shipping activities is the body corporate
{company). Any person, wheLher MalLese or noL, may lorm a body corporaLe in MalLa under Lhe Companies
Act.
MalLa operaLes a lull impuLaLion sysLem whereby Lhe shareholder receivinq a dividend is enLiLled Lo receive a
credit of the tax paid by the company and is therefore not subject to further full taxes. Any dividends paid out
ol qains or prolLs ol Lhe ship are exempL lrom income Lax when disLribuLed Lo Lhe company shareholders as
dividends. FurLhermore, MalLa does noL levy any wiLhholdinq Lax on dividends paid by a company reqisLered in
MalLa Lo iLs nonresidenL shareholders.
3.3 Tax refunds
Upon a disLribuLion ol prolLs by way ol dividend, shareholders ol companies reqisLered in MalLa may claim
relunds ol Lax on prolLs LhaL have been allocaLed Lo Lhe MalLese Laxed accounL and loreiqn income accounL.
Shareholders may claim one of the following refunds of tax:
Six-sevenths refund
This type of refund may be claimed if:
1he inLeresL derived by Lhe MalLese company is noL classiled as "passive inLeresL or royalLies"
No double Lax reliel has been claimed
Passive inLeresL or royalLies is delned in ArLicle 2 ol Lhe lncome 1ax AcL as "inLeresL or royalLy income which
is not derived, directly or indirectly, from a trade or business, where such interest or royalties have not
suffered any foreign tax, directly, by way of withholding, or otherwise, at a rate of tax which is less than 5%.
Five-sevenths refund
This type of refund may be claimed if:
1he income ouL ol which prolLs have been disLribuLed is classiled as passive income or royalLies, or Lhe
distributions of dividends are received from a participating holding company that does not satisfy the anti-
abuse provisions
No double Lax reliel has been claimed
Two-thirds refund
ll Lhe MalLa enLiLy has opLed Lo claim reliel lrom double LaxaLion, a relund ol LwoLhirds ol Lhe Lax paid in
MalLa may be claimed.
1his Lype ol relund enables Lhe MalLese company Lo claim a laLraLe loreiqn Lax crediL {FRF1C). 1he
FRF1C is a crediL LhaL is noL qranLed lor Lax acLually paid abroad buL is compuLed by relerence Lo specilc
compuLaLional rules. 1he FRF1C is calculaLed aL a deemed lxed raLe ol 257 ol Lhe neL income or qains
receivable {in Lhis case, ol Lhe neL dividend) by Lhe company residenL in MalLa belore any deducLions or
payments whatsoever are made from said income or gains.
The FRFTC applies if certain conditions are met:
lncome and capiLal qains are received by a company reqisLered in MalLa.
1he recipienL can produce documenLary evidence LhaL such income and capiLal qains lail Lo be allocaLed Lo
Lhe loreiqn income accounL, buL excludinq prolLs resulLinq lrom dividends paid ouL ol Lhe loreiqn income
accounL ol anoLher company residenL in MalLa.
1he company is specilcally empowered Lo receive Lhe FRF1C aqainsL prolLs allocaLed Lo Lhe loreiqn
income accounL. 1he recipienL musL have documenLary evidence conlrminq Lhis requiremenL as
well. A cerLilcaLe issued by a cerLiled public accounLanL and audiLor is considered Lo be saLislacLory
documentary evidence for this purpose.
There are no subsidies for shipping companies.
1he MalLa LnLerprise AcL qranLs incenLives in Lhe lorm ol Lax crediLs and enLerprise supporL lor qualilyinq
activities, such as repair, overhaul or maintenance of pleasure crafts, certain yachts and engines or
equipment incorporated or used in these vessels.
1here are no specilc incenLives lor environmenLal awareness.
4.4 !ssues with Byin the MaItese Ba
1he MalLese laq has been upqraded Lo Lhe whiLe lisL ol Lhe Paris and 1okyo memoranda ol undersLandinq,
Lhereby lesseninq Lhe conLrols on ships lyinq Lhe MalLese laq.
1here are no issues reqardinq subsidies and qranLs connecLed Lo lyinq Lhe MalLese laq.
5.1 Infrastructure
5.1.1 Major ports
MalLa's ma|or porLs are:
MalLa FreeporL
ValleLLa Crand Harbor
MainLenance and repair:
1he MalLese companies LhaL oller mainLenance and repair laciliLies are Bezzina Ship Repair Yard, Cassar
Ship Repair, MalLa Dry Docks, Palumbo MalLa Shipyard LimiLed and Manoel lsland YachL Yard.
Dockinq:
1he MalLese companies LhaL oller dockinq laciliLies are Bezzina Ship Repair Yard LimiLed, Cassar Ship
Repair LimiLed, MalLa Dry Docks and Manoel lsland YachL Yard LimiLed.
SLoraqe:
1he MalLese companies LhaL oller sLoraqe laciliLies are Alpha Oil Services & 1radinq LimiLed, MalLa
FreeporL CorporaLion LimiLed, Oil 1ankinq MalLa LimiLed, Salvo Crima {FreeporL OperaLions) LimiLed and
Sea MalLa Company LimiLed.
Cranes lor every size ol vessel:
1hese are ollered by Cassar Ship Repair LimiLed, MalLa FreeporL CorporaLion LimiLed and MoLherwell Bridqe
MalLa LimiLed.
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MalLa lnLernaLional AirporL is abouL 15 minuLes lrom ValleLLa Crand Harbor and abouL 10 minuLes lrom MalLa
Freeport.
AlLhouqh Lhe MalLese banks do noL have specialized shippinq desks, some MalLese banks are equipped Lo deal
with shipping companies requirements.
1he ma|or mariLime educaLional insLiLuLions in MalLa are:
1he lnLernaLional MariLime Law lnsLiLuLe {lMLl)
1he NauLical School ol MalLa
Ship operaLors ol ships reqisLered under Lhe MalLese laq, which were required Lo comply wiLh Lhe
lnLernaLional SaleLy ManaqemenL {lSM) Code by 1 July 1998, have done so {accordinq Lo Lhe MalLa
MariLime AuLhoriLy). MosL ol Lhe ship manaqemenL companies, and some ship operaLors ol MalLese
reqisLered ships, have lnLernaLional OrqanizaLion lor SLandardizaLion {lSO) 9000 cerLilcaLes.
1he saleLy rules reqardinq manninq may be characLerized as quiLe sLricL. MosL ol Lhe mariLime leqislaLion
{parLicularly on saleLy issues) is seL ouL in Lhe MerchanL Shippinq AcL and in requlaLions made under Lhe
same Act.
There are no trading restrictions for the registration of vessels. However, ships 15 years of age and over but
under 20 years old, musL pass an inspecLion by an auLhorized laq sLaLe inspecLor belore or wiLhin a monLh ol
provisional registration; ships 20 years of age or more, but not yet 25 years old, must pass an inspection by
an auLhorized laq sLaLe inspecLor prior Lo beinq provisionally reqisLered. 1radinq ships 25 years ol aqe and
over are not registered.
5.3 Registration
The registration of a ship-owning company is an uncomplicated and inexpensive matter and can be effected
very quickly.
The following details would be required for a company to be registered:
Name ol Lhe company
DeLails ol shareholders and direcLors {name, address, passporL number/reqisLraLion number [in Lhe case
ol a body corporaLe|)
1he minimum share capiLal is t1,200 {USS1,690), ol which 207 musL be paid up prior Lo reqisLraLion. All
types of vessels, from pleasure yachts to oil rigs, may be registered, provided that they are wholly owned
by MalLese ciLizens or a MalLese body corporaLe. However, ships under six meLers lonq are noL sub|ecL Lo
reqisLraLion under Lhe MerchanL Shippinq AcL. Ships LhaL are reqisLered under Lhe MalLa MariLime AuLhoriLy
Act not exceeding 24 meters in length are exempt from the registry. Consequently, ships not exceeding 24
meLers in lenqLh do noL en|oy Lhe riqhLs and privileqes ol a MalLese ship and are noL recoqnized as such.
A vessel is lrsL reqisLered provisionally under Lhe MalLese laq lor a period ol six monLhs {exLendible Lo one
year), durinq which period all documenLaLion musL be lnalized. 1he requiremenLs lor provisional reqisLraLion
are:
An applicaLion lor reqisLraLion by Lhe owner or an auLhorized represenLaLive
ll required, an applicaLion lor a chanqe ol name
A copy ol Lhe ship's inLernaLional Lonnaqe cerLilcaLe, where applicable
Prool ol qualilcaLion Lo own a MalLese ship; in Lhe case ol a body corporaLe, Lhe memorandum and
articles of association
A declaraLion ol ownership made belore Lhe reqisLrar by Lhe owner or an auLhorized represenLaLive
Lvidence ol seaworLhiness; in Lhe case ol Lradinq vessels, conlrmaLion ol class
PaymenL ol iniLial and annual reqisLraLion lees
The following documents must be submitted during provisional registration:
A builder's cerLilcaLe, il Lhe vessel has noL been reqisLered elsewhere; oLherwise a bill ol sale or any oLher
document for registry
A cancellaLion ol reqisLry cerLilcaLe lrom Lhe lasL counLry ol reqisLry, showinq Lhe vessel Lo be lree lrom
encumbrances or otherwise
A cerLilcaLe ol survey and a copy ol Lhe inLernaLional Lonnaqe cerLilcaLe cerLilyinq LhaL Lhe vessel has
been surveyed in accordance wiLh MalLese requlaLions
Lvidence LhaL Lhe vessel has been marked in accordance wiLh Lhe law
AL leasL one crew lisL
MalLese law provides lor Lhe bareboaL charLer reqisLraLion ol loreiqnreqisLered ships under Lhe MalLese laq.
Vessels so registered enjoy the same rights and privileges and have the same obligations as any other ship
reqisLered in MalLa.
Bareboat charter registration shall apply for the duration of the bareboat charter or until the expiry date
of the underlying registration, whichever is shorter, but in no case will it exceed a period of two years.
ReqisLraLion may be exLended. For a loreiqn vessel Lo be bareboaL charLer reqisLered wiLh Lhe MalLese
registry, the ship must:
Be bareboaL charLered Lo MalLese ciLizens or Lo a MalLese body corporaLe
NoL be a MalLese ship, buL iL musL be reqisLered in a compaLible reqisLry
NoL have been reqisLered in anoLher bareboaL reqisLry
MalLese law also provides lor Lhe bareboaL charLer reqisLraLion ol MalLese ships under a loreiqn laq as lonq
as Lhe ship is reqisLered as a MalLese ship under Lhe MerchanL Shippinq AcL and Lhe bareboaL charLer reqisLry
where the ship is to be registered is a compatible registry.
MalLa has acceded Lo Lhe lnLernaLional MariLime OrqanizaLion {lMO) ConvenLion on SLandards ol 1raininq,
CerLilcaLion and WaLchkeepinq lor Sealarers {S1CW) 1978. MalLese ships are sub|ecL Lo Lhe provisions ol
Lhe MerchanL Shippinq AcL and ancillary requlaLions concerninq Lhe compeLence ol ollcers and sealarers.
CerLilcaLes ol compeLence are issued on examinaLion. Foreiqn cerLilcaLes issued under Lhe Lerms ol Lhe
Convention STCW 1978 are recognized where they have been granted by examination.
MalLa has adopLed pracLically all ma|or lMO convenLions, includinq Lhe Civil LiabiliLy ConvenLion ol 1969
{CLC 69); 1onnaqe 69; lnLernaLional RequlaLions lor PrevenLinq Collisions aL Sea {COLRLC 72); Fund 71;
lnLernaLional MariLime SaLelliLe OrqanizaLion {lNMARSA1); Load Lines 1966; London ConvenLion 1972;
MARPOL {lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion From Ships) 73/78, 7^/78 and S1CW
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78; Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971; Prevention
ol PolluLion lrom Ships, 1973/78; SaleLy ol Lile aL Sea, 197^/78; SLandards ol 1raininq, CerLilcaLion and
WaLchkeepinq lor Sealarers, 1978; and 1onnaqe MeasuremenL ol Ships, 1969.
MalLa has also adopLed Lhe ma|or lnLernaLional Labour OrqanizaLion {lLO) convenLions, includinq Freedom
ol AssociaLion and ProLecLion ol Lhe RiqhL Lo Orqanize, 19^8 {No. 87); Medical LxaminaLion {Sealarers),
19^6 {No. 73); Medical LxaminaLion ol Younq Persons {Sea), 1921 {No. 16); Minimum Aqe, 1973 {No.
138); Right to Organize and Collective Bargaining, 1949 (No. 98); Seamens Articles of Agreement, 1926
{No. 22); Sealarers' ldenLiLy DocumenLs, 1958 {No. 108); UnemploymenL lndemniLy Shipwreck, 1920
{No. 8); and Minimum SLandards, 1976 {No. 1^7, includinq Lhe 1996 ProLocol).
Flaq sLaLe inspecLions are carried ouL reqularly by inspecLors appoinLed by Lhe MalLese auLhoriLies LhrouqhouL
Lhe world. 1he inspecLions are in addiLion Lo Lhe reqular sLaLuLory surveys conducLed by classilcaLion
socieLies and are carried ouL only on Lhe specilc insLrucLions ol Lhe direcLoraLe. 1here are no addiLional
charges for these inspections, except when the vessel has to undergo a second or subsequent inspection
Lo ascerLain wheLher reporLed delciencies have been correcLed, and when a vessel is inspecLed prior Lo
provisional registration.
Regarding mortgages, the registration, transfer and discharge of mortgages may be effected immediately
upon presentation of the relevant documents to the registrar of ships.

Mexico
1. Tax
1here are no specilc Lax laciliLies lor shippinq companies in Mexico.
The corporate tax rate is 30% for 2013 . Taxable income is commonly determined on an accrual basis, and
taxpayers are allowed to deduct most expenses that are strictly necessary to the business provided formal
statutory requirements are met.
In accordance with current tax provisions, the tax depreciation rate applicable to vessels is 6%.
The above notwithstanding, an immediate deduction of the investment in new vessels is permitted instead of
the one mentioned in the preceding paragraph by deducting the amount resulting from applying 62% (or 78%
depending on kind of the asset) to the original restated amount of the investment in the year in which the
invesLmenL in new lxed asseLs is made, Lhe year in which such asseLs are puL inLo use or in Lhe lollowinq year.
Mexican enLiLies are obliqed Lo share a porLion ol Lheir annual prolLs wiLh Lheir employees. ln qeneral Lerms,
Lhe basis lor deLermininq Lhe correspondinq prolL sharinq ol Lhe year is Lhe Laxable income lor income Lax
purposes wiLhouL considerinq any inlaLionary ellecL. 1he applicable prolL sharinq raLe is 107.
ln 2008, Lhe FlaL RaLe Business 1ax {FRB1) was inLroduced as a minimum Lax Lo replace Lhe Minimum 1ax
on Assets. The calculation of the taxable base for FRBT purposes is based on subtracting certain deductions
(basically from the purchase of goods, services and payment of rent) from taxable income (from the sale
ol asseLs, renderinq ol services and Lhe renLinq or lease ol properLy). Dividends, inLeresL, lnancial derivaLive
transactions and some royalties are generally not included in the basis of the FRBT. As such, these types of
income are neither taxable nor deductible.
The tax is calculated by applying a relatively low tax rate to a broad tax basis. For 2013, the FRBT rate is
17.5%.
The amount of income tax (IT) due is credited against the amount of FRBT so that the amount of tax due
is the higher of FRBT or IT. If the FRBT is greater than the IT amount for the year concerned, the difference
must be paid and will not be eligible for a tax refund in subsequent years.
ln qeneral Lerms, Lhe lease ol vessels by loreiqn companies Lo Mexican companies could be sub|ecL Lo 57
wiLhholdinq Lax Lo Lhe exLenL LhaL cerLain requiremenLs are lulllled, such LhaL Lhe vessel has a permiL Lo be
commercially exploiLed in Mexico and LhaL iL is used direcLly by Lhe lessee Lo LransporL qoods and personnel.
Value-added tax (VAT) is also imposed on some goods and services at rates of 0%, 11% or 16%.
1here are no special Lax laciliLies lor sealarers in Mexico.
Mexico has concluded inLernaLional LreaLies Lo avoid double LaxaLion wiLh Lhe lollowinq counLries:
Argentina*, Australia, Austria, Barbados, Bahrain, Belgium, Brazil, Canada, Chile, China, Czech Republic,
Denmark, Ecuador, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel,
Italy, Japan, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Panama,
Romania, Russia, Singapore, Slovak Republic, South Africa, South Korea (ROK), Spain, Sweden,
Switzerland, United Kingdom, United States of America, Uruguay.
*1reaty to avo|c couo|e taxat|on w|tn resect to |nternat|ona| trafhc.
NoLwiLhsLandinq Lhe lacL LhaL Mexico lollows Lhe OrqanisaLion lor Lconomic CooperaLion and DevelopmenL
{OLCD) model reqardinq inLernaLional Lrallc, iL reserves Lhe riqhL Lo impose Lax on source prolLs derived
1
lor hsca| year 2013, tne |ncome tax rate w||| rema|n at 30x. |t |s exectec to cecrease to 29x for 2014.
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from the provision of accommodation. However, in several tax treaties, the rule in place is used. Through the
OLCD commenLaries Lo Lhe model Lax convenLion, Mexico also reserves Lhe riqhL Lo Lax prolLs lrom inLernal
Lrallc lrom Lhe carriaqe ol passenqers or carqo Laken on board aL one place in a counLry lor discharqe aL
another place in the same country.
lL should be poinLed ouL LhaL Mexico has also concluded aqreemenLs lor Lhe exchanqe ol inlormaLion lor Lax
purposes with such countries as the Bahamas, Bermuda and Netherlands Antilles.
1.4 Freight tax
No lreiqhL Lax applies in Mexico.
If the owner is a foreign resident, a reduced withholding tax rate may apply for granting the use of the vessel
Lo Mexican residenLs {as menLioned in secLion 1.1).
See section 4.5.
2. Human capital
Mexican labor law esLablishes LhaL Lhe workers on any kind ol ship or vessel are delned as Lhe capLains, deck
and enqine ollcers, hosLesses and accounLanLs, radioLeleqraphisLs, boaLswains, dredqers, deckhands and
cooks, as well as any oLher person considered a worker under Mexican mariLime laws and requlaLions and,
in general, all persons performing any kind of job for a shipowner, shipper or freighter related to assembly,
shipping or freight.
Work conditions are to be stipulated in writing. Each party (employer, worker) shall keep a copy of such
documenLaLion, anoLher copy shall be submiLLed Lo Lhe porL auLhoriLy or Lo Lhe closesL Mexican consulaLe,
and a lourLh copy shall be submiLLed Lo Lhe |ob inspecLion ollce ol Lhe respecLive counLry.
No labor relationship is deemed to exist in the event of stowaways entering into an agreement with the
capLain ol Lhe ship Lo pay lor Lheir lare Lhrouqh personal services or wiLh Mexican ciLizens on board who are
being repatriated at the request of a consulate.
Mexican labor law applies Lo all Mexicanlaqqed vessels.
Mexican labor law esLablishes qenerally accepLed rules lor employees {lor example, an eiqhLhour workinq
day and vacation days).
1here are dillerenL unions relaLed Lo Lhe shippinq indusLry in Mexico lor:
CapLains
Ollcers and enqineers
Sealarers
Cooks and sLewards
SLokers
OLher ship occupaLions
Cenerally, Lhe Lerms ol such aqreemenLs are based on Lhe labor law.
The employees rate of social security contribution is 2.775% of the comprehensive salary, which is withheld
by the employer from wages. The employers contribution rate is approximately 36.15% (without considering
|ob hazards, which raise Lhe raLe). 1he maximum annual conLribuLion lor employees is approximaLely t880
and lor employers t5,306 per employee. 1he work perlormed in Lhis Lype ol indusLry is considered very risky.
Therefore, the applicable percentage for job hazard is the highest.
CAMLlN1RAM {Lhe NaLional Shippinq lndusLry Chamber) has proposed LhaL Lhese raLes be reduced.
2.5 Treaties relating to social security obligations
Social security agreements have been entered into with Spain and Canada.
2. Mannin issues with Byin the Mexican Ba
Vessels wiLh a Mexican laq musL be manned by Mexican sealarers.
1he mosL common leqal sLrucLure is Lhe qeneral corporaLe sLrucLure {S.A. de C.V.). 1he Sociedad LimiLada
{S de R.L) is also very common, mosLly lor subsidiaries ol UniLed SLaLes {US) companies lor US Lax
purposes.
Another widely used legal structure is the investment promotion corporation (S.A.P.I.). This structure has
become very popular in recenL years due Lo iLs lexibiliLy and corporaLe qovernance leaLures LhaL relecL
market practices and common contractual arrangements used by investors. This structure was created to
give companies the ability to protect their equity and encourage the participation of other shareholders and
invesLors, and Lhereby achieve economic qrowLh. Reqardinq Lhe lscal poinL ol view, in qeneral Lerms, Lhe
entities built under this kind of structure are subject to the same taxes as any corporation.
RecenL modilcaLions Lo Lhe Mexican CorporaLions AcL include Lhe removal ol cerLain requiremenLs lor Lhe
establishment of these legal structures. Due to the above, there is currently not a minimum amount of
capital stock required, provided that the amount established by each corporation is stated on the partnership
aqreemenL. Also, Lhe duraLion ol Lhe corporaLion can be sLaLed as indelniLe in a previously menLioned
document.
1he averaqe Lax raLe lor shippinq companies is as explained in secLion 1.1. Many loreiqn companies consider
qranLinq Lhe use ol vessels Lo Mexican companies. Renderinq services Lhrouqh Lime charLer aqreemenLs is
also used.
Dividends received by residenL and nonresidenL shareholders lrom a Mexican corporaLion are noL sub|ecL
to corporate income tax if the earnings were already subject to corporate income tax and if the distributing
corporaLion has sullcienL accumulaLion in iLs "neL Lax prolL" {CUFlN) accounL Lo cover Lhe dividend. ll Lhe
accumulaLed amounL is noL sullcienL, Lhe dividends are Laxed aL Lhe corporaLe level aL a raLe ol 307.
lncome Lax paid on disLribuLed prolLs may be crediLed aqainsL corporaLe income Lax in Lhe lollowinq
three years.
3.3 Chambers and organizations in Mexico
1here are currenLly Lhree main supporLinq orqanizaLions in Mexico lor Lhe shippinq indusLry.
1he Mexican AssociaLion ol Shipowners {AMANAC) qroups Lhe principal Mexican shippinq companies,
port terminals, port service providers and Integral Port Administrations. Its main objective is to be an organ
ol consulLaLion and collaboraLion wiLh Lhe Mexican qovernmenL lor Lhe execuLion and desiqn ol policies,
programs and tools in order to encourage the growth of the industry.
CAMLlN1RAM, on Lhe oLher hand, aims Lo serve and proLecL Lhe common inLeresLs ol iLs members, when iL
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comes Lo achievinq Lhe sLrenqLheninq ol Lhe Mexican merchanL or Lhe specilc acLiviLy in relaLion Lo cerLain
members of the Chamber.
The National Ship-owners Association (ANANAC) was created to represent the shipping Agents before the
authorities, unions and third parties and, at the same time, contribute to the accomplishment of their main
activities. The ANANAC also provides specialized services to its members.
The special excise tax on production and services derived from acquiring maritime fuel can be credited
aqainsL any lederal Lax in Mexico. However, in order Lo apply such crediL, cerLain lormal requiremenLs issued
by Lhe Mexican 1ax AdminisLraLion Service {SA1) should be lulllled, lor example, acquirinq Lhe luel lrom
authorized stations.
1here are no special incenLives lor environmenLal awareness in Mexico.
4.4 !ssues with Byin the Mexican Ba
1here are no issues reqardinq qranLs and incenLives associaLed wiLh lyinq Lhe Mexican laq. Mexicanlaqqed
vessels are allowed Lo be commercially exploiLed in Mexico, while loreiqn vessels can also be used in Mexico
but only when such vessels obtain temporary permits (every three months).
1here is qreaL inLeresL in increasinq subsidies and qranLs Lo companies in Lhe Mexican shippinq indusLry as
well as a push toward the tonnage tax regime to be implemented for most domestic corporations that form
parL ol Lhe shippinq indusLry in Mexico. However, no such plans have yeL been implemenLed.
4.6 Tax incentive on new employees hired
The Revenue Act incorporates a tax incentive related to the Excise Tax, consisting of granting a credit in
general against the income tax for the acquisition of diesel to the extent certain requirements are met.
5.1 Infrastructure
5.1.1 Major ports
AlLamira
Cd. Del Carmen
CoaLzacoalcos
Lnsenada
Lazaro Cardenas
Manzanillo
MazaLlan
Proqreso
PuerLo VallarLa
Salina Cruz
1ampico
1opolobampo
1uxpan
Veracruz
1he porL services are classiled as:
Services Lo ships Lo carry ouL Lheir inLernal naviqaLion operaLions, such as piloLinq, Lowinq and anchoraqe
Overall services Lo ships, such as vicLuallinq, drinkinq waLer, luel, communicaLion, elecLriciLy, qarbaqe or
waste collection, and disposal of wastewater
Handlinq services lor Lhe Lransler ol qoods and merchandise, such as loadinq, unloadinq, consiqnmenL,
storage, stowage and hauling within the port
There are airports close to the major ports. They differ regarding distance, but in general they are well-
connected to highways or roads.
Major port Closest airport Distance (approx.)
Altamira, Tampico
(Tamaulipas)
Tampico International Airport
(IATA: TAM, OACI:MMTM)
12.6 km
Cd. Del Carmen (Campeche) Ciudad del Carmen
(IATA: CME, OACI: MMCE)
3 km
Ensenada (Baja California) Ensenada Airport
(IATTA: ESE, ICAO:MMES)
3 km
Lzaro Crdenas (Michoacn) Lzaro Crdenas National
Airport
(IATA: LZC, OACI: MMLC)
3 km
Manzanillo (Colima) Playa de Oro International
Airport
(IATA: ZLO, ICAO: MMZO)
45 km
Mazatln (Sinaloa) International Airport of
Mazarlan
(IATA: MZT, ICAO: MMMZ)
18 km
Tuxpan (Veracruz) Poza Rica National Airport
(IATA: PAZ, OACI: MMPA)
40 km
Veracruz (Veracruz) Veracruz International Airport
(IATA: VER, OACI: MMVR)
8 km
Coatzacoalcos (Veracruz) Minatitlan National Airport
(IATA: MID, ICAO: MMMD)
18 km
Progreso (Yucatn) Merida International Airport
(IATA: MID, ICAO: MMMD)
36 km
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A number ol proqrams exisL LhaL provide mariLime educaLion in schools, such as in MazaLlan, Mexico CiLy,
Tampico and Veracruz. Personnel who provide training in maritime education must be registered with the
MinisLry ol Public LducaLion.
5.2.1 Implementation of the International Safety Management Code on board
Vessels
1he lnLernaLional SaleLy ManaqemenL {lSM) Code has been implemenLed by some shippinq companies in
Mexico.
1he Mexican auLhoriLies periodically carry ouL audiLs reqardinq saleLy rules.
Mexico is a parLy Lo cerLain inLernaLional convenLions reqardinq waLer polluLion {e.q., Marine PolluLion
RequlaLion or MARPOL).
5.3 Registration
Accordinq Lo Lhe Mexican NaviqaLion AcL, in order Lo ly Lhe Mexican laq on a vessel, iL is necessary Lo
register the vessel (to obtain a license) before the competent authority at the request of the owner of
Lhe vessel. Only Mexican individuals and corporaLions are enLiLled Lo obLain a license lor a vessel Lo ly Lhe
Mexican laq.
1he cerLilcaLe ol Lhe license should conLain, amonq oLher iLems, Lhe name ol Lhe ship, Lhe license number,
the port and the name of the owner.
lL is necessary Lo lle a requesL wiLh Lhe NaLional MariLime Public ReqisLry, which will reqisLer Lhe vessel in a
special section of the Registry.
To obtain the ship registration, the request must include:
Name and domicile ol Lhe person who makes Lhe requesL
1he oriqinal documenLaLion or a cerLiled copy ol Lhe deed ol incorporaLion, power ol aLLorney lor Lhe
leqal represenLaLive, an invoice lor Lhe purchase ol Lhe properLy and a saleLy cerLilcaLe lor naviqaLion
1he name ol Lhe ship
A copy ol Lhe documenLaLion in evidence ol paymenL ol Lhe leqal riqhLs
A sworn sLaLemenL LhaL Lhe applicanL is Mexican
Parallel reqisLraLion is noL possible in Mexico.
1he ollcers and crew servinq on vessels reqisLered in Mexico musL be ol Mexican naLionaliLy, should noL
obtain another nationality and should be able to exercise their civil rights. They also have to prove their
pracLical and Lechnical capabiliLies accordinq Lo Lhe ConvenLion on SLandards ol 1raininq, CerLilcaLion and
Watchkeeping (STCW).
There are certain international conventions with respect to the license and the registry of the vessel.
lnlormaLion on Lhese can be lound aL Lhe CAMLlN1RAM websiLe, hLLp://www.cameinLram.orq.
Duties have to be paid in order to register the ship.
5.4 Other comments
Fees, Laxes and social securiLy quoLes may be considered Lo be somewhaL burdensome in Mexico, which
mostly affects the domestic industry in relation to foreign competitors.
FurLhermore, Lhere have been commenLs LhaL Lhe Mexican qovernmenL has noL qranLed enouqh Lax
incentives in order to reduce the aforementioned charges and to encourage the development of the national
indusLry. NeverLheless, iL is believed LhaL Lhe shippinq indusLry in Mexico has qrown siqnilcanLly over Lhe lasL
few years.
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The Netherlands
1. Tax
The following tax facilities are available to shipping companies:
1onnaqebased LaxaLion
Reqressive depreciaLion
lnvesLmenL deducLion
Zero raLinq lor valueadded Lax {VA1) purposes
Recovery ol DuLch VA1 incurred on cosLs
Waqe cosL deducLion
Tonnage-based taxation
Introduction
As of 1996, the Netherlands has incorporated a special tax facility in its tax laws for shipping enterprises.
1his law provides lor Lhe calculaLion ol Laxable prolL ol shippinq enLerprises enqaqed in seaqoinq shippinq
business on the basis of the net registered tonnage of their vessels, instead of taxation on their actual
operaLinq resulLs. 1his Lonnaqebased LaxaLion is opLional and can siqnilcanLly reduce Lhe ellecLive Lax
burden of these companies.
Conc|t|ons for a|y|n tne ca|cu|at|on of taxao|e roht oasec on tonnae
In order to apply the tonnage-based taxation, a shipping company should meet the following conditions:
1he shippinq enLerprise is liable lor DuLch income Lax or corporaLe income Lax {Cl1).
1he shippinq enLerprise operaLes own vessels lor:
1he inLernaLional LransporLaLion ol people or qoods overseas
1he LransporLaLion ol people or qoods overseas lor Lhe purpose ol Lhe exploraLion or exploiLaLion ol
natural resources at sea
1he exploraLion ol Lhe sea bed
Cablelayinq and pipelayinq acLiviLies aL Lhe sea bed
1ackle and lilLinq acLiviLies aL sea
Dredqinq services aL sea
Or
1owinq and supporL services aL sea
"Own vessels" include seaqoinq vessels ol which Lhe benelcial ownership {or coownership) is in Lhe hands
of the shipping enterprise, and seagoing vessels which, though not owned or co-owned by the shipping
enterprise, have been chartered bare from a third party (bareboat charter in). Seagoing vessels owned by
the shipping enterprise but chartered bare to a third party (bareboat charter out) do not qualify as own
vessels.
The shipping enterprise is engaged in the exploitation of these own vessels. Operation is understood to mean
that the shipping enterprise takes care of at least 30% of the management of own vessels.
The tonnage tax regime may also be applicable if a shipping enterprise does not own a vessel but performs
the entire crew and technical management of a vessel for the owner.
1he vessels ly a Luropean Union {LU) or a Luropean Lconomic Area {LLA) laq {lceland, LiechLensLein and
Norway). This is only required for own vessels (and, therefore, for bareboat chartered in vessels as well).
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1here are several exempLions Lo Lhe laq requiremenL available.
ProlLs earned by vessels enqaqed in dredqinq services aL sea come wiLhin Lhe scope ol Lhe Lonnaqebased
taxation provided that these activities are predominantly (i.e., at least 50%) executed at sea (i.e., the
transport part of the dredging activities may qualify for the tonnage tax regime). Hence, dredging vessels
mainly used in inland waLerways and porLs do noL qualily lor Lonnaqebased LaxaLion. No laq requiremenL
exempLion is applicable lor dredqinq vessels {hence, iL is always mandaLory Lo ly an LU or LLA laq).
ProlLs earned by vessels enqaqed in Lowinq and supporL services aL sea Lo qualilyinq seaqoinq vessels also
come wiLhin Lhe scope ol Lhe Lonnaqebased prolL calculaLion. No laq requiremenL exempLion is applicable
lor vessels enqaqed in Lowinq and supporL acLiviLies {hence, iL is always mandaLory Lo ly an LU or LLA laq).
ProlLs earned on acLiviLies direcLly relaLed Lo Lhe qualilyinq operaLion ol seaqoinq vessels, such as ship
brokinq, sLevedorinq and comparable acLiviLies, also come wiLhin Lhe scope ol Lhe Lonnaqebased prolL
calculation.
f|ect|on for tne tonnaeoasec roht ca|cu|at|on
ln case Lhe abovemenLioned condiLions are saLisled, a shippinq company can opL lor Lonnaqebased
taxation. A shipping enterprise qualifying for the tonnage-based taxation should make the election in the
lrsL year in which Lhe shippinq enLerprise earns Laxable prolL lrom shippinq operaLions {lor example, a
newly incorporated company engaged in shipping). The ruling, which may be appealed, is issued by the tax
inspectors concerned. The election then, in principle, applies for 10 years, after which it can be reversed
(back to the ordinary tax system) or continued for another 10 years. In the year of the election, the
difference between the book value and the fair market value of the assets relating to the shipping activities
(i.e., any hidden reserves on the vessels) is determined and set as a tax-claimed reserve for the 10-year
period. If the shipping enterprise fails to comply with the conditions for tonnage-based taxation within the
10-year period, this tax-claimed reserve must be included in its taxable base (at the general tax rate for
2013 mentioned below). If, after the 10-year period, the shipping enterprise no longer complies with the
conditions, the tax-claimed reserve will be waived without any taxation.
Ca|cu|at|on of tne taxao|e tonnaeoasec roht
1axable prolL based on Lonnaqe is calculaLed on Lhe basis ol Lhe amounLs per day LhaL Lhe vessel is exploiLed,
as set out below. If shipping enterprises only own a part of a seagoing vessel, they will be taxed only for the
tonnage attributable to themselves.
1he reduced raLe ol t0.50 per day per 1,000 neL Lons lor vessels ol aL leasL 50,000 neL Lons is only
applicable for vessels:
1haL are lrsL reqisLered under a laq alLer 31 December 2008
Or
Which in Lhe lve years precedinq Lhe elecLion lor Lhe Lonnaqebased prolL calculaLion were lyinq a non
LU/LLA laq
1o make Lhe Lonnaqe Lax reqime benelcial lor ship manaqemenL acLiviLies, Lhe Laxable prolL based on Lhe
table as set out above may be decreased by 75% with respect to a shipping enterprise that does not own a
vessel but performs the entire crew and technical management of a vessel for the owner (and, consequently,
Total net tonnage Income per day per 1,000 net tons (rounded down) ()
Up Lo 1,000 9.08
1,00110,000 6.81
10,00125,000 4.54
25,00150,000 2.27
Over 50,000 0.50
tonnage based taxation is applied).
The taxable amount, which is calculated by applying the above table, is taxed at the general CIT rates. In
2013, the tax rates are as follows:
1axable income up Lo t200,000 is Laxed aL 20.07.
1axable income over t200,000 is Laxed aL 257.
Shipping companies that qualify for the tonnage-based taxation but do not opt for tonnage-based taxation
may apply for accelerated depreciation of the vessels. This means that an annual depreciation rate of 20% of
the initial cost, less the residual value, can be applied. Accelerated depreciation is only possible if the shipping
business is prolLable. ll Lhe shippinq company sullers a loss, parL ol Lhe 207 lqure cannoL be used. 1he
remainder will be added to the 20% for the next year.
Regressive depreciation
If a shipping company does not opt for tonnage-based taxation, the shipping company may apply
depreciation at a regressive rate on seagoing vessels. The regressive depreciation rate depends on the life of
the vessel and the residual value. The maximum rate for regressive depreciation is 12.1% of the book value
for a new vessel.
Investment deduction
Investment incentives in the Netherlands are granted at the request of the taxpayer and are available for
shipping companies that do not opt for the tonnage-based taxation. A percentage of the total amount
invesLed durinq a lnancial year can be deducLed lrom Laxable income. 1he invesLmenL deducLion applies il
beLween t2,300 and t306,931 {lqures lor Lhe year 2013) is invesLed in relevanL asseLs durinq a year. 1he
size of the deduction depends on the amount of the investment and could be as much as 28% of the total
amount invested.
VAT
Zero rating for VAT purposes
The supply and the leasing of seagoing vessels (excepting yachts used for recreational purposes) are zero-
rated (exempt with input VAT recovery credit) for VAT purposes.
The supply of goods (e.g., equipment to be used on board) and services (e.g., repair services) to outbound
seagoing vessels are in most cases zero-rated if supplied to:
Commercial seaqoinq vessels
Vessels used lor rescue or assisLance aL sea
Vessels used lor coasLal lshinq wiLh Lhe excepLion ol ship's provisions
Warships wiLh a harbor or anchoraqe berLh ouLside Lhe NeLherlands as Lheir desLinaLion
In addition, services related to the cargo transported by these seagoing vessels (e.g., loading and unloading)
are VAT zero-rated in most cases.
The VAT zero rate also applies to international passenger transport carried out with seagoing vessels. A
reduced rate (currently 6%) applies to domestic passenger transport.
Place of supply rules
Since 1 January 2010, supplies of services (including services to outbound seagoing vessels) are in principle
not subject to Dutch VAT if the business recipient of the service is established outside the Netherlands. On
the other hand, supplies of services to outbound seagoing vessels by nonresident taxable persons to a Dutch
business recipient are in principle subject to Dutch VAT, but again VAT zero-rated in most cases.
Commercial Cruising Vessels
The supply and leasing of yachts that do not meet the criteria for seagoing vessels, but that are used
commercially for passenger transport purposes and meet certain other criteria, can also be VAT zero-rated
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under the Commercial Cruising Vessels (CCV) tax facility. In that case, CCVs are regarded as seagoing
vessels for Dutch VAT purposes.
ll a yachL qualiles as a CCV, Lhe DuLch VA1 zeroraLe also can also apply Lo supplies and services relaLed Lo
the construction and exploitation of the CCV.
Recovery of Dutch VAT incurred on costs
In principle, businesses can recover Dutch VAT incurred on costs. However, for certain types of costs (e.g.,
private use of business assets, such as company cars), only a partial recovery is possible, whereas for some
other types of costs (e.g., food and drinks used in hotels and restaurants), no recovery is possible at all.
NonresidenL shippinq companies which do noL perlorm supplies sub|ecL Lo VA1 in Lhe NeLherlands can lle
a relund claim lor DuLch VA1 incurred on cosLs aL Lhe DuLch Lax ollce lor nonresidenLs {lor businesses
esLablished ouLside Lhe LU) or aL Lhe local Lax ollce in Lheir own LU counLry {lor businesses esLablished in
anoLher LU Member SLaLe).
Wage cost deduction
Under Lhe waqe cosL deducLion requlaLion, shippinq companies LhaL acL as wiLhholdinq aqenLs lor payroll Lax
purposes can, on certain conditions, deduct 40% of the wages of the Dutch-resident tax-paying seafarers from
the total amount of payroll tax and national insurance contributions to be remitted to the Tax and Customs
Administration. The wage cost deduction of 40% is also applicable for non-Dutch-resident seafarers who are
residenLs ol an LU counLry or a counLry LhaL is a member ol Lhe LLA. lL is noL required LhaL Lhe DuLch, LU or
EEA-resident seafarer be liable for wage tax or national insurance contributions in the Netherlands in order to
apply Lhe waqe cosL deducLion. Please noLe LhaL Lhe ellecL is limiLed, because a DuLch, LU or LLAresidenL
sealarer workinq on board a vessel lyinq Lhe DuLch laq will in pracLice {almosL) always be liable lor waqe Lax
or national insurance contributions in the Netherlands.
ll Lhe sealarer is noL a DuLch, LU or LLA residenL buL is liable lor waqe Lax in Lhe NeLherlands, or even only
liable to pay national insurance contributions, the deduction is 10% of the wages.
1he laciliLy only applies Lo vessels lyinq Lhe DuLch laq LhaL are operaLed mainly aL sea. ln principle, vessels
used for the international transport overseas of goods or persons are regarded as sea vessels. In addition,
so-called sailing commercial cruising vessels are also regarded as sea vessels. As a consequence, the wage
tax facility can be applied in more situations.
Vessels used for pilotage services, sailing boats, tugboats used in harbors, dredging vessels without their own
propulsion or wiLhouL carqo space, and lshinq boaLs {commercial lshery) are excluded lrom Lhe laciliLy.
Based on a DuLch SLaLe SecreLary ol Finance Decree, daLed 9 December 2011, specilc sailinq boaLs LhaL are
issued a cerLilcaLe ol saleLy lor an unlimiLed sailinq LerriLory pursuanL Lo more sLricL saleLy requlaLions Lhan
the CCV code, still qualify for the wage cost deduction retrospectively to 2006.
For Lhese specilc sailinq boaLs, Lhe SLaLe SecreLary ol Finance approved LhaL lrom 2012, a relund ol remiLLed
waqe Lax can be ollcially claimed wiLh a maximum reLrospecLive ellecL up Lo and includinq 2006.
The abovementioned Decree of the Dutch State Secretary of Finance is lapsed as from 2013. That means
that as from 2013 for the purpose of a refund of remitted wage tax with regard to the wage cost deduction
lor Lhese qualilyinq sailinq boaLs, Lhe reqular sLaLuLe ol limiLaLions ol lve years is applicable.
New work-related costs scheme
From 1 January 2011, Lhe sysLem ol Laxlree employmenL benelLs and allowances will be replaced by
the work-related costs scheme. There are transition arrangements in place. In 2011, 2012 and 2013, the
employer can choose wheLher Lo apply Lhe old sysLem ol Laxlree employmenL benelLs and allowances or Lhe
new work-related costs scheme. As of 2014, the new work-related costs scheme is mandatory.
For seamen, the provision of meals and lodging on board of sea vessels is tax free within the new work-related
cosLs scheme. Durinq Lhe lrsL year {2011), some ad|usLmenLs were made Lo Lhis new workrelaLed cosL
scheme by Lhe DuLch MinisLry ol Finance. Movinq lorward, an assessmenL wheLher Lhe new workrelaLed cosLs
scheme could be prolLable lor shippinq companies is recommended.
1he waqe Lax levied on Lhe workrelaLed cosLs is a lnal levy, lully lor Lhe accounL ol Lhe employer and as a
resulL noL Lo be wiLhheld on Lhe qross waqe ol Lhe employee. 1he employer bears Lhe cosLs ol a lnal levy ol
80% to be paid on all work-related costs. Every employer is entitled to a tax free work-related costs budget of
1.5 7 {2013) ol Lhe LoLal waqe bill. 1he 807 lnal levy only applies on Lhe amounL in excess ol Lhis Laxlree
budqeL. ll Lhe employer desiqnaLes cerLain employmenL benelLs and allowances as workrelaLed cosLs, Lhen
Lhe employer can make use ol specilc exempLions and special valuaLion rules.
As previously mentioned, the shipping company has to determine for itself, on the basis of the current
employment conditions, what the impact of the work-related costs scheme would be on its business. If the
work-related costs scheme has an adverse impact, then the shipping company has until 2014 to adjust its
employmenL condiLions such LhaL Lhe payroll Lax Lo be paid {Lhe lnal levy ol 807) remains as low as possible.
It is important to check not only existing contracts but employment contracts with new employees as well.
The Netherlands has concluded tax treaties with more than 90 countries (including a tax agreement with
the former Netherlands Antilles). The Netherlands has also concluded so-called Tax Information Exchange
AqreemenLs {1lLAs) wiLh 29 counLries. MosL ol Lhe Lax LreaLies are based on Lhe OrqanisaLion lor Lconomic
CooperaLion and DevelopmenL {OLCD) model LreaLy lor Lhe avoidance ol double LaxaLion. Please lnd
hereunder an overview of the Dutch tax treaties:
Albania, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus,
Belgium, Brazil, Bulgaria, Canada, China, Croatia, Cuba, Czech Republic, Denmark, Egypt, Estonia,
Ethiopia, Finland, France, Georgia, Germany, Ghana, Greece, Hong Kong, Hungary, Iceland, India,
Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lithuania,
Luxembourg, Macedonia, Malawi, Malaysia, Malta, Mexico, Moldova, Mongolia, Morocco, New Zealand,
Nigeria, Norway, Oman, Pakistan, Panama, Philippines, Poland, Portugal, Qatar, Romania, Russian
Federation, Saudi Arabia, Singapore, Slovak Republic, Slovenia, South Africa, South Korea (ROK),
Spain, Sri Lanka, Suriname, Sweden, Switzerland, Taiwan (ROC), Tajikistan, Thailand, Tunisia, Turkey,
Turkmenistan, Uganda, Ukraine, United Kingdom, United States of America, Uzbekistan, Venezuela,
Vietnam, Yugoslavia*, Zambia, Zimbabwe.
*The provisions of the Netherlands-Yugoslavia double tax avoidance treaty are treated as remaining in force between the
Netherlands and Bosnia-Herzegovina, Montenegro and Serbia.
Besides Lhe abovemenLioned LreaLies, Lhere are specilc aqreemenLs on Lhe LaxaLion ol shippinq income wiLh
the following countries:
Argentina, Bermuda, Estonia, Greece, Hong Kong, Isle of Man, Mexico, Latvia, Lithuania, Panama,
Venezuela.
In most tax treaties, the place of effective management is an important criterion for determining whether
a company is subject to tax in the Netherlands. If a company is registered abroad, but the place of effective
management of the shipping activities is in the Netherlands, the shipping activities will be subject to tax in
the Netherlands. The place of effective management is determined based on the actual facts with respect to
managerial activities. All managerial aspects are taken into consideration.
1.4 Freight taxes
Although freight taxes do not apply in the Netherlands, they do apply in some countries with which the
Netherlands has concluded tax treaties. It is not yet clear whether all of the tax treaties grant relief from
lreiqhL Lax. lL can be arqued LhaL lreiqhL Laxes are Laxes Lo which a specilc LreaLy can apply. 1his could resulL
in a total or partial exemption from freight tax. If freight tax is not covered in the relevant tax treaty, an
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exemption may still apply on the basis of the levying countrys national law. Some countries that levy freight
Laxes also qranL reliel under naLional rules. ln some cases, Lhe rules sLaLe LhaL ship owners residenL in an LU
Member SLaLe, lor example, are noL required Lo pay lreiqhL Lax. 1he NeLherlands is olLen lisLed as a counLry
whose ship owners are exempt. If no exemption applies, freight tax can only be seen as a cost, resulting in a
deduction of 25% (general CIT rate for 2013, as mentioned in 1.1) of the amount of freight tax. Obviously,
reliel is more benelcial Lhan a deducLion.
1.5 SpeciaI vesseI reistraticn benehts fcr the ship cwner
Registration can be an important factor affecting whether seafarers are covered by social security and the
abovemenLioned waqe Lax laciliLies. Under Lhe new Lonnaqe Lax leqislaLion, in principle, LU or LLA laq
registration is a requirement for the application of the tonnage tax facility. Registration is usually not a
requirement for other income tax facilities.

2. Human capital
ln Lhe NeLherlands, DuLch shipowners have Lo meeL specilc requiremenLs lor hirinq sealarers based on
Lhe MariLime Shippinq Manpower Services RequlaLions {Regeling Arbeidsvoorziening Zeescheepvaart).
These regulations stipulate that a Dutch shipowner may not hire foreign seafarers for employment on
board vessels {e.q., capLain, ollcer or naval Lechnician) unless Lhey have a cerLilcaLe ol reqisLraLion wiLh
Lhe MariLime LmploymenL Ollce {Arbeidsbureau Maritiem). The term foreign seafarers is understood to
mean seafarers who:
Do noL live in Lhe NeLherlands or in any oLher LU counLry
Live in an LU counLry where Lhe lreedom ol movemenL lor workers does noL apply
Do noL have a work permiL
Or
Have noL worked lor aL leasL Lwo years in Lhe DuLch shippinq indusLry under a DuLch collecLive labor
agreement, provided that the last employment was not longer than three years ago
MariLime law, Lherelore, requires a DuLch capLain, in principle. However, Lhe success ol Lhe shippinq policy in
Lhe NeLherlands has led Lo a subsLanLial qrowLh ol Lhe DuLch leeL and Lo a shorLaqe ol DuLch capLains. As a
consequence, regulations have been adopted that provide exemptions for the requirement. Nevertheless,
loreiqn capLains and lrsL ollcers musL have sullcienL knowledqe ol DuLch mariLime law and are required, lor
example, Lo possess Lhe necessary cerLilcaLes showinq mariLime educaLion and mariLime experience.
Under Lhe MariLime Crews AcL {Zeevaartbemanningswet), each vessel has Lo have a crew cerLilcaLe issued
by Lhe MinisLer ol lnlrasLrucLure and Lhe LnvironmenL. 1his crew cerLilcaLe speciles Lhe minimum number
of crew members and their duties on board the vessel (besides the captain and the shipowner). The
manaqer ol Lhe vessel has Lo lle an applicaLion lor a crew cerLilcaLe wiLh Lhe MinisLer ol lnlrasLrucLure and
Lhe LnvironmenL lor each individual ship. A crew policy lor Lhe specilc vessel has Lo be enclosed wiLh Lhe
application. This crew policy is a proposal by the ship manager and consists of the desired minimum number
ol crew members {besides Lhe capLain) wiLh Lheir specilc duLies.
A vessel has Lo be manned accordinq Lo Lhe crew cerLilcaLe. Under some condiLions, an exempLion may apply
for no more than six months.
1he crew cerLilcaLes musL be published in a public reqisLer. 1he issued or wiLhdrawn shippinq cerLilcaLes and
the issued exemptions are registered in the Central Register of Crew Information.
Under Lhe MariLime Crews AcL, Lhe ship manaqer has Lo keep a lisL ol aL leasL Lhe educaLion, experience,
prolessional skills and medical lLness ol each crew member ol every vessel Lhey manaqe. 1he MariLime
Crews Act sets professional requirements for the knowledge and skills needed for a position or activity on
board a vessel. All Lhose workinq on board who are sub|ecL Lo Lhe provisions ol Lhe MariLime Crews AcL musL
have a shippinq cerLilcaLe lor Lhe specilc work involved.
Based on the Healthcare Insurance Act, each insured person older than 18 years has to pay a nominal
premium. Besides that, an income-related premium of 7.1% for the year 2012 applies regarding onshore
personnel, up to a certain maximum amount. Employers have to compensate their employees for the income-
related contribution. This compensation is part of the employees (onshore personnel) taxable income.
Seafarers do not have to pay the income-related contribution. As a consequence, employers do not have to
compensate them (as of that date).
1he minimum requiremenLs lor collecLive labor aqreemenLs {CLAs) consisL ol Lhe lollowinq.
Term of contract
An employmenL conLracL can be aqreed Lo wiLh Lhe sealarer lor a lxed or indelniLe period and lor one or
more journeys. The contract has to be in writing.
1he lxedLerm conLracL can be LerminaLed by one ol Lhe parLies by qivinq noLice in wriLinq. 1his is only
possible when the seafarer is on board the vessel in a port where the vessel is moored. It is illegal to
LerminaLe an employmenL conLracL wiLhouL Lhe permission ol Lhe DeparLmenL ol Leqal Allairs ol Lhe CenLral
Organization for Work and Income (sector Juridische Zaken van de Centrale Organisatie Werk en Inkomen).
Wages
ln principle, a specilc waqe can be aqreed upon in an individual waqe aqreemenL. However, il Lhe
employment is agreed between an employer established in the Netherlands and a seafarer who is a resident
of the Netherlands, the wage cannot be less than the minimum wage set by the legal minimum wage and
minimum holiday pay supplement for the merchant service. This minimum wage is reviewed every six months
(as of January 1 and July 1 each year). In cases where minimum wage regulations apply, the seafarer is also
entitled to a holiday allowance of 8% of the annual wage. This holiday allowance can be reduced if the normal
wage is three times the minimum wage.
Leave entitlements
A seafarer is entitled to a minimum of 30 days leave per annum (if the employment contract has been in
force for one year), regardless of age, but depending on the number of consecutive working years with the
same employer. The leave days have to be divided in such a way that after three years the seafarer has used
up the leave entitlement. The employer is obliged to allow the employee 15 successive calendar days leave.
Working hours
1he maximum number ol workinq hours on board vessels lyinq Lhe DuLch laq is requlaLed by law, currenLly
the Working Hours Act (Arbeidstijdenwet).
Retirement
ParLicipaLion in Lhe Pension Fund lor Lhe MerchanL Service is mandaLory in some cases lor sealarers on board
a DuLchreqisLered vessel. Based on Lhe Pension AcL, parLicipaLion in Lhe Pension Fund lor Lhe MerchanL
Service is mandatory for seafarers between the ages of 21 and 65 who:
Are DuLch
Are noL DuLch buL are a residenL:
Ol Lhe NeLherlands
Ol a counLry wiLh which Lhe NeLherlands has a social securiLy LreaLy, wiLh Lhe excepLion ol Lhe UniLed
States of America
Sec|hc C|/s
ln CLAs, Lhe leqal minimum requiremenLs lor labor aqreemenLs on some specilc poinLs can be deparLed lrom
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in lavor ol Lhe sealarer. 1hese CLAs olLen apply Lo all labor aqreemenLs wiLhin Lhe scope ol Lhe CLA.
1here are some specilc inLernaLional rules LhaL apply Lo sealarers. As lrom 1 May 2010, Lhe Luropean
Lconomic CommuniLy {LLC) RequlaLion No.883/200^ is in lorce. ln Lhis requlaLion, Lhe qeneral rule is LhaL
a sealarer workinq on board a vessel lyinq Lhe laq ol an LU counLry should be insured in Lhe same counLry.
However, iL could inluence Lhe social securiLy posiLion ol sealarers enqaqed in crossborder work. Provided
that certain conditions are met, one can apply for transitional provisions.
2.5 Mannin issues with Byin the Dutch Ba
One ol Lhe ma|or advanLaqes ol lyinq Lhe DuLch laq is Lhe waqe cosL deducLion lor sealarers {see secLion
1.2).
MosL companies operaLe as a privaLe limiLed liabiliLy company or BesloLen VennooLschap {BV). 1he liabiliLy ol
the shareholders of a BV is limited to their interest in its share capital. The BV is independently liable for tax.
If the shipping enterprise opts for the Dutch tonnage tax regime, the shipping enterprise may nonetheless
benelL lrom Lhe DuLch parLicipaLion exempLion. 1he DuLch parLicipaLion exempLion exempLs income, such as
dividends, capital gains, as well as capital losses, realized with respect to a qualifying participation held by the
Dutch shareholder. Among other requirements, the shipping enterprise should at least hold 5% of the nominal
paid-up share capital of a company with capital divided into shares, and the participation is not considered to
be held as a portfolio investment.
The structure of a Dutch permanent establishment or branch of a foreign company is also commonly used. If
a Lax LreaLy is applicable {see secLion 1.3), a branch ollce sLrucLure can resulL in subsLanLial Lax savinqs lor
shipping companies.
The limited partnership is a commonly used legal structure for private individuals and corporations when
parLicipaLinq in a ship lnance sLrucLure. ParLicipanLs in a limiLed parLnership can Lake advanLaqe ol Lhe DuLch
tonnage tax regime. A so-called closed limited partnership is regarded as transparent for Dutch tax purposes.
1his means LhaL Lhe parLicipanLs can direcLly prolL lrom, lor example, Lhe Lax deducLion.
1ax LreaLies usually requlaLe prolL disLribuLions and allow lor a reducLion ol, or exempLion lrom, wiLhholdinq
tax. Dividends received from participants that qualify for the participation exemption are exempt from CIT.
Not only are dividends received from a qualifying shareholding exempt, but so are any capital gains on the
disposal of a qualifying shareholding.
4.1 Infrastructure
4.1.1 Major ports
RoLLerdam {larqesL Luropean porL)
AmsLerdam
Vlissinqen
Moerdi|k
1erneuzen
Dellzi|l and Lemshaven
DordrechL
The following facilities are readily available:
Dockinq
SLoraqe
MulLicore pipelines
The following airports are close to major ports:
RoLLerdam 1he Haque AirporL {RoLLerdam)
Schiphol {AmsLerdam)
4.2 Registration
DuLch law idenLiles Lhree Lypes ol seaqoinq vessels:
MerchanL ships
CCVs
Pleasure cralLs
ArLicle 311 ol Lhe Commercial Code {WeLboek van Koophandel) seLs lorLh Lhe requiremenLs lor qualilyinq as
a Dutch vessel.
1he main condiLions lor lyinq Lhe DuLch laq are as lollows:
1he ship has Lo be owned by one or more:
PrivaLe individuals who have Lhe naLionaliLy ol an LU Member SLaLe, ol a sLaLe LhaL is parL ol Lhe LLA, ol
SwiLzerland or who are considered equivalenL Lo LU sub|ecLs on Lhe basis ol LU law
Companies or oLher leqal enLiLies sub|ecL Lo Lhe laws ol an LU Member SLaLe, Lhe laws ol some ol Lhe
countries or areas as mentioned in Article 299 of the EC Treaty, the laws of other countries, which are
part of the EEA or the laws of Switzerland
PrivaLe individuals or leqal enLiLies LhaL have Lhe riqhL ol lree esLablishmenL on Lhe basis ol a LreaLy ol Lhe
LU wiLh anoLher sLaLe
1he owner should have an esLablishmenL or branch {as seL lorLh in DuLch leqislaLion) in Lhe NeLherlands
and manage the ship from the Netherlands through one or more private individuals who have the
authority to act on behalf of the owner in all matters regarding the ship, its captain and other crew
members. A substitute with full powers should be appointed for cases of absence.
In the case where the management has been transferred to a company as referred to above, the owner does
noL have Lo esLablish an ollce in Lhe NeLherlands, provided Lhe owner elecLs domicile aL Lhe DuLch ollce ol
the company managing the vessel.
A vessel that is not used for commercial purposes is a Dutch ship if it is owned by a private individual or legal
enLiLy as relerred Lo above, and a privaLe individual in Lhe NeLherlands has sullcienL power ol aLLorney Lo acL
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promptly on behalf of the owner if required.
MerchanL ships and CCVs can be reqisLered as a DuLch ship in Lwo dillerenL ways, namely by sLandard
(full ownership) registration (4.2.2) or by registration as a bareboat charterer (4.2.3). Dutch ships are
registered in the shipping register in Rotterdam.
4.2.2 Standard registration procedure
The standard registration of seagoing vessels requires the owner to produce:
A siqned sLaLemenL ol Lhe owner ol Lhe vessel in which he/she sLaLes LhaL Lo his/her besL knowledqe, Lhe
vessel can be registered as seagoing vessel
A sLaLemenL issued on behall ol Lhe MinisLer ol lnlrasLrucLure and Lhe LnvironmenL provinq LhaL Lhe
owner complies with the provisions of Article 311 of the Commercial Code
A cerLilcaLe ol deleLion lrom Lhe lormer reqisLer il Lhe ship was previously reqisLered abroad; should Lhe
former register not be willing to honor the application for deletion, such information should be contained
in the Dutch register
4.2.3 Registration as a bareboat-chartered vessel
The second option for registering a seagoing vessel in the Netherlands is as a bareboat-chartered vessel. A
seagoing vessel that is registered outside the Netherlands may be registered in the Dutch Bareboat Register
under the following conditions:
1he bareboaL charLerer {naLural person or company) is residenL in Lhe LU, LLA, SwiLzerland or one ol Lhe
overseas areas (by agreement).
1he bareboaL charLerer manaqes a shippinq company wiLh a head or branch ollce esLablished in Lhe
Netherlands under Dutch law.
1he dayLoday operaLion ol Lhis shippinq company {includinq nauLical, Lechnical and manninq
operations) is in the hands of one or more natural persons who are authorized to represent the bareboat
charterer in all affairs concerning the management of the ship and those on board.
1he person or persons responsible lor Lhe dayLoday operaLion ol Lhe ship musL be available aL all Limes.
If they are not available, a substitute authorized to deal with all matters relating to the management of
the ship and those on board may deputize for them.
1he bareboaL charLerer accepLs all responsibiliLies lor ship and crew arisinq lrom bareboaL reqisLraLion as
a Dutch vessel.
1he owner and/or bareboaL charLerer aqrees uncondiLionally, and in wriLinq, Lo ly Lhe DuLch laq.
No conlicL in law may exisL or arise beLween Lhe sLaLe ol reqisLraLion and Lhe NeLherlands reqardinq
registration as a bareboat charterer.
4.2.4 Required information
1he lollowinq daLa and documenLs concerninq Lhe vessel musL be available aL all Limes aL Lhe owner's ollce or
aL Lhe bareboaL charLerer's head or branch ollce in Lhe NeLherlands:
PosiLion ol Lhe vessel
1echnical mainLenance records
Names, posiLions and cerLilcaLes ol compeLence ol all crew members on board Lhe vessel
All daLa on Lhe crew, in accordance wiLh secLion 3 ol Lhe MariLime Crews AcL
lndividual and/or collecLive employmenL conLracLs ol all crew members on board Lhe vessel
ll applicable, names ol passenqers or oLher persons on board Lhe vessel
ll danqerous or hazardous qoods are beinq LransporLed, all deLails ol Lhe carqo in accordance wiLh
ChapLer Vll ol Lhe lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS) 197^ as amended and
related legislation
Under Lhe MariLime Crews AcL, Lhe capLain should have Lhe naLionaliLy ol a sLaLe ol Lhe LU or LLA, wiLh
limited exceptions. The vessel has to have a valid manning document issued by the authority stated in the law.
1he crew should aL leasL consisL ol qualiled sLall Lo lullll Lhe posiLions as sLaLed on Lhe crew cerLilcaLe.
The international convention regarding registration is the:
UniLed NaLions ConvenLion on Lhe Law ol Lhe Sea {UNCLOS), MonLeqo Bay,
10 December 1982
Other relevant conventions include the:
lnLernaLional ConvenLion on SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq lor Sealarers, {S1CW)
1978, as revised in 2010
lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS), 197^, as amended
lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships, 1973, as modiled by Lhe ProLocols
ol 1978 and 1997 relaLinq LhereLo {MARPOL 73/78/97)
lnLernaLional ConvenLion on 1onnaqe MeasuremenL ol Ships, 1969
lnLernaLional ConvenLion on Load Lines, 1966
Bonn AqreemenL lor cooperaLion in dealinq wiLh polluLion ol Lhe NorLh Sea by oil and oLher harmlul
substances, 1983, as amended
lnLernaLional ConvenLion on Civil LiabiliLy lor Bunker Oil PolluLion Damaqe, 2001 {BUNKLR 2001)
MariLime Labour ConvenLion, 2006, as raLiled in 2012
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New Zealand
1. Tax
Shipping companies are treated like any other company and are subject to the standard tax laws of New
Zealand. The current company tax rate is 28%.
Where a ship owned or chartered by any nonresident carries outside New Zealand any goods or passengers
shipped or embarked in New Zealand, 5% of the gross passage or carriage fee is deemed to be gross income
derived by Lhe nonresidenL lrom New Zealand. Merchandise, qoods, livesLock, mail or passenqers shipped
or embarked at any port in New Zealand are deemed to be carried outside New Zealand from that port
reqardless ol Lhe lacL LhaL Lhe ship may call aL oLher porLs belore lnally leavinq New Zealand.
MosL ol New Zealand's double Lax aqreemenLs {D1A) provide LhaL income will be exempL lor shippinq
operations of other jurisdictions. In addition, the Inland Revenue Department may grant an exemption (in
whole or in parL) lrom Lhis income Lax liabiliLy, where iL is saLisled LhaL Lhere is a reciprocal arranqemenL lor
New Zealand shippers with the nonresident shippers country of residence. In this regard, the shipping income
tax exemption of that other country must be of substantially the same nature as that in New Zealand. New
Zealand has entered into exemption arrangements with the following countries:
Barbados, Bermuda, Brazil, Greece, Hong Kong, Israel, Liberia, Netherlands Antilles, New Caledonia,
Panama, Papua New Guinea, Tonga, Vanuatu.
Requests for the shipping income tax exemption can be made to the Commissioner of Inland Revenue.
RequesLs should be accompanied by conlrmaLion lrom Lhe nonresidenL shippinq operaLor's home |urisdicLion
LhaL, in correspondinq circumsLances, LhaL |urisdicLion would noL Lax Lhe prolLs ol a New Zealand residenL
shipping operator in that jurisdiction.
Nonresident shipping operators may ship or embark cargo in New Zealand for delivery to other ports in New
Zealand provided LhaL cerLain condiLions are meL {ouLlined in Lhe MariLime 1ransporL AcL 199^). 1he income
derived lrom Lhe LransporL ol domesLic carqo is specilcally deemed Lo be derived lrom New Zealand and is
accordingly assessable for income tax in New Zealand.
Goods and services tax
New Zealand has a consumpLion Lax called Lhe qoods and services Lax {CS1), levied aL 157. 1his is
incorporated into the total price of all goods and services provided in New Zealand. Where a shipping
company is reqisLered lor CS1, iL can claim back Lhe CS1 incurred on acquisiLions ol qoods and services {an
input tax credit) where the imported goods are acquired for the purpose of making taxable supplies. A zero
raLinq ol CS1 applies Lo exporLed services {such as inLernaLional LransporLaLion) and qoods supplied as
consumable stores intended for use on a foreign-going ship. However, this is a particularly complex area as it
applies Lo Lhe shippinq indusLry, and specilc advice should be obLained.
Depreciation
Depreciation rates in New Zealand are generally very low, around 10% diminishing value (DV) for vessels. A
concessionary depreciation rate of 12% DV on secondhand shipping vessels has now been removed. There
are, however, different depreciation rates for special purpose vessels. These rates compare unfavorably
to other shipping nations as reported in Shipping Review 2000, a publication issued by the New Zealand
government.
Sealarers are classiled as normal waqe earners. Pay as you earn {PAYL) qives ellecLive Lax deducLions
at the appropriate rate for all employees. A nonresident shipping operator must deduct PAYE from salary
and wages paid to employees when the employees are present in New Zealand. PAYE may not have to be
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deducLed il Lhe lnland Revenue DeparLmenL is saLisled LhaL Lhe employee is or will be exempLed or provided
with relief from New Zealand tax, either because the employee is present for fewer than 92 days in an income
year {1 April Lo 31 March) or by Lhe operaLion ol a double Lax aqreemenL. PAYL is required Lo be deducLed
unless the Inland Revenue Department approves otherwise.
New Zealand has a network of 37 double tax treaties with its main trading and investment partners aimed
at reducing tax impediments to cross-border trade and assisting tax administration. These treaties generally
comply wiLh Lhe OrqanisaLion lor Lconomic CooperaLion and DevelopmenL {OLCD) model LreaLy. Under Lhe
LreaLies, prolLs lrom ships are qenerally Laxable in Lhe counLry where Lhe ship is reqisLered. New Zealand
currently has treaties with the following countries:
Australia, Austria, Belgium, Canada, Chile, China, Czech Republic, Denmark, Fiji, Finland, France,
Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, Norway,
Philippines, Poland, Russian Federation, Singapore, South Africa, South Korea (ROK), Spain, Sweden,
Switzerland, Taiwan (ROC), Thailand, Turkey, United Arab Emirates, United Kingdom, United States of
America.
The place of effective management determines a countrys primary right under most DTAs to tax shipping
companies' prolLs lrom inLernaLional operaLions. 1he prolLs ol inLernaLional shippinq companies LhaL Lrade
in many states should be taxed in only one of the states, the place where the effective management of the
company is.
New Zealand views effective management as the place where the key management and commercial
decisions that are necessary for the conduct of the entitys business are in substance made.
1.4 Freight taxes
There are no special freight taxes in New Zealand.
ReqisLraLion enLails no special Lax benelLs lor Lhe shipowner, alLhouqh iL does impose Lhe domesLic laws ol
New Zealand on the owner of the vessel and affords the protection of the New Zealand government.
1.6 Changes to tax law
Double tax agreement with the United States
1he updaLed NZ/US D1A has come inLo lorce since 13 November 2010.
The new withholding tax rates apply from 1 January 2011. For New Zealand taxes other than withholding
taxes, the protocol applies for income years beginning or after 1 January 2011. The withholding tax rate
on dividends is lowered from 15% to either 5% or 0%, depending on the size of the investors shareholding in
the company paying the dividend and certain other criteria. The withholding tax rate on interest generally
remains aL 107. However, where Lhe inLeresL is paid Lo lendinq or lnancial insLiLuLions, provided a 27
approved issuer levy is paid on New Zealand sourced interest, the withholding tax rate will be reduced to 0%.
The withholding tax rate on royalties is lowered from 10% to 5%.
Double tax agreement with Hong Kong
1he D1A beLween New Zealand and Honq Konq came inLo lorce on 9 November 2011. 1he new D1A
introduces lower withholding tax rates on dividends, ranging from 0% to 15%, depending on the shareholding
of the parent company and certain other criteria. The withholding tax rate for interest is set at 10%. The
withholding tax rate for royalties is 5%. The new withholding tax rates apply from 1 April 2012. For all other
New Zealand taxes, the DTA applies for income years beginning on or after 1 April 2012.
1he NZ/HK D1A also includes an OLCD inlormaLion exchanqe arLicle, which allows New Zealand and Honq
Konq Lo requesL and exchanqe inlormaLion wiLh Lheir respecLive Lax auLhoriLies.
Double tax agreement with Chile
The new reciprocal withholding tax rate on royalties arising in New Zealand and Chile is reduced from 10% to
57. 1his new raLe applies reLrospecLively lrom 1 May 2010.
Double tax agreement with Mexico
For dividend paymenLs arisinq in New Zealand and Mexico, Lhe new wiLhholdinq Lax raLe has been reduced
from 15% to either 5% and 0%, depending on the size of the investors shareholding in the company paying
the dividend and certain other criteria.
Double tax agreement with Turkey
1he new NZ/1urkey D1A came inLo lorce on 12 AuqusL 2011. 1he new D1A inLroduces a lower wiLhholdinq
tax rate of 5% on dividends if the parent company holds directly at least 25% of the capital of the company
paying the dividends. The withholding tax rate is 10% for interest paid to a bank, and 15% in all other cases.
The withholding tax rate for royalty is set at 10%.
Tax information exchange agreements
New Zealand has expanded its bilateral tax information exchange agreements (TIEA) network and signed 20
TIEAs with Anguilla, Bahamas, Bermuda, Curacao, the British Virgin Islands, the Cayman Islands, the Cook
lslands, Dominica, CibralLar, Cuernsey, Lhe lsle ol Man, Jersey, Lhe Marshall lslands, Lhe NeLherlands AnLilles,
SinL MaarLen, SL. ChrisLopher and Nevis, SL. VincenL and Crenadines, Samoa, Lhe 1urks and Caicos lslands
and VanuaLu. However, only Lhe 1lLAs wiLh Lhe NeLherlands AnLilles and Lhe lsle ol Man are currenLly in lorce;
Lhe resL are noL yeL in lorce and a specilc Limeline has noL been qiven by Lhe qovernmenL. 1hese aqreemenLs
allow for the full exchange of information between New Zealand and the relevant state to manage and
enforce domestic tax law.
2. Human capital
The hiring of personnel in New Zealand is primarily governed by the Employment Relations Act 2000 (ERA),
which provides that parties to an employment relationship must deal with each other in good faith. The ERA
is intended to encourage such good faith in all aspects of the employment relationship, but particularly in
relation to bargaining.
All employees recruited following the enactment of the ERA on 2 October 2000 must have a written
employment agreement. This may be a collective agreement if the employer is a party to a collective, or
it may be an individual employment agreement. The ERA details content that must be included in these
agreements and procedures that must be followed when hiring personnel. From 1 April 2011, all New
Zealand employers are able to use the 90-day trial period for new employees. However, the trial periods are
voluntary, and must be agreed in writing and negotiated in good faith as part of the employment agreement.
New minimum wage rates for adults, new entrants and transfers came into effect on 1 April 2012 under
Lhe Minimum Waqe Order 2012. 1he minimum waqe raLe is NZS13.50 per hour lor adulLs {increased lrom
NZ$13 per hour), and NZ$10.80 for new entrants and new trainees.
Leave provisions are encapsulaLed in Lhe Holidays AcL 2003 {Lhe AcL). 1his AcL ouLlines inlormaLion
regarding the rights and responsibilities of employees and employers in the workplace. It also includes
transitional provisions from the previous Holiday Act 1981 to the current Act. The Act broadly covers
minimum legal entitlements to annual holidays, public holidays, sick leave and bereavement leave.
The Privacy Act 1993, Human Rights Act 1993 and Health and Safety in Employment Act 1992 (HSE
AcL) apply Lo employmenL siLuaLions. On 5 May 2003, Lhe prime minisLer desiqnaLed Lhe MariLime SaleLy
AuLhoriLy Lo adminisLer Lhe provisions ol Lhe HSL AcL in respecL ol Lhe mariLime secLor, specilcally lor ships.
HealLh and saleLy lor sealarers on New Zealand ships were previously covered by ParL ll ol Lhe MariLime
Transport Act 1994.
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New Zealand's labor laws apply Lo all New Zealandlaqqed vessels.
In some instances, employees are recruited by the employer directly, while sometimes they are recruited
through a recruitment company acting on behalf of the employer. Positions are generally advertised in the
countrys main newspapers and on the internet. A position description is commonly developed to provide
a deLailed undersLandinq ol Lhe role and Lhe specilcaLions. AlLer reviewinq all candidaLes, shorLlisLed
candidates are interviewed face to face in almost all cases. It is important that the recruiter and interviewer
are aware of the grounds for discrimination set out in the Human Rights Act so as not to discriminate against
any of the candidates. Psychometric testing is often carried out. When an offer of employment is to be made
to a new employee, the employer must ensure it complies with the procedures detailed in the ERA.
There has been an increase in the number of unions since the introduction of the ERA because only
unions are empowered to negotiate collective employment agreements. In comparison, individuals can be
represented in negotiations for an individual employment agreement by representatives of their choice.
Union membership is volunLary, buL collecLive barqaininq is promoLed by Lhe LRA as iL puLs measures in place
to encourage people to join unions and sets out good faith requirements in relation to collective bargaining.
All collective agreements must be in writing and must include the following matters:
A coveraqe clause
A clause dealinq wiLh Lhe riqhLs and obliqaLions ol Lhe employees and employer il Lhe work ol any ol Lhe
employees were to be contracted out or the business or part of the business of the employer concerned
were to be transferred or sold
An explanaLion ol Lhe services available lor Lhe resoluLion ol employmenL relaLionship problems
A clause providinq how Lhe aqreemenL can be varied
1he daLe on which Lhe aqreemenL expires or an evenL on Lhe occurrence ol which Lhe aqreemenL is Lo
expire
Every worker is entitled to receive minimum wage from their employer, notwithstanding anything to the
conLrary in any employmenL aqreemenL. 1he Minimum Waqe AcL 1983 and Minimum Waqe Orders seL Lhe
rates. The latest update to the rates was effective from 1 April 2012.
Hours and days are neqoLiable beLween Lhe employer and Lhe employee aL Lhe Lime ol employmenL. Leave
provisions are governed by the Act 2003.
Annual leave AlLer 12 monLhs ol conLinuous service wiLh Lhe company, every employee is enLiLled Lo
not less than 4 weeks paid annual leave.
Special leave AlLer six monLhs ol conLinuous service wiLh Lhe company, every employee is enLiLled Lo
lve days' paid special leave {sick, domesLic, bereavemenL leave) per year. However, Lhis can be increased
to a more generous amount should the employer wish to do so, for example, to 8 or 10 days special
leave.
Public holidays Lvery employee is also enLiLled Lo Lhe 11 New Zealand public holidays, provided LhaL
they fall on days on which the employee would ordinarily work. If employees work on a public holiday,
they are entitled to be paid time and a half for that day and receive a paid day in lieu.
Dismissal based on poor perlormance, disciplinary maLLers or redundancy musL be boLh subsLanLially |usLiled
and procedurally fair. The rules for issuing warnings and dismissing employees are well established in New
Zealand case law. As noted, from 1 April 2011, all employees are able to use the 90-day trial period to all
employees, provided that trial periods are voluntary and must be agreed in writing and negotiated in good
faith as part of the employment agreement.
There is no obligation on employers to provide health insurance or subsidized health insurance to their
employees, but many larger organizations in New Zealand do so.
2.5 Treaties relating to social security obligations
No such treaties exist in New Zealand. However, the government has announced changes that will allow
retirement savings from certain Australian superannuation funds to be transferred to the New Zealand
KiwiSaver lunds, and vice versa. 1he new arranqemenLs are expecLed Lo Lake ellecL alLer Lhe CovernmenLs ol
Australia and New Zealand exchange notes between them on trans-Tasman retirement savings portability.
2. Mannin issues with Byin the New ZeaIand Ba
1he lyinq ol New Zealand's laq brinqs wiLh iL New Zealand law, parLicularly employmenL law.
The legal structure for the majority of New Zealand operational shipping activities is the limited liability
company. 1he currenL company Lax raLe is 287. Where Lhe company is owned by nonresidenLs, a specilc
regime applies to limit the total income tax and non-resident withholding tax to 28%.
Income derived from carriage by sea in New Zealand is deemed to have a New Zealand source. Tax is levied
on prolL disLribuLion in line wiLh normal New Zealand company Lax laws and depends on Lhe sLaLus ol Lhe
recipient of the distribution. In general, either resident or non-resident withholding tax applies, but this can be
reduced.
Where a dividend is paid to a New Zealand resident recipient, resident withholding tax (RWT) is substantially
reduced by imputing dividends (i.e., attaching tax credits). As the RWT rate on dividends is still 33%
despiLe Lhe reducLion in Lhe company Lax raLe Lo 287, Lhe RW1 cash low cosL {qenerally 57) will remain in
respect of dividends paid to a New Zealand resident recipient.
Where a dividend is paid to a non-New Zealand resident recipient, the foreign investor tax credit regime has
been modiled by a 07 nonresidenL wiLhholdinq Lax {NRW1) raLe under domesLic leqislaLion. Broadly, lully
imputed dividends paid to nonportfolio (that is, 10% or greater) shareholdings are now subject to 0%
NRWT.
No subsidies exist for shipping companies in New Zealand.
The New Zealand industry is fully deregulated, so there are no direct incentives for shipping companies or the
shipbuilding industry. However, there are a number of funding incentives for businesses in general, which are
in place to assist companies with growth strategies.
4.3 Research and development
The 15% tax credit for research and development (R&D) that was introduced in 2007 and applicable in the
2008-09 year has been repealed, effective from the 2009-10 year. As a result, expenditure on activities in
the 2009-10 and subsequent income years will not be eligible for the tax credit.
No such incentives exist in New Zealand.
4.5 !ssues with Byin the New ZeaIand Ba
1here are no issues connecLed wiLh lyinq New Zealand's laq in relaLion Lo qranLs or subsidies. 1he New
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Zealand government subsidizes other modes of transport, such as road and rail, either directly or indirectly,
but the shipping industry receives no subsidies.
Labor and sLaLuLory compliance cosLs are hiqh compared wiLh oLher shippinq naLions. As a resulL, many may
deem New Zealand to be less competitive than other nations with respect to the shipping industry.
No anticipated major changes have been reported, although the government may be examining possibilities
to improve shipping in New Zealand. This may require the introduction of subsidies in order to stay
competitive and attractive.
5.1 Infrastructure
5.1.1 Major ports
The following are the largest ports in New Zealand, measured by the combined tonnage of exports passing
through the port from largest to smallest.
Dockinq
SLoraqe includinq cold/dry sLoraqe, conLainer and covered sLoraqe
Cranes lor every size ol vessel {in mosL ma|or porLs)
Ports close to major airports include:
Auckland {Auckland, 1auranqa, Whanqarei)
ChrisLchurch {LyLLelLon)
Dunedin {PorL Chalmers)
Nelson {Nelson)
WellinqLon {Napier, New PlymouLh, WellinqLon)
The following support services for the shipping industry are easily available:
City in which port is located Location of port
Tauranga North Island
LyLLelLon {ChrisLchurch) South Island
Auckland North Island
Napier North Island
Port Chalmers (Dunedin) South Island
New Plymouth North Island
Nelson South Island
Whangarei North Island
Wellington North Island
Bradley's NauLical School {Russell)
Marlborouqh MariLime School {PicLon)
New Zealand MariLime School {Auckland)
New Zealand School ol Fisheries {Nelson)
Apart from the specialized maritime educational institutions listed above, there are also a number of other
mariLime courses ollered by various Lraininq insLiLuLions and polyLechnics, as well as Lhe MariLime SaleLy
Authority of New Zealand.
1he body responsible lor ship saleLy manaqemenL in New Zealand is Lhe MariLime SaleLy AuLhoriLy {MSA).
Shippinq companies have been required Lo be in compliance wiLh Lhe lnLernaLional SaleLy ManaqemenL
{lSM) Code since iL was made mandaLory on 1 July 1998. Any ships inspecLed in New Zealand and lound
wiLhouL Lhe necessary lSM documenLaLion will be deLained unLil Lhey obLain Lhe necessary documenLaLion
from their administration.
New Zealand has strict requirements on employees safety, demonstrated by its impressive safety record. The
health and safety of maritime employees is governed by the HSE Act. Health and safety for seafarers on New
Zealand ships was previously covered by ParL ll ol Lhe MariLime 1ransporL AcL 199^.
Under Lhe HSL AcL, employers are responsible lor Lhe saleLy ol Lhose on board New Zealand ships. 1his
means Lhey are required Lo idenLily and conLrol siqnilcanL hazards, provide appropriaLe Lraininq and
supervision and to involve employees in the development of health and safety procedures. Coverage now
includes noL only sealarers on New Zealand ships buL all Lhose who are on board on business piloLs, ships'
agents, stevedores, provedores, surveyors, contractors and so on.
Ship SaleLy ManaqemenL {SSM), inLroduced in New Zealand by Lhe MSA, aLLempLs Lo puL onqoinq saleLy
measures in place to prevent maritime accidents to both vessels and crew. This is monitored by inspections
and audits, with higher-risk vessels being inspected more often.
New Zealand has very strict environmental regulations to protect its diverse marine life. All ports in New
Zealand emphasize the need for boats to discharge their ballast water in the deeper sea and not at port.
Various marine service groups regularly test the water at ports to make sure there are no environmental
hazards.
5.2.4 Maritime Security Act 2004
lncreased concern abouL Lerrorism has seen Lhe implemenLaLion ol Lhe MariLime SecuriLy AcL 200^ {Lhe
Security Act). The Security Act attempts to protect ships against potential attacks and hijacking. The Security
Act establishes a robust framework that will reduce the risk of security threats affecting the ships or port
facilities. The instruments of the Security Act comply with the International Ship and Port Facility Security
(ISPS) Code in the New Zealand context.
5.3 Registration
The Ship Registration Act 1992 sets out the registration requirements in New Zealand. There are two classes
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of compulsory registration for New Zealand-owned ships:
1. Part A registration is for larger commercial vessels.
2. Part B is for pleasure vessels that need nationality for overseas voyaging.
For procedures, see section 5.3.2.
Registration is performed through the New Zealand Register of Ships, which is located in Wellington. There
are two types of registration, parts A and B as mentioned in section 5.3.1.
Part A registration
Registration is aimed at larger commercial vessels and provides evidence of title. It requires the following:
ApplicaLion lor reqisLraLion
AppropriaLe lee {which varies dependinq on Lhe lenqLh ol Lhe ship and wheLher a ship is secondhand or
new)
A builder's cerLilcaLe or a phoLocopy ol a builder's cerLilcaLe il Lhe ship has previously been reqisLered in
another country
Lvidence ol all ownership chanqes lrom Lhe builder Lo Lhe presenL owner, or, il Lhe ship has previously
been registered in another country, evidence of all ownership changes from the last registered owner
overseas to the present owner
DeclaraLion ol ownership and naLionaliLy
ll applicable, a cerLiled LranscripL ol any previous overseas reqisLraLion and evidence LhaL Lhe reqisLraLion
has been closed, e.q., a deleLion cerLilcaLe
For ships over 2^ meLers in lenqLh, an inLernaLional Lonnaqe cerLilcaLe {1969) and a New Zealand
surveyor's Lonnaqe cerLilcaLe prepared by a surveyor recoqnized by Lhe MSA lor Lhis purpose
For ships less Lhan 2^ meLers reqisLer lenqLh, a surveyor's cerLilcaLe issued by a recoqnized surveyor
Carvinq and markinq noLe siqned by a recoqnized surveyor {lor commercial ships)
ll Lhe owner does noL reside in New Zealand or does noL have a reqisLered ollce in New Zealand, an
appoinLmenL ol a represenLaLive person and a lee ol NZS10^.27{USS83)
For demise charLer ships, a declaraLion by Lhe charLerer and a copy ol Lhe charLer parLy
In addition, a surveyors fee will be charged for the measurement of the ship. A number of organizations
around New Zealand are recoqnized by Lhe MSA Lo underLake measuremenLs ol ships lor parL A reqisLraLion.
Depending on the circumstances of the case, a part A registration will take approximately 25 working days to
complete. However, it does depend on the individual circumstances of each application.
Part B registration
Part B registration is aimed particularly at pleasure vessels that need nationality for overseas voyaging. It
requires an appropriate fee and the following documentation:
ApplicaLion lor reqisLraLion; Lhe oriqinal lorm musL be lodqed; iL cannoL be accepLed by lax or email
Lvidence ol closure ol any previous overseas reqisLraLion il applicable
Fee ol NZS^35.^7 {USS350)
No measurement by a surveyor is required for part B registration. The ships overall length must be measured
using the diagrams supplied by the registrar with the application form.
1he approximaLe processinq Lime lor a parL B reqisLraLion is lve workinq days.
Ollcers and crew musL have Lhe appropriaLe qualilcaLions and be permiLLed Lo work in New Zealand.
MosL ma|or inLernaLional convenLions have been raLiled by New Zealand.
A ship must be registered before it can be mortgaged.
For more inlormaLion on Lhe New Zealand shippinq indusLry, visiL Lhe MinisLry ol 1ransporL's websiLe aL www.
transport.govt.nz. The site includes a government review of the shipping industry, looking at how to increase
New Zealand parLicipaLion in shippinq and mariLime services. AlLernaLively, visiL Lhe MSA's websiLe aL www.
msa.govt.nz, which provides information on most areas of New Zealand shipping.
While the shipping industry in New Zealand has experienced little growth over the last 10 years, with
increased support from the government it is expected to become more attractive. With appropriate
incenLives, Lhe New Zealand shippinq indusLry has siqnilcanL opporLuniLy lor qrowLh.
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Norway
1. Tax
Standard tax
Unless a Norweqian shippinq company elecLs Lo be covered by Lhe Lonnaqe Lax reqime, iL is sub|ecL Lo Lax
under Lhe sLandard corporaLe income Lax reqime {i.e., prolLs are Laxed aL 287). 1he raLe ol depreciaLion ol
vessels under the standard tax regime is 14% according to the declining balance method.
Tonnage tax
The main tax incentive is the tonnage tax system introduced in 1996, which made it possible to operate
in Norway wiLhouL beinq sub|ecL Lo normal corporaLe Lax on operaLinq income. Ma|or amendmenLs ol Lhe
tonnage tax regime have been in effect since 1 January 2007, bringing the Norwegian system more in line
wiLh Lhe Luropean Unionbased sysLems.
1he Norweqian Lonnaqe Lax sysLem provides a lnal exempLion lrom Lax on qualilyinq shippinq income.
Net hnanc|a| |ncome |s suoject to 28x tax.
A tonnage-taxed company may perform activities closely related to the operation of the companys qualifying
ships, but as a rule, other business activities are not permitted to be performed by a company covered by
the regime. Permitted activities and qualifying assets have been expanded as of 2007 to include strategic
and commercial management as well as day-to-day technical operations and maintenance for group-related
companies outside the tonnage tax regime. This also includes activities in group-related foreign companies
and controlled foreign corporations (CFCs).
The minimum requirement for assets is primarily ownership of a qualifying vessel or ownership of at least
3% in a company or chain of companies owning such a vessel. There is no required ratio of owned vessels to
chartered-in vessels, and there are no restrictions on bareboat chartering out of vessels.
1he delniLion ol qualilyinq vessels covers primarily ships in inLernaLional Lrade carryinq passenqers and/or
cargo. In addition, Norway allows auxiliary ships, such as AHTS (anchor handling tug supply vessels), PSV
(platform supply vessels) and seismic vessels. Special rules apply to tugs.
Also included are enLrepreneurial vessels, such as inLervenLion vessels, lMR vessels, crane vessels and cable
and pipe-laying vessels, among others. If operating on the Norwegian continental shelf, only hiring out of
entrepreneurial vessels on bareboat charter terms is allowed. Only income from the bareboat charter will be
tax exempt under the regime. The company operating the entrepreneurial vessel would be subject to 28% tax
on its net income.
The regime provides for the calculation of a special tonnage tax for shipping companies engaged in ocean-
going shipping business on the basis of the net registered tonnage of their vessels. The tonnage tax for each
ship is deemed Lo be equal Lo Lhe lollowinq laL raLes lor every 1,000 neL Lons and days ol operaLion:
The rates may be reduced if certain environmental requirements are met.
Total net tonnage (NT) Fixed tax per day per 1,000 net tons, (US$)
Up Lo 1,000 0
1,001 to 10,000 2.22 (2.91)
10,001 to 25,000 1.48 (1.94)
Over 25,000 0.74 (0.97)
Over 50,000 0.50
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Upon enLerinq Lhe Lonnaqe Lax reqime, Lhe dillerence beLween lair markeL values and Lax values will be Laxed
at 28%.
Under Lhe Lonnaqe Lax sysLem, loreiqn invesLors in a Norweqian shippinq company are noL qranLed
any special addiLional benelLs. Norway qenerally levies a wiLhholdinq Lax ol up Lo 257 ol Lhe dividends
disLribuLed, buL Lhis is usually reduced {157 07) in accordance wiLh Lhe relevanL Lax LreaLy. As ol 200^,
dividends disLribuLed Lo companies wiLhin Lhe Luropean Union {LU) or Luropean Lconomic Area {LLA) are
noL sub|ecL Lo wiLhholdinq Lax, provided Lhey have sullcienL subsLance.
The Norwegian tonnage tax system is a ring-fenced system. Thus, only qualifying assets can be owned and
activities performed by the tonnage-taxed company. A breach of the requirements entails a compulsory exit.
No tax will be levied upon exit, but the company will be subject to ordinary income tax (28%) in the year of
exit and subsequent years.
As ol 1 July 2005, laq requiremenLs were added as a qualilcaLion in line wiLh Lhe LU/LLA requiremenLs. 1he
MinisLry ol Finance has decided LhaL Lhe laq requiremenL is noL valid lor Lhe lscal year 2012. Any laqqinq
requiremenL lor Lhe lscal year 2013 will usually be announced by Lhe MinisLry ol Finance in November 2013.
A group requirement has been introduced as of 2009, implying that eligible companies belonging to the
same group must make the same choice as to whether to claim tonnage tax. Furthermore, a lock-in period
of 10 years was introduced as of 2007. If a company exits the regime before expiry of this 10-year period,
this will entail a waiting period (i.e., a period when this company will be locked out) that corresponds to the
remaining part of the 10-year period.
Foreign international shipping companies with Norwegian management
Individuals or companies resident outside Norway will, in principle, not be subject to tax in Norway
on income LhaL resulLs lrom owninq vessels in inLernaLional Lrallc, even Lhouqh Lhe vessels are
effectively managed from Norway. The same applies to drilling rigs and construction vessels operating
internationally. However, in some cases the exemption does not apply, for example, when the non-
resident is a resident of a country with which Norway has concluded a tax treaty that grants Norway
the exclusive right to tax income from international shipping, or the nonresident has more than 34%
Norwegian owners.
Seafarers living in Norway may be entitled to a seafarers allowance on their income before tax is calculated.
1he sealarer's allowance is 307 ol income earned on board, sub|ecL Lo a maximum ol t10,517.58
{USS13,725.^^).
There are two refund schemes for Norwegian seafarers.
Norway has concluded double taxation treaties with more than 80 countries:
Albania, Argentina, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belgium, Benin, Bosnia,
Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt,
Estonia, Faeroe Islands*, Finland*, France, Gambia, Georgia, Germany, Greece, Greenland, Hungary,
Iceland*, India, Indonesia, Ireland, Israel, Italy, Ivory Coast, Jamaica, Japan, Kazakhstan, Kenya, Latvia,
Lithuania, Luxembourg, Macedonia, Malawi, Malaysia, Malta, Mexico, Montenegro, Morocco, Nepal,
Netherlands, Netherlands Antilles, New Zealand, Pakistan, Philippines, Poland, Portugal, Qatar, Romania,
Russian Federation, Senegal, Serbia, Sierra Leone, Singapore, Slovak Republic, Slovenia, South Africa,
South Korea (ROK), Spain, Sri Lanka, Sweden*, Switzerland, Tanzania, Thailand, Trinidad and Tobago,
Tunisia, Turkey, Uganda, Ukraine, United Kingdom, United States of America, Venezuela, Vietnam,
Zambia, Zimbabwe.
* Nordic treaty
In addition, Norway has concluded special shipping treaties with the following countries: Argentina, China,
Creece, Honq Konq, Lebanon, New Zealand, SouLh Alrica and SouLh Korea {ROK). 1o Lhe exLenL LhaL Norway
has concluded general tax treaties with these countries, the general tax treaties will prevail.
MosL LreaLies include a special arLicle on shippinq. Some LreaLies use Lhe place ol ellecLive manaqemenL as a
basis for taxation of shipping. However, all new treaties are based on place of residence.
Norways tax treaties generally have an offshore article directed at shipping and service activities performed
on the continental shelf.
1.4 Freight taxes
Norway does not levy freight taxes. It has concluded treaties that grant relief from foreign freight tax.
1here are no benelLs wiLh reqard Lo LaxaLion. 1he Lonnaqe Lax sysLem applies Lo ships sailinq under any laq.
However, Lhe sysLem has an LU or LLA laq requiremenL, which sLaLes LhaL Lhe qroup ol companies has Lo
mainLain or increase Lhe exisLinq level ol vessels lyinq an LU or LLA laq unLil 607 ol Lhe leeL meeLs Lhe
requirement.
The tonnage system has been in effect since January 1996. The system was adjusted in 2007, and further
adjustments may be expected as experience is gained.
2. Human capital
The conditions that have to be met when hiring personnel depend on the individuals job on board the vessel.
Formalities in general
All crew members must have:
A discharqe book
A conLracL ol employmenL wiLh a shippinq company
A conLracL ol employmenL wiLh a vessel, eiLher permanenL employmenL or hired wiLh one or several
vessels. A noLilcaLion has Lo be senL Lo Lhe MariLime LLreqisLer in Hamar, which records Lhe relaLionship
between employers and employees.
Received approved basic saleLy Lraininq and have aLLended a special saleLy course {il required lor LhaL
type of vessel)
Public musLer musL be carried ouL lor all employees belore commencinq service on board Norweqianlaqqed
vessels {Norweqian lnLernaLional Ship ReqisLer [NlS| and Norweqian Ship ReqisLer [NOR|), eiLher by Lhe
Norwegian Employment Service or the Foreign Service mission.
The crew members must have a written contract of employment with the shipping company. The shipping
company should use Lhe sLandard LhaL has been drawn by Lhe Norweqian MariLime DirecLoraLe, il permission
has not been given by the directorate to use other contracts.
In some instances, there are registration requirements for statistical purposes.
All seafarers should have received approved basic safety training, or have at least one years seagoing
experience as from 1 July 1987. The rules of the International Convention on Standards of Training,
CerLilcaLion and WaLchkeepinq lor Sealarers {S1CW) ol Lhe lnLernaLional MariLime OrqanizaLion {lMO) are
relecLed in Lhe Norweqian cerLilcaLe rules.
By 20 AuqusL 2013, Lhe MariLime Labour ConvenLion {MLC) shall be implemenLed lor Norweqian ships, and
Lhe requiremenL lor MLCcerLilcaLes on all Norweqian ships ol 500 qross Lon or more in overseas Lrade shall
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in principle be in place.
Cert|hcat|on requ|rements
Norweqian crew members musL have Lhe relevanL Norweqian cerLilcaLes lor Lheir respecLive posiLions.
1he cerLilcaLes musL lullll Lhe S1CW sLandard. Belore a cerLilcaLe is issued, Lhe crew member musL have
obLained a relevanL qualilcaLion and have Lhe required lenqLh ol service.
Persons holdinq nonNorweqian cerLilcaLes musL apply Lo Lhe Norweqian MariLime DirecLoraLe lor
qualilcaLion documenLs. Approval is qranLed only il Lhe cerLilcaLe is issued by a counLry LhaL has enLered
into a bilateral agreement regarding this. Agreements exist between Norway and Argentina, Australia, Brazil,
Canada, China, CroaLia, Lhe LU, lceland, lndia, lndonesia, LaLvia, New Zealand, Peru, Lhe Philippines, Lhe
Russian FederaLion, Sinqapore and Sri Lanka.
1he Norweqian MariLime DirecLoraLe will consider enLerinq inLo aqreemenLs wiLh counLries oLher Lhan Lhe
above where particular shipping companies document a stated desire to employ a reasonable number of
sealarers. Such requesLs, wiLh accompanyinq documenLaLion, are Lo be made Lo Lhe Norweqian MariLime
Directorate.
MasLers holdinq a nonNorweqian cerLilcaLe musL, in addiLion, serve under a Norweqian masLer lor aL leasL
six monLhs and have knowledqe ol Lhe laws ol Norway belore Lhey can apply lor qualilcaLion documenLs.
Safety courses
Crew members should have received the relevant safety training in, for example, oil, chemical and gas.
Norway has two separate laws that regulate the working conditions for crew members. These are Act No.
18 {Lhe Sealarers' AcL) ol 30 May 1975 {Sjmannsloven), and Act No. 9 of 16 February 2007, relating to
hours of work on board the ship (Skipssikkerhetsloven). 1hese AcLs meeL Lhe UniLed NaLions lnLernaLional
Labour OrqanizaLion {lLO) ConvenLion 180 and LU direcLives on workinq hours on vessels, and are
harmonized with the rules that apply within the EEA.
The description given in this chapter is for ships registered in NIS.
In Norway, three collective labor agreements apply to Nordic seafarers (i.e., seafarers of Norway, Sweden
and Denmark). The Norwegian Shipowners Association (NSA) has entered into collective labor agreements
with:
Norweqian MariLime Ollcers' AssociaLion {Norsk Sjoofhsersforounc)
Norweqian Sealarers' Union {Norsk Sjmannsforbund)Norweqian Union ol Marine Lnqineers {Norsk
Maskinistforbund)
The shipping companies also have the possibility of using the labor agreements for NOR-registered vessels.
To some extent this is done for offshore-service vessels.
In addition, the NSA has entered into collective bargaining agreements (CBAs) for seafarers serving on NIS
ships wiLh mariLime unions in China, CroaLia, LsLonia, lndia, lndonesia, LaLin America {Caribbean and SouLh
America), LaLvia, LiLhuania, PakisLan, Lhe Philippines, Poland, Ukraine, Romania and Lhe Russian FederaLion.
1he CBAs lor LaLin America and PakisLan have noL been renewed lor many years and Lherelore cannoL be
considered fully valid.
All the agreements listed above cover wages and other working conditions, such as working hours, duration
ol service, vacaLion, repaLriaLion, sickness/disabiliLy and deaLh benelLs and war risk compensaLion. 1hus,
in some aspects, they are similar to the Total Crew Cost Concept (TCC) agreements of the International
Transport Workers Federation (ITF). The agreements also include provisions on union subscriptions to
Norweqian and local/naLional unions.
The agreements cover only NIS vessels whose owners, operators or managers have joined the NSA. Other
owners, operators or managers of NIS vessels may make their own arrangements with the appropriate
unions representing seafarers, or conclude individual employment contracts directly with the seafarers,
without any reference to a collective bargaining agreement. Thus, these agreements may differ from the TCC
agreements.
The NIS also allows individual employment agreements between seafarers and employers without any
reference to a collective agreement or union approval. In such cases, deviation from the Seafarers Act is not
permitted.
Norway is amonq Lhe very lew counLries LhaL raLiled and aqreed Lo abide by Lhe lLO ConvenLion 109
{1958). 1his convenLion has been replaced by Lhe lLO ConvenLion 180, which applies Lo Lhe LLA counLries
and some other countries (e.g., Japan).
WiLhouL relerence Lo any specilc collecLive barqaininq aqreemenL, Lhe basic principles are LhaL sealarers
from outside Norway may be hired under labor agreement standards in their countries of origin, but their
waqes have Lo meeL lLO sLandards lor sailors' waqes. For all pracLical purposes, a parLicular 1CC sLandard
applies lor all ships in inLernaLional ship reqisLers {"laqs ol convenience"). lLO sLandards are accepLed as
sullcienL sLandards lor bona lde ship reqisLers {noL laq ol convenience).
In principle, the Norwegian National Insurance Scheme applies only to Norwegian seafarers and foreign
sealarers residenL in Norway servinq on Norweqianlaqqed vessels. As reqards nonNorweqianlaqqed
vessels, the National Insurance Scheme applies to seafarers resident in Norway and employed by a Norwegian
shipping company.
1he LLA LreaLy and LU RequlaLions 1^98/71 and 1^78/71 reqardinq social securiLy provide LhaL all LU
citizens should be treated as Norwegians and be covered by the Norwegian public system. However, seafarers
from countries outside the EEA area and catering crews serving on cruise vessels (regardless of nationality),
are noL covered. LU 883/01, which came inLo lorce as ol 1 May 2010 in Lhe LU is implemenLed in Norway
and will, as ol 22 June 2012, replace LU 1^08/71. 1he requlaLions concerninq sealarers in LU 883/01 are in
accordance wiLh Lhe requlaLions in LU 1^08/71 and will Lherelore noL imply any chanqes in Lhis reqard.
Norway has entered into bilateral social security agreements with countries outside the EEA. These countries
are AusLralia, Canada, Chile, lsrael, SwiLzerland, 1urkey and Lhe US. 1hese aqreemenLs do noL cover sealarers
or have separaLe clauses lor sealarers. MosL ol Lhe aqreemenLs have been enLered inLo wiLh counLries LhaL
are not well represented on board Norwegian vessels.
Norway has enLered inLo aqreemenLs wiLh Poland and LaLvia. Norway had an aqreemenL wiLh Romania unLil
1 August 2012 that could be extended. As of January 2013, an extension has not yet been agreed upon.
Seafarers from these countries serving on NIS ships may be insured by their home country based on an
application to the national health care authorities.
Seafarers from EEA member states should be fully covered by the social security system in the register state
if they do not have an employer in their home country. If they have an employer in their home country, they
are covered by the national social security system.
For EEA seafarers covered by the Norwegian scheme, the employer must pay social security contributions
of 14.1% of the seafarers gross wages to the scheme, and the seafarers must pay 7.8% of their gross salary.
In addition, the employer must pay a contribution to the seafarers pension. Finally, for EEA seafarers,
employers pay a premium in accordance with the Occupational Insurance Act. For seafarers from countries
outside the EEA area and catering crews serving on cruise vessels, the social security liabilities are covered by
the protection and indemnity (P&I) clubs. Special P&I protection is required for catering crew members who
are citizens of an EEA country.
Seafarers from the EEA who do not want to be covered by the Norwegian scheme may opt to be covered by
the national health scheme of their home country. Approval is granted via form A1, which has to be shown to
Lhe employer and senL Lo Lhe Norweqian Labour and Wellare AdminisLraLion {NAV).
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Seafarers from the EEA serving on NIS ships owned, operated or managed by a company from their home
country are still covered by the national scheme of their home country.
Seafarers from the EEA serving on NIS vessels are covered by the Norwegian Pension Insurance for Seamen
(see www.pts.no). The shipowner has to pay a pension insurance tax of 3.3% of the gross salary. The
sealarer musL pay approximaLely NOK800 per monLh.
Typical legal structures that can be utilized are:
JoinL sLock companies
Ceneral/limiLed parLnerships
Due to the tonnage tax system, Norway has seen an increase in the use of joint stock companies.
The average tax rate payable by shipping companies depends on whether the company has entered into the
Lonnaqe Lax sysLem. Cenerally speakinq, Lhe Lax raLe has been, and will be, very low. See secLion 1.1.
Norwegian individual investors and owners are subject to tax at a rate of 28% of the received dividend that
exceeds a computed risk-free interest on the tax base cost of each share.
Dividends and capital gains from shares in companies resident within the EEA are generally tax-exempt
for corporate shareholders. However, the exemption does not apply to companies resident in a low-tax
jurisdiction within the EEA unless the subsidiary is actually established and performs genuine economic
acLiviLy Lhere {i.e., meeLs Lhe "subsLance" requiremenL). Losses are noL deducLible. From 7 OcLober 2008,
the participation exemption method was amended to state that that 3% of the tax-exempt income shall be
considered taxable income subject to the ordinary corporate income tax rate of 28%. Thus, the effective tax
rate under the exemption method will be 0.84% (i.e., 28% of 3%).
Dividends and capital gains from investments outside the EEA are only exempt if (1) the shareholding is at
least 10% of the share capital of the foreign company, (2) the shareholding has been at least 10% for at least
two years and (3) the foreign company is not considered resident in a low-tax country.
Effective from 1 January 2012, the 3% rule will no longer apply to the following situations:
CapiLal qains derived lrom sale ol shares and inLeresLs in limiLed liabiliLy companies, parLnerships and
other qualifying companies
lnLraqroup disLribuLions beLween qroup companies covered by Norweqian qroup conLribuLion rules {i.e.,
more than 90% ownership), distributions from an EEA company equivalent to a Norwegian qualifying
company {i.e., havinq sullcienL subsLance) or disLribuLions lrom a Norweqian company Lo a PermanenL
Establishment (PE) of a foreign company (90% ownership requirement)
As of 1 January 2012, the 3% rule is introduced on distributions from partnerships (formerly tax exempt).
Three percent of distributions from the partnerships will always be included as income in the hands of the
corporate partner (i.e., the group exemption referred to above is not applicable).
Furthermore, the scope of the 3% rule has been broadened to cover distributions of dividends to foreign
companies with PE in Norway (not exempt under the 90% ownership rule). Thus, the business will have the
right to deduct expenses incurred in relation to the shares, etc., of the PE in Norway.
There is no withholding tax on dividends paid by resident companies to corporate shareholders resident within the
LLA il Lhe shareholder saLisles Lhe "subsLance" requiremenL. Dividends paid Lo oLher nonresidenL shareholders
are sub|ecL Lo wiLhholdinq Lax aL a raLe ol 257, unless a lower raLe applies under a Lax LreaLy {15707).
No stamp duty or transfer taxes are imposed on the transfer of shares. There is no capital duty on
contribution of capital.
4.1 Tax refund for Norwegian seafarers
Subject to certain criteria, there is a refund scheme for Norwegian seafarers on board vessels registered in
the NOR and the NIS.
1he shipbuildinq subsidy scheme is aliqned wiLh Lhe new LU scheme.
Norway has a shipbuilding credit guarantee scheme aligned with the Organisation for Economic Co-operation
and Development (OECD) arrangement. The scheme is operated by fksorthnans on behalf of the
Norweqian MinisLry ol lndusLry and 1rade. 1he scheme applies Lo loans qranLed lor Lhe purpose ol lnancinq
Lhe consLrucLion or radical alLeraLion ol ships. CuaranLeed loans ol up Lo 807 ol Lhe approved conLracL price
are qiven lor Lhe consLrucLion/alLeraLion ol ships.
For companies that are subject to tonnage taxation, marginal reductions in tonnage tax may be granted if
vessels lullll cerLain environmenLal requiremenLs.
4.4 !ssues with Byin the Ncrweian Ba
One possible issue wiLh reqard Lo lyinq Lhe NlS laq is LhaL Lhe vessel may noL carry carqo in domesLic Lrade,
or passenqers beLween Norweqian porLs and some LU porLs {caboLaqe).
Norway follows the OECD rules. No major changes are expected in the near future.
5.1 Infrastructure
5.1.1 Major ports
Berqen/MonqsLad
FredriksLad {Borq)
MonqsLad
Narvik
Oslo
Porsqrunn {Crenland)
Cranes
Dockinq
SLoraqe
Lvenes AirporL {Narvik)
Flesland AirporL {MonqsLad and Berqen)
Cardermoen AirporL {Oslo)
1orp Sandel|ord AirporL {Oslo, Porsqrunn)
Ryqqe {Oslo, FredriksLad [Borq|)
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Lxperienced ship manaqers and shippinq companies
There are four major nautical colleges in Norway:
1. Hogskolen i Alesund, Alesund
2. Hoqskolen i SLord/Hauqesund, Hauqesund
3. Hogskolen i Tromso, Tromso
4. Hogskolen i Vestfold, Tonsberg
The universities also offer specialized courses in maritime economics, engineering and logistics. In addition,
there are several schools for nautical education at a lower level.
1he lnLernaLional SaleLy ManaqemenL {lSM) Code is implemenLed by all shipowners.
1he saleLy rules reqardinq manninq are sLrinqenL. 1he Norweqian requlaLions ol 17 March 1987, on Lhe
manning of merchant ships, apply to vessels registered in the NOR and the NIS (both described under section
5.3.1), which musL have a manninq cerLilcaLe issued by Lhe Norweqian MariLime DirecLoraLe.
5.2.3 International organizations
Norway is a member ol Lhe lnLernaLional MariLime OrqanizaLion {lMO) {elecLed member ol Lhe council) and
Lhe lLO. Norway has raLiled mosL lMO and lLO convenLions, proLocols and amendmenLs, which also apply Lo
NIS vessels.
5.3 Registration
In Norway, there are two ship registers:
1. The NIS
2. The NOR
NlS was esLablished in 1987 lor a Lwolold purpose: Lo oller a lexible and commercially aLLracLive alLernaLive
to the open register, while retaining the essential features of quality registers. In several areas, the
adminisLraLive procedures were simpliled compared wiLh Lhose qoverninq Lhe NOR.
Ships registered in the NIS may not carry cargo or passengers solely in domestic trade between Norwegian
ports or engage in regular, scheduled passenger transport between Norwegian and foreign ports.
Dispensations may be granted from this provision on a case-by-case basis. For the purpose of this register, oil
and gas installations on the Norwegian continental shelf are regarded as Norwegian ports.
The main requirements regarding the manning of NIS vessels are as follows:
1he vessel musL have a manninq cerLilcaLe issued by Lhe Norweqian MariLime DirecLoraLe.
1here are no resLricLions on Lhe naLionaliLy ol Lhe crew, excepL LhaL dispensaLion musL be applied lor il Lhe
master is not a Norwegian citizen.
When a vessel Lranslers Lo NlS, Lhe shipowner may apply lor a manninq specilcaLion lrom Lhe MariLime
DirecLoraLe. 1he MariLime DirecLoraLe will Lake inLo consideraLion, lor example, Lhe Lechnical sLandards
ol Lhe vessel and Lhe adminisLraLive and orqanizaLional arranqemenLs. ll a manninq specilcaLion is noL
requesLed, Lhe MariLime DirecLoraLe will issue a Lemporary manninq specilcaLion lor Lhe sale manninq ol
the vessel.
The NIS legislation allows employment of nonresident seafarers on local or national wages. Norway has
raLiled Lhe lLO ConvenLion 180. Sealarers lrom ouLside Norway may be hired in accordance wiLh labor
aqreemenL sLandards in Lheir counLries ol oriqin, buL Lhe requiremenLs have Lo meeL lLO sLandards.
The registration procedure for NIS complies with the procedures of international ship registries (see www.
nis-nor.no).
Parallel registration is not permitted, due to the strict legal requirements.
ln accordance wiLh lMO's S1CW sLandards, boLh ollcers and crew servinq on vessels reqisLered in NlS musL
hold Norweqian cerLilcaLes or apply Lo Lhe MariLime DirecLoraLe lor a qualilcaLion documenL on Lhe basis
ol Lheir nonNorweqian cerLilcaLes. Approval is qranLed only il Lhe cerLilcaLe is issued by a counLry LhaL has
entered into a bilateral agreement regarding this. All seafarers should have received approved basic safety
training, or have at least one years seagoing experience since 1 July 1987.
Norway is a member ol Lhe lMO {an elecLed member ol Lhe council) and Lhe lLO. Norway has raLiled mosL
lMO and lLO convenLions, proLocols and amendmenLs LhaL also apply Lo vessels reqisLered in NlS.
The Norwegian Shipowners Association may also be consulted on NIS matters. The Association is a member
of the International Shipping Federation (ISF) and the International Chamber of Shipping (ICS).
Vessels in Lhe NlS are sub|ecL Lo public conLrol by Lhe MariLime DirecLoraLe. For NlS vessels, Lhe lollowinq
classilcaLion orqanizaLions have been qranLed auLhoriLy, on behall ol Lhe qovernmenL, Lo carry ouL
inspecLions and Lo issue all cerLilcaLes lor carqo vessels above 500 qross Lons:
American Bureau ol Shippinq
Bureau VeriLas
DeL Norske VeriLas
Cermanischer Lloyds
Lloyd's ReqisLer ol Shippinq
6. Excise duty on emission of nitrogen oxides
Vessels operating in and around Norway are at the outset subject to the nitrogen oxides (NOx) duty if they
have propulsion machinery exceeding 750 kW. Only the owner of the vessels is required to register with the
customs authorities, unless the owner is a foreign company, in which case the company must register with a
representative based in Norway. For rigs, special provisions apply. The duty is incurred when emitting NOx,
and Lhe scope ol Lhe liabiliLy depends on Lhe vessel's Lrallc paLLern. 1he duLy is calculaLed per kiloqram NOx
emiLLed, and Lhe raLe lor 2013 is budqeLed aL NOK17.01 per kiloqram. 1he exLenL ol Lhe liabiliLy Lo pay Lhe
NOx duLy depends on several lacLors, includinq Lhe vessel's laq allliaLion, where Lhe liabiliLy is qreaLer lor
vessels sailinq under Lhe Norweqian laq. 1he leqal basis lor charqinq Lhe duLy on loreiqn reqisLered vessels
outside Norwegian territorial waters is unknown, and the legality of this practice will likely be challenged in
the future.
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Oman
1.1 Taxation of shipping companies
1.1.1 Omani shipping companies
The tax laws generally apply to shipping companies as they would apply to any other company operating
in Oman. Omani-owned shipping companies that meet certain conditions, laid down under the executive
regulations governing the tax law, qualify for tax exemptions on the income earned from carrying on shipping
activity.
1.1.2 Foreign shipping companies
Shipping income accruing to a foreign person from carrying on shipping activity in Oman is exempt from tax,
provided that the person carries on the activity in accordance with the laws and regulations in force in the
country of incorporation and a similar treatment is accorded, on a reciprocal basis, to an Omani company in
the country in which the foreign person is incorporated or where the effective management and control of
the shipping company is exercised. All other income earned by the shipping company and arising in Oman
shall be subject to tax in Oman in the normal course of doing business.
1.1.3 Tax treaties and place of effective management
Oman has entered into double tax treaties with Algeria, Belarus, Brunei Darussalam, Canada, China,
Croatia, France, India, Italy, Iran, Korea (South), Lebanon, Mauritius, Moldova, Morocco, Netherlands,
Pakistan, Seychelles, Singapore, South Africa, Sudan, Syria, Thailand, Tunisia, Turkey, Uzbekistan, the
United Kingdom, Vietnam and Yemen.
Oman has siqned double Lax LreaLies wiLh Belqium, LqypL, Cermany and Lhe Russian FederaLion, buL Lhese
treaties are not yet in force.
Also, Oman has raLiled a lree Lrade aqreemenL wiLh Lhe UniLed SLaLes ol America. 1he Cull CooperaLion
Council {CCC) counLries have enLered inLo a lree Lrade aqreemenL wiLh Sinqapore, buL Lhis aqreemenL has
noL yeL been raLiled by Oman.
1reaLies delne whaL lalls wiLhin Lhe scope ol "shippinq acLiviLy" and whaL is Laxable lor loreiqn shippinq
companies in the contracting state.
In the absence of a treaty between Oman and a foreign country, provisions of local law shall prevail.
1.1.4 Bilateral agreements
Oman has siqned bilaLeral aqreemenLs wiLh Yemen, Syria, Jordan and lran in Lhe leld ol mariLime LransporL
and ports.
PreparaLions are under way Lo conclude bilaLeral aqreemenLs wiLh Morocco, 1unisia, Alqeria, LqypL and
1urkey Lo promoLe cooperaLion beLween Oman and Lhese counLries in Lhe leld ol mariLime LransporL and
ports.
1.1.5 International maritime conventions
Oman has signed more than 30 international maritime conventions, including maritime agreements issued by
Lhe lnLernaLional MariLime OrqanizaLion {lMO), Lhe lnLernaLional Hydroqraphic OrqanizaLion and Lhe UniLed
NaLion, such as Lhe ConvenLion on Lhe SaleLy ol Lile aL Sea {SOLAS), Lhe lnLernaLional ConvenLion lor Lhe
PrevenLion ol PolluLion lrom Ships {MARPOL), Lhe ConvenLion on SLandards ol 1raininq, CerLilcaLion and
Watchkeeping (STCW), the International Ships and Ports Security Code (ISPS code) and others.
ln May 2008, Lhe lMO included Oman on Lhe socalled WhiLe LisL ol S1CW which was raLiled under Royal
Decree 65/90.
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Oman is considering other international conventions, such as the Convention on Ballast Water
ManaqemenL, Lhe MariLime AcLiviLy ConvenLion and oLhers emanaLinq lrom Lhe SecreLariaL ol Lhe Leaque
of Arab States.
1.1.6 Taxation of individual income of a seafarer
Oman does not impose personal taxation. Income of an individual seafarer employed on board a ship used in
a business operated by an Omani company is not subjected to tax in Oman.
Employees who work on ships operated by foreign persons visiting Oman are not subject to tax on income
arising in Oman.
1.1.7 Value-added tax
Currently, there is no legislation in Oman for imposition of value-added tax (VAT).
1.1.8 Duty
Foreign goods attract a custom duty of 5% of value at the point of importation in Oman.
1.1.9 Freight taxes
No freight taxes are levied in Oman.
1.1.10 SpeciaI vesseI reistraticn tax benehts fcr shipcwners
No vessel reqisLraLion Lax benelLs are available Lo shipowners in Oman. However, il vessels owned by an
Omani company are not registered within the period set out in the maritime law, civil and criminal penalties
may be applied.
1.2 Income tax law in Oman overview
A new Lax law, ellecLive lrom Lax year 2010, was published in Lhe ollcial qazeLLe on 1 June 2009. 1he
LxecuLive RequlaLions {LR) qoverninq Lhe income Lax law was issued by MinisLerial Decision 30/2012 on
28 January 2012. 1he provisions ol Lhe LR will Lake ellecL lrom Lax year 2012, which applies Lo all lnancial
years ending after 1 January 2012.
A. At a glance
Corporate income tax rate (%) 12 (a)
Capital gains tax rate (%) 12
Branch tax rate (%) 12
Withholding tax (%) 10 (b)
Net operating losses (years)
Carry back 0
Carry forward 5
(a) See Section 6.1.
(b) This tax is imposed on certain payments to foreign persons who do not have a permanent establishment
in Oman. Companies or permanent establishments in Oman that pay these items must deduct tax at the
source and remiL iL Lo Lhe SecreLary Ceneral ol 1axaLion.
1.2.1 Taxes on corporate income and gains
1.2.1.1 Corporate income tax
Companies, which include Omani companies, partnerships, joint ventures and sole proprietorships,
and permanent establishments of foreign companies, are subject to Omani income tax. A permanent
esLablishmenL is delned in Lhe law as place ol sale, place ol manaqemenL, branch, ollce, lacLory or
workshop, mine, quarry, building site, place of construction or assembly point. In addition, a permanent
establishment is created for a foreign person providing consultancy or other services in Oman through
employees or designated agents for periods of not less than 90 days, in aggregate, in any 12-month period.
Omani companies and Omani sole proprietorships are subject to tax on their global income (income accrued
from a source outside Oman). However, foreign tax credit limited to Omans tax rate of 12% is available
against the tax payable in Oman.
1.2.1.2 Rates of corporate income tax
Companies registered in Oman, regardless of the extent of foreign participation, and permanent
esLablishmenLs ol loreiqn companies are sub|ecL Lo Lax aL a raLe ol 07 on Lheir lrsL RO 30,000 ol Laxable
income, and at a rate of 12% on their taxable income in excess of RO 30,000.
Oil exploration and production companies are taxed at a rate of 55% and are usually covered by special rules
contained in concession agreements.
No income can be exempt from tax unless provided by a law or Royal Decree.
1.2.1.3 Capital gains
No special rules apply to capital gains. Capital gains are taxed as part of regular business income at the rates
set out in rates of corporate income tax.
1he Lax law provides LhaL prolLs and qains derived lrom disposals ol all asseLs, includinq disposals ol qoodwill,
trade names or trademarks with respect to all or part of a business, are included as deemed income.
Cains derived lrom Lhe sale ol invesLmenLs and securiLies lisLed on Lhe MuscaL SecuriLies MarkeL {MSM) are
exempt from tax.
1.2.1.4 Withholding tax
Withholding tax at a rate of 10% of gross payments is imposed on certain gross payments made to foreign
companies, including the following:
RoyalLies {see below)
ConsideraLion lor research and developmenL
ManaqemenL lees
ConsideraLion lor Lhe use ol or riqhL Lo use compuLer solLware
Entities in Oman, including permanent establishments, are responsible for deducting and remitting tax to the
qovernmenL. 1he Lax is lnal. Foreiqn persons do noL have any lurLher llinq or oLher obliqaLions wiLh respecL
to that income.
If a foreign company has a permanent establishment in Oman, and the permanent establishment is
unconnected to the income that is subject to withholding tax, withholding tax in Oman applies to such
payments.
The term royalties includes payments for the use of or right to use software, intellectual property rights,
patents, trademarks, drawings, equipment rentals, consideration for information concerning industrial,
commercial or scienLilc experience, and concessions involvinq minerals.
1.2.2 Administration
1.2.2.1 General
A Laxpayer is required Lo reqisLer wiLh Lhe Lax deparLmenL by llinq a Form lor DeclaraLion ol Business
Particulars within a period of three months after the date of incorporation or commencement of activities.
Any changes to the registration information must be communicated within two months. The accounting
period begins on the date of commencement of business for joint ventures and permanent establishments.
For companies, Lhe sLarL daLe is Lhe daLe ol reqisLraLion or incorporaLion. 1he lrsL accounLinq period may be
less than 12 months but cannot exceed 18 months. The accounting period may be changed with the approval
ol Lhe SecreLary Ceneral lor 1axaLion.
The books of account are required to be maintained for a period of 10 years. Permission is required for
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maintaining books of accounts in a foreign currency. In such a case, income must be converted at exchange
rates prevailing on the last day of the accounting year. The accrual method of accounting must be used.
1he Lerm "Principal Ollcer" is delned lor various enLiLies. ll a permanenL esLablishmenL carries on an acLiviLy
in Oman Lhrouqh a dependenL aqenL, Lhe aqenL is LreaLed as Lhe Principal Ollcer. ll a sole proprieLor or owner
of a permanent establishment is outside Oman, the individual or permanent establishment must designate a
Principal Ollcer Lo comply wiLh Lhe obliqaLions under Lhe law. Such Principal Ollcer may noL be absenL lrom
Oman for more than 90 days in a tax year. Partners of joint ventures are jointly and severally liable for taxes
of the joint venture.
1.2.2.2 Returns
Provisional reLurns ol income musL be lled wiLhin Lhree monLhs alLer Lhe yearend. A lnal reLurn ol income,
LoqeLher wiLh audiLed lnancial sLaLemenLs, musL be lled wiLhin six monLhs alLer Lhe end ol Lhe accounLinq
year.
1.2.2.3 Assessments
AssessmenLs musL be issued wiLhin lve years lrom Lhe end ol Lhe year in which Lax reLurns are lled. ll no
assessmenL is issued wiLhin a period ol lve years, such assessmenLs are deemed Lo have been issued {LhaL
is, Lax reLurns are accepLed as lled).
Corrections of assessments as a result of obvious errors are allowed. Such corrections must be made within
lve years alLer Lhe year ol issuance ol Lhe oriqinal assessmenL.
If a tax return is not submitted for a tax year, the time limit for making an assessment is 10 years from the
end of the tax year for which the tax return is due.
Assessed tax, reduced by tax already paid, must be paid within 30 days from the date of issuance of the
assessmenL. A delay resulLs in a delay lne ol 17 per monLh on Laxes due lor Lhe period ol delay. ll a relund
is assessed, Lhe relund musL be claimed wiLhin lve years alLer Lhe daLe ol assessmenL. AssessmenLs are also
made with respect to withholding tax.
1.2.2.4 Statutory periods of limitation
For the period of limitation related to assessments, see 7.2.3.
The governments right to collect taxes expires after seven years from the date taxes became due and
payable, unless the tax authority initiates action to recover taxes.
1.2.2.5 Appellate processes
An ob|ecLion aqainsL Lhe assessmenL order musL be lled wiLh Lhe SecreLary Ceneral lor 1axaLion. OLher
appellaLe procedures are an appeal wiLh Lhe 1ax CommiLLee, a Lax suiL lled in Lhe primary courL, an appeal Lo
Lhe appellaLe courL, and lnally a case belore Lhe Supreme CourL.
1he ob|ecLion aqainsL an assessmenL musL be lled wiLhin ^5 days lrom Lhe daLe ol servinq ol Lhe assessmenL
order. An appeal must be submitted within 45 days from the date of the decision on the objection or the date
ol expiraLion ol Lhe speciled period lor decidinq on Lhe ob|ecLion il no decision is issued.
1he Lime limiL lor consideraLion ol Lhe ob|ecLion is lve monLhs, wiLh an exLension ol an addiLional lve
months. If no decision is issued, an implied rejection of the objection is deemed to occur.
A taxpayer can seek extension of time for the payment of disputed tax. However, the undisputed tax must be
paid within 30 days from the date of assessment.
1.2.2.6 Dividends
Dividends received by Omani companies, permanent establishments of foreign companies or Omani sole
proprietors from Omani companies are exempt from tax. However, foreign dividends received by Omani
companies are subject to tax, with a tax credit for overseas withholding tax as set out in the paragraph 7.2.7.
1.2.2.7 Foreign tax relief
A foreign tax credit limited to Omans tax rate of 12% is available against the tax payable in Oman on overseas
income of Omani companies and sole proprietors.
1.2.3 Miscellaneous matters
1.2.3.1 Anti-avoidance legislation
If a company carries out a transaction with a related party that is intended to reduce the companys taxable
income, the income arising from the transaction is deemed to be the income that would have arisen had the
parties been dealing at arms length.
For transactions between related parties that are not at arms length, certain arrangements and terms may
be ignored by the tax authorities if such arrangements or terms result in lower taxable income or higher
losses.
The tax authorities may make adjustments if the principal purpose of a transaction is to avoid taxation even if
the transaction is between unrelated parties.
1.2.3.2 Thin-capitalization rules
Thin-capitalization rules are imposed based on the Executive Regulations issued.
1.2.3.3 Transfer pricing
The tax law has introduced the concept of transfer-pricing, by seeking to restrict any measures that may be
taken by related parties for avoidance of tax through transactions entered into between them.
L:\1ax\1ax Knowledqe 2009\Shippinq relaLed\Oman shippinq relaLed publicaLion.docx
2. Human capital
Crews ol Omani carqo vessels consisL ol Omaniqualiled sealarers who hold cerLain required documenLs, as
described below.
An Omani seafarer is allowed to carry out duty on vessels sailing outside Omani territorial waters only if he
has obtained a seafarers passport from the appropriate marine authority.
In order for any person to work on an Omani vessel or a ship, a permit and training from competent marine
auLhoriLy are required. 1he permiL is provided in Lhe lorm ol a license or cerLilcaLe issued Lo Lhe person.
The person must be:
AL leasL 18 years old
Medically lL Lo carry ouL marine work
Individuals between the ages of 12 and 18 may participate in job training on vessels pursuant to conditions
issued under a decision from a competent minister.
1here are no specilc requlaLions or imporLanL cusLoms wiLh respecL Lo Lhe employmenL ol personnel.
2.2 Articles of agreement (maritime law)
Cenerally, Omani labor law qoverns requlaLions lor employmenL, includinq Lhose perLaininq Lo social wellare
and worker compensation during the course of employment.
However, in relation to a person who undertakes to work on board a vessel, under the maritime law,
articles of agreement (i.e., a contract for wages payable by the owner of a vessel) shall include the
period of charter or voyage. Provisions in the law set out requirements for single voyages or multiple
voyages.
The articles of agreement should be completed in triplicate, and the vessel husband (owner), competent
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marine authority and seafarer should each retain a copy. In certain cases, the articles of agreement may be
retained jointly by husband and seafarer.
1he aqreemenL musL include:
DaLe and place ol conclusion
Name, naLionaliLy and domicile ol Lhe sealarer
1ype ol work Lo be perlormed
DeLails ol sealarer's passporL and marine license
DeLails ol waqes payable
DaLe ol deparLure and porL aL which voyaqe beqins and ends
The articles of agreement may be brought to an end by either party or terminated by the competent marine
authority due to one of the following:
Lxpiry {in Lhe case ol a lxedLerm conLracL) or by noLice {in Lhe case ol an unlimiLed Lerm ol conLracL)
CompleLion ol voyaqe, il Lhe conLracL is on a voyaqe basis
DeaLh or disembarkaLion ol Lhe crew member due Lo illness or in|ury
Damaqe or unseaworLhiness ol a ship, wiLhdrawal ol license or seizure
CourL order, on loss or abandonmenL ol Lhe ship on any oLher leqiLimaLe qround {e.q., breach by eiLher parLy
of contract of employment)
ArLicles ol aqreemenL relaLinq Lo an employmenL conLracL are usually lor a delniLe period. ll Lhe conLracL
expires during a voyage, it shall be extended until the end of the voyage.
On LerminaLion ol duLy, a sealarer can requesL LhaL Lhe vessel husband provide a cerLilcaLe ol compleLion ol
his duties and obligations under the agreement.
Wages and other amounts due to the seafarer shall be paid in the national currency, Omani rial. There are
certain exceptions for making payment in foreign currency.
All the provisions of Omani labor law and social security shall apply to the articles of agreement, to the extent
that these laws do not contradict the provisions of the maritime law. The provisions of social security and
labor law in Oman shall become applicable in case of injury or sickness during a voyage and the sickness is
not curable.
2.3 Oman Social Security Law
1he Oman social securiLy law conLains provisions qranLinq benelLs Lo Omani employees {aqed 15 Lo 59) in
the private sector, in accordance with permanent labor contracts.
Lmployers musL pay a monLhly conLribuLion and accrued endolservice benelLs {LSBs) lor each employee.
This law does not govern foreign workers. There are no social security provisions that apply to expatriate
employees. Social security contributions are required only for Omani employees.
The rates of social security tax are as follows:
Lmployee's conLribuLion 6.57 ol Lhe basic salary
Lmployer's conLribuLion 10.57 ol Lhe basic salary
The amount so deducted shall be deposited with the Public Authority of Social Insurance. The insurance
contribution is based on the employees basic wage or average monthly earnings. Such contribution shall be
made durinq Lhe lrsL 15 days ol Lhe monLh lollowinq Lhe monLh in which Lhe conLribuLions become due.
Social security taxes currently apply to Omani employees only.
In accordance with the labor law (Royal Decree No. 35 of 2003), employers must pay an ESB to their foreign
employees. 1he LSB is calculaLed on an employee's lnal waqe and is paid accordinq Lo Lhe lollowinq quidelines:
For Lhe lrsL Lhree years ol service, Lhe equivalenL ol 15 days' basic pay lor each year worked
For each subsequenL year, Lhe equivalenL ol one monLh's basic pay
2.4 Special requirements for foreign nationals
Omani employers musL pay a vocaLional Lraininq levy {V1L) lor each ol Lheir expaLriaLe employees, includinq
shippinq crew and sLall on Lhe sea. 1he V1L raLe is RO200 {USS520) once every Lwo years lor each
expatriate employee.
For loreiqn workers, LSBs are compuLed lor Lhe lrsL Lhree years as 15 days' basic salary lor each compleLed
year of service and 30 days thereafter.
2.4.1 Facilities for seafarers
The provisions of the Oman labor law regarding rules and regulations between employer and employee
also apply to seafarers. The general incentives available to any employee in Oman (e.g., social security
contributions, life insurance, and working hours) are also available to seafarers. Any additional incentives
provided to the seafarer beyond the Oman labor law shall be considered in settling the seafarers account on
termination of employment.
The most commonly used legal structure for shipping companies is incorporation as a joint stock company
{SAOC), closed |oinL sLock company {SAOC) or limiLed liabiliLy company {LLC).
As per Lhe Commercial Companies Law, Lhe mariLime company is a |oinL sLock company, i.e. SAOC and SAOC,
established for the purpose of engaging in maritime activities.
Oman does not impose any withholding tax on dividends distributed by Omani shipping companies to its
shareholders lrom prolLs LhaL are LaxexempL.
4.1 Specihc and eneraI subsidies avaiIabIe tc shippin ccmpanies
As described in section 1.1 above, corporate tax exemption is available to Omani shipping companies with
respect to shipping activities carried out within and outside Oman.
Foreign shipping companies are eligible for tax exemption of income from carrying on shipping activity in
Oman, provided reciprocal treatment is available to an Omani company in the country in which the foreign
person is incorporated or where the effective management and control is exercised.
4.2 Maritime aids to navigation
PursuanL Lo Royal Decree 81/2003, Lhe MinisLry ol 1ransporL and CommunicaLions {Mo1C) siqned a
concession aqreemenL wiLh Lhe Arabian MariLime and NaviqaLion Aids Services LLC {AMNAS) relaLed Lo
maritime navigational guidance in the Omani territorial waters.
Under Lhis aqreemenL, Lhis company shall carry ouL Lhe insLallaLion and mainLenance ol naviqaLional aids,
such as the navigational buoys and beacons at the ports entrances and on the breakwaters, including new
porLs and sea/coasLal pro|ecLs.
1he mariLime law is promulqaLed in Oman by Royal Decree 35/1981.
1he Mo1C has enLered inLo an aqreemenL wiLh Lhe lMO Lo produce a dralL ol new Omani mariLime law. A
committee has been formed to formulate the new law, as well as to include all the maritime and commercial
aspects relating to maritime safety, ships, seafarers and registration of foreign vessels.
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Accordingly, a new maritime law is under preparation aiming to regulate the maritime sector in the regional
seawaters of Oman.
1he pro|ecL, now in iLs lnal sLaqe, will be presenLed Lo Lhe MinisLry ol Leqal Allairs lor leedback and
commenL. 1he law will Lhen be presenLed Lo Lhe auLhoriLies in Lhe cabineL and Ma|lisashShura lor
endorsement.
5.1 Powers of the Directorate General of Maritime Affairs in Oman
1he DirecLoraLe Ceneral ol MariLime Allairs requlaLes naviqaLion and mariLime LransporL acLiviLies in Lhe
maritime areas under the sovereignty and authority of the Sultanate of Oman. The directorate also controls
vessels lyinq Lhe laq ol Oman, in accordance wiLh requlaLions seL ouL under Lhe mariLime law ol Oman and
Lhe Law lor RequlaLion ol NaviqaLion in Lhe Omani LerriLorial waLers.
In addition, the Directorate examines the need for joining various international and regional maritime
conventions, treaties and codes, and effectuates the maritime conventions already joined by Oman.
1he DirecLoraLe also adminisLers compliance wiLh Lhe requiremenLs ol Lhe SOLAS, MARPOL and lSPS Code.
5.2 Infrastructure
5.2.1 Major ports
There are eight major ports of Oman:
PorL SulLan Oaboos
PorL ol Salalah
PorL ol Sohar
PorL ol Khasab
PorL ol Shinas
PorL ol Duqm
Mina Al Fahal
OalhaL LNC
Dockinq
SLoraqe
MariLime educaLion is available aL Lhe lnLernaLional MariLime Colleqe ol Oman.
5.2.5 State Port Control
Oman is a member ol Lhe Riyadh Memorandum ol UndersLandinq {MoU) lor Lhe SLaLe PorL ConLrol and Lhe
lndian Ocean Memorandum ol UndersLandinq lor Lhe SLaLe PorL ConLrol. As per Lhe MoU, Lhe inlormaLion and
daLa have been exchanqed wiLh reqard Lo ships havinq been inspecLed by Lhe member sLaLes ol Lhose MoU,
noLinq LhaL Lhe locaLion ol Lhe SecreLariaL and lnlormaLion CenLer lor Lhe Riyadh MoU is in Oman.
5.2.6 Ships and ports security
1he DirecLoraLe issues CerLilcaLes ol Compliance lor ships and porLs in accordance wiLh Lhe lSPS Code,
havinq carried ouL leld visiLs Lo Lhe porL laciliLies ol all Lhe requesLinq aqencies and examined Lhe securiLy
and conLinqency plans ol each porL. Such cerLilcaLes are renewed annually and periodically.
5.2.7 Implementation of the International Safety Management (ISM) Code
Compliance wiLh Lhe requiremenLs ol Lhe lSM Code by shippinq companies is required in Oman. 1he Oman
qovernmenL issues Lwo documenLs lor shippinq companies LhaL comply wiLh Lhe lSM, namely Lhe documenL
ol compliance {DOC) and Lhe saleLy manaqemenL cerLilcaLe {SMC). 1hese documenLs are issued alLer Lhe
shipping companies pass an audit performed by the appropriate authority.
5.3 Registration
5.3.1 Reistraticn cf vesseIs and seacin units under the Dmani Ba
1he DirecLoraLe Ceneral ol MariLime Allairs reqisLers and inspecLs Omani and loreiqn ships ol various kinds
{e.q., lshinq, Lourism, excursion, service, loqisLics, Luq, oil and qas Lankers, lerries) Lhrouqh Lhe ollces ol
ships registration available in Port Sultan Qaboos, Port of Salalah and Port Sur.
5.3.2 Ships Byin Dmani Ba
Lvery vessel en|oyinq Lhe Omani naLionaliLy should ly Lhe Omani laq.
5.3.3 Registration of Omani vessels
1he reqisLraLion ol ships is qoverned by Lhe MariLime Law. Under SecLion 10 ol Lhe MariLime Law, a vessel is
only registered as an Omani ship if it is owned by an Omani or by an Omani company.
Abandoned vessels seized by vessels wiLh Omani naLionaliLy or vessels conlscaLed due Lo violaLion ol laws in
Oman are also considered to have Omani nationality.
Every Omani vessel is required to register in the competent maritime authority of Oman. The authority
shall also decide Lhe ship's Lonnaqe, and a cerLilcaLe lor Lonnaqe is issued Lo Lhe owner ol Lhe vessel by Lhe
maritime authority.
An application for registration is required to be submitted within 30 days from the date of building or
ownership of the vessel. Alternatively, per Article 49, an application for registration is required to be
submitted to the maritime authority within 30 days from the date the vessel entered an Omani port if it was
built or taken possession of abroad.
The owner should submit an application to the Ships Registration section at port, along with the following
documents:
ApplicaLion leLLer lor reqisLerinq Lhe ship/boaL
Purchase bill
CancellaLion cerLilcaLe ol Lhe reqisLered cralL lrom Lhe counLry where iL was bouqhL and reqisLered
CerLilcaLe ol oriqin, il any
CusLoms sLaLemenL
AuLhenLicaLion ol Lhe purchase bill lrom Lhe Omani embassy or consulaLe aL Lhe counLry ol sale
New phoLos ol Lhe cralL alLer lxinq Lhe proposed name and phoLos ol Lhe saleLy equipmenL
A copy ol Lhe owner's passporL/idenLiLy card
A copy ol Lhe capLain's passporL/idenLiLy card and a cerLilcaLe ol experience
1here are separaLe requiremenLs lor lshinq vessels and pleasure boaLs.
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Boats and installations belonging to the vessel and enlisted in the vessels inventory list are exempted from
registration.
1he naviqaLion license and saleLy cerLilcaLe are qranLed upon Lhe applicaLion submiLLed Lo Lhe mariLime
authority. The navigation license is valid for one year and can be renewable upon satisfaction of certain
conditions.
Upon reqisLraLion, every vessel is required Lo carry ollcial documenLs, includinq Lhe cerLilcaLe ol reqisLraLion,
crew loq, naviqaLion license lor Lhe currenL year, healLh cerLilcaLe and declaraLion ol carqo while on Lhe
voyage.
The electronic ships registration system recently introduced facilitates for the process of issuing ship
cerLilcaLes relaLinq Lo naviqaLional licenses and permiLs, cerLilcaLes ol compeLency Lo sealarers, naviqaLional
warninqs, cerLilcaLes ol sale manninq ol ships and oLher documenLs.
5.3.5 Foreign vessels entering Oman territorial waters
Foreign vessels must carry documents as prescribed under the laws of their respective countries, in addition
Lo licenses and cerLilcaLes ol saleLy compliance under inLernaLional convenLions.
5.3.6 Navigational warnings
1he DirecLoraLe Ceneral ol MariLime Allairs also orqanizes Lhe naviqaLion ol vessels in and ouL ol Lhe porLs ol
Oman and in Lhe LerriLorial sea. 1his is carried ouL by issuinq mariLime naviqaLional warninqs delninq Lhe sale
waLerways/sailinq prohibiLed areas and quidinq ships passinq Lhrouqh Lhe LerriLorial waLers.
Panama
1. Tax
The corporate tax rate is 25%. The Panamanian tax system is based on the territorial principle whereby all
income, from any source, derived within Panamanian territory is subject to income tax. Section 694 of the
Panamanian Tax Code states:
The object of this tax is any taxable income generated from any source, within the territory of the Republic
ol Panama, reqardless ol where Lhe income is received. 1axpayer, as delned herein, is any leqal enLiLy or
individual, domiciled or non-domiciled that receives taxable income.
Nonetheless, Section 694, paragraph 2 indicates several activities that, even though carried out within the
Panamanian territory, are not considered Panamanian source, and consequently, would not be subject to
local taxation. Such activities include the following:
"a. Billinq, lrom an ollce seL up in Panama, sales ol merchandise or producLs lor an amounL qreaLer Lhan lor
which they were purchased, provided that said merchandise or products are transferred abroad
b. DirecLinq, lrom an ollce seL up in Panama, LransacLions LhaL Lake place or produce ellecLs abroad
c. Distributing dividends or participations of legal entities that do not require the Notice of Operation or do
not produce taxable income in PA, when said dividends or participations derive from income not generated
within the Panamanian Territory, including income derived from the activities mentioned in bullets a. and
b. above.
In the recent past, Panama has implemented many tax reforms, which drastically changed the general
LerriLorial Laxable income principle. SecLion 701{n) ol Law 33 ol 2010 sLaLes LhaL as ol 1 January 2010,
income of international maritime transportation companies derived from freight, passengers, cargo and
similar services whose oriqin or lnal desLinaLion is Panama, reqardless ol where Lhe company is incorporaLed
or domiciled, is deemed to be generated in Panama and, therefore, is subject to tax in Panama.
SecLion 69^{c) ol Law 8 ol 2010 esLablishes LhaL income earned by companies enqaqed in inLernaLional
LransporL lrom lreiqhL, carqo, LickeLs and oLher service, which have Panama as Lheir oriqin or lnal
destination, regardless of the companys place of incorporation or domicile, is deemed to be generated in
Panama except for the following:
a. Income earned from freight, tickets and services provided to passengers or cargo in transit through Panama
b. Income earned from maritime tickets when they are issued by a cruise ship whose home port is located in
Panama
SecLion 701 {m) ol Law 8 ol 2010 esLablishes LhaL companies enqaqed in inLernaLional LransporL wiLh
income lrom lreiqhL, carqo, LickeLs and oLher services when Panama is Lheir oriqin or lnal desLinaLion may
apply as income tax credit the income tax paid abroad over income from freight, cargo, tickets and other
services abroad that are also considered taxable income in Panama. These credits may not be carried forward
or returned to the taxpayer.
Exempt income
Income earned from international maritime commerce carried out by merchant ships legally registered in
Panama, even if the transportation contracts are signed in Panama, is exempt, except when Panama is the
oriqin or lnal desLinaLion ol Lhe service.
According to Section 1057(v) of the Fiscal Code, the following goods and services are exempt from value
added tax (VAT):
FreiqhL and LransporL ol carqo, by air, sea or land, as well LransporL ol individuals by sea or land
Loadinq, unloadinq, Lransler wiLhin or beLween porLs, loqisLics and auxiliary services provided Lo carqo
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in ports, and in free trade zones or special economic areas, as well as repairs, maintenance and cleaning
services provided within the territorial waters to ships in transit
ArLicle 15^ ol Law 8 ol 2010 indicaLes LhaL, lor all leqal ellecLs, iL is undersLood LhaL loqisLic services are
those that seek to facilitate that goods in general arrive to the various clients, which includes transportation,
distribution, storage, handling and repackaging of goods, information management, invoicing services, as
well as logistics and foreign commerce advisory.
There are no special tax facilities for seafarers in Panama.
1o daLe, Lhe LreaLies wiLh Mexico, Spain, Barbados, Luxembourq, OaLar, Sinqapore, Lhe NeLherlands, France,
SouLh Korea, PorLuqal and lreland have enLered inLo ellecL.
Vessel agreements
USA:
Agreement to exempt from income tax on a basis of reciprocity income derived by residents of the other
nation for the international exploitation of ships and aircraft
Netherlands:
1reaLy Lo avoid Lhe double LaxaLion lor companies LhaL operaLe ships or aircralL in inLernaLional Lrallc
Cyprus:
Agreement to exempt the income tax or any other tax that taxes the income perceived from the exploitation
of ships on the basis of reciprocity
1.4 Freight taxes
Receipts obtained by international transportation companies that relate to freight, passengers, cargo and
similar services between Panama and foreign countries or vice versa are considered Panamanian source
income, regardless of where companies are constituted and domiciled. Although its way of computing is
similar to a freight tax, this is an income tax.
Companies engaged in transportation may choose to be taxed either on the basis of their ordinary income,
or on the basis of considering 3% of gross freight received from the operations set out in the preceding
paragraph as net taxable income. For the purpose of the latter option, gross freight income is calculated on
the basis of how many miles or kilometers are covered within the territory of Panama.
In either of the above options, income tax will be assessed at the corporate tax rate of 25%. Operating cost
and expenses can be deducted if the international transportation company chooses to be taxed on the
basis ol iLs ordinary income. ll wiLhholdinq Lax applies, iL is possible Lo lle a Panamanian Lax reLurn lor LhaL
revenue, so as to deduct expenses and obtain a credit or refund for part of the sums that have been paid as
income tax. No deduction of expenses will be allowed if a company decides to apply the 3% gross freight rule.
Dependinq on Lhe ship's qross reqisLer Lonnaqe {CR1) and aqe, shipowners may be enLiLled up Lo a 507
discount on regulatory and consular rates and up to a 30% annual tax (Resolution 16-09 of the Panamanian
MariLime AuLhoriLy).
Shipowners may also be entitled to a 20% discount for having registered more than 5 vessels, a 35% discount
for having 16 to 50 vessels and a 60% discount for having more than 50 vessels registered in Panama.
None.

2. Human capital
Sn||n coman|es are free to cec|ce on tne nat|ona||ty of tne sn|s crew anc ofhcers.
ln order Lo comply wiLh Lhe lnLernaLional ConvenLion on SLandards ol 1raininq, CerLilcaLion and
WaLchkeepinq lor Sealarers {S1CW), all crew members and ollcers have Lo be duly cerLiled by Lhe
Panamanian MariLime AdminisLraLion {Lhe AdminisLraLion). All enrollmenL conLracLs musL be execuLed in
writing by the shipowner or its representative and the crew member. A copy of the contract shall be annexed
to the crew list.
Panamanian maritime labor law applies to crew members of international merchant vessels.
The contract of employment or articles of agreement of the crew could be held for a limited term, an
unlimited term or per trip.
This contract may be individual or collective, transcribed or attached to the role of crew, so that the whole
crew appears duly.
The date of termination of the contract is determined by the type of contract:
1. For a limited term contract, the date in set forth therein.
2. For a contract for travel, the port of destination and the time that must elapse after the arrival to ensure
LhaL Lhe person concerned can be licensed, il Lhe conLracL is seL lor a specilc Lravel, Lhe conLracL should
end in the port of destination.
3. For unlimiLed Lerm conLracLs, Lhe conLracL should include condiLions LhaL will enable each parLy Lo lnish iL
as well as the term of notice.
Minimum waqe and oLher obliqed paymenLs
Belore Lhe enLry inLo lorce ol Lhe Decree Law 8 ol 26 February 1998, "which requlaLes work aL sea and on
waterways and enacting other provisions, labor relations on board vessels of Panamanian registry were
governed by the labor code of the Republic of Panama.
As ol Lhe enLry inLo lorce ol Decree Law 8 ol 1998, all conlicL and mariLime labor is requlaLed by such
provision provided that the parties may not agree in other labor legislation applicable to the case.
NeiLher Lhe labor code nor Decree Law 8 ol 1998 provides any rule on Lhe salaries raLe lor sealarers who
work on ships under Lhe Panamanian laq.
In the majority of cases, the following parameters are taken into consideration:
Place ol recruiLmenL and aqreed currency
NaLionaliLy ol Lhe owner, shippinq or charLerer
AqreemenL beLween Lhe parLies
Manners and cusLoms ol mariLime Lrade
The salary is paid from the day the crew starts its service aboard. However, if the crew had to embark on a
journey from the place of recruitment to join the ship, the wage will be determined either beginning at the
sLarL ol Lhe Lrip or on Lhe daLe speciled in Lhe conLracL.
The salary will be paid in the currency agreed on in the contract of employment.
The wages of the crew may only be paid after the following deductions and discounts have been applied:
Social securiLy conLribuLions, il Lhe crew member is incorporaLed inLo Lhe Panamanian social securiLy
regime;
1he paymenL ol Lhe debLs LhaL Lhe crew has wiLh Lhe shipowner lor advances ol waqes and excess
payments, but in no case shall discounts exceed 15% of the wages earned during the respective pay
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period;
MonLhly housinq morLqaqe paymenLs made Lo Lhe real esLaLe company or crediL insLiLuLion, or Lhe renL Lo
be paid for housing, up to 30% of the salary;
Family benelLs;
Ordinary and exLraordinary conLribuLions Lo orqanizaLions ol sealarers {i.e., unions);
ALLachmenLs or qarnishmenLs ol 157 ol Lhe surplus over and above Lhe amounL ol Lhe waqes LhaL may
not be garnished; and
DeducLions esLablished by law.
Total deductions and deductions authorized in any case should not exceed 50% of the basic wage of the crew,
except for family allowance.
Rules regarding working hours
Ordinary hours for work on board will be agreed on in the contract of registration.
Working hours in excess of the daily limits prescribed in the contract are deemed overtime hours for which
Lhe worker is enLiLled Lo compensaLion lxed by collecLive or individual conLracLs, which in no case will be less
than the basic hourly wage rate increased by 25%.
The arrangement of national/health insurance
Professional risks are those accidents suffered by seafarers because of the work done on behalf of a
shipbuilder.
Cenerally, Lhe Lerms ol such aqreemenLs are based on Lhe Law Decree 8 ol 1998, which requlaLes work
in the sea.
Every foreign individual working for a company established in Panama is subject to social security
withholdings and educational insurance tax withholdings. These payments are shared between the employer
and employee, and remiLLed by Lhe employer on a monLhly basis Lo Lhe appropriaLe ollce.
Lmployees pay 9.757 ol Lheir salaries lor social securiLy and 1.257 lor educaLional Lax.
Lmployers conLribuLe 12.257 ol Lhe salaries paid Lo Lhe employees lor social securiLy and 1.57 lor
educational tax. In addition, employers pay workers compensation insurance at a rate that ranges from
0.98% to 5.6% of the salaries, depending on the type of business in which the employer is engaged.
Social security and educational taxes are levied on salaries and on most other remuneration paid to
employees. No ceiling applies to the amount of remuneration subject to these taxes. Remuneration subject to
social securiLy includes all compensaLion, wheLher moneLary or nonmoneLary, and benelLs inkind qiven Lo
or provided for an employee or family member.
No treaties providing relief from social security contributions have been concluded.
2.5 Mannin advantaes and disadvantaes cf Byin the Panamanian Ba
1he procedure lor reqisLraLion ol vessels under Lhe Panamanian laq is very simple and sLraiqhLlorward.
Ceneral advanLaqes:
Any person, naLural or leqal, reqardless ol naLionaliLy and place ol oriqin, is eliqible Lo reqisLer ships under
Lhe Panamanian laq.
1he reqisLraLion procedure allows Lhe reqisLraLion ol a ship in a period ol eiqhL hours, provided LhaL Lhe
ship complies with all the requirements.
Panama has a reliable sysLem ol naval morLqaqes LhaL have Lhe supporL ol naLional and inLernaLional
banking.
Panama ollces operaLe 2^ hours a day Lo accommodaLe Asian and Luropean cusLomers despiLe Lhe Lime
difference.
Panama has sLraLeqic represenLaLion in 60 counLries Lhrouqh Lhe merchanL navy consulaLes.
Panama has a hiqhqualiLy sysLem.
Panama is in sLricL compliance wiLh Lhe inLernaLional convenLions on mariLime saleLy, Lhe lnLernaLional
CNSS Service {lCS), S1CW 78/95 and oLher oLhers.
Panama permiLs exempLion lrom Laxes on qains lrom Lhe acLiviLy underLaken.
ResoluLion 1609 ol Lhe Panamanian MariLime AuLhoriLy provides discounLs over Lhe annual Lax, consular
rate and regulatory rates depending on the age and capacity of the vessel. Also, discounts per number
ol ships are qranLed by Law 57 ol 2008 {see secLion 1.5 Special vessel reqisLraLion benelLs lor Lhe
shipowner).
Shipbuilder and operaLors ol ships under Lhe Panamanian laq have access Lo Lhe sysLem relerred Lo in
the law of corporations.
1here are no minimum Lonnaqe requiremenLs; however, ships older Lhan 20 years will have Lo pass a
special inspection by a Panamanian authorized inspector to obtain a statutory patent.
1he owners ol vessels who wish Lo Lransler Lo Lhe Panamanian laq will noL be reinspecLed il Lhe ships
possess a cerLilcaLe ol securiLy and valid Lonnaqe issued by a recoqnized orqanizaLion or socieLy.
However, aL Lhe Lime ol reqisLraLion, a recoqnized enLiLy shall issue new cerLilcaLes on behall ol Lhe
Panamanian Administration.
Since 1977, Lhe represenLaLive ollce ol Lhe mariLime auLhoriLy ol Panama in New York has provided
assistance and advice in technical matters relating to the Panamanian registry and security to all users with
prompLness and ellciency.
Shipping activities are generally carried out through a corporation or limited liability partnership. Both
vehicles provide limited responsibility and are opaque (subject to tax) for Panamanian tax purposes.
lncome Lax liabiliLy will be assessed aL a laL 257 raLe on Lhe neL Laxable income {dillerence or balance LhaL
results upon deducting from his gross income or general earnings the foreign and exempted income, and
deducLible expendiLures, cosLs and expenses). 1axable income/revenue includes all income derived lrom
business activities in Panama less expenses incurred wholly and exclusively in the production of assessable
income or the conservation of its source.
However, taxpayers with annual taxable income greater than PAB1.5 million are required by law to calculate
the tax based upon the two following methods, which are to be included in their annual income tax return and
pay Lhe hiqher amounL beLween Lhese Lwo calculaLions: {1) a laL 257 or 27.57 raLe {2011) on neL Laxable
income, or {2) Lhe laL raLes described above on ^.677 ol Lhe Laxable revenue.
Taxpayer will have the option to request the non-application of calculation No. 2, if this is the highest amount
between the two methods, when the company has net operating losses or the effective tax rate is higher
than the nominal 25% or 27.5% rate. However, please be advised that calculation No. 2 will still need to be
determined, regardless of whether the company has net operating losses.
The request shall be addressed to the tax administration along with certain documentation stipulated in the
law. Tax authorities will have six months to provide an answer in reference to this matter.
The norms establish some exceptions.
Section 10 of Executive Decree No. 98 of 2010 indicates several activities that are not considered
Panamanian source. Per Section 10, foreign source income from the following activities is not of Panamanian
source:
... (g) The income derived from freight, tickets and services to the passengers or cargo that are in transit
in the territory of the Republic of Panama and which is derived from maritime fares and other services when
they are obtained by international companies operating cruise ships which have their cruise port or Home
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Port based in the Republic of Panama, and...
(l) Income generated by persons or corporations located overseas, receiving payment for goods or services
lnanced, conLracLed or execuLed compleLely ouLside ol Lhe naLional LerriLory, in lavor ol Laxpayers such as
hotels, international vehicle lessors, repairs of naval and air vessels dedicated to international exploitation,
freight or other charges made by shipping agencies on behalf of international naval lines or international
tourism operators, as well as any other international business activities.
Taxpayers dedicated to these international businesses must certify the following before the Tax
Administration:
1haL Lhe qoods or services are ol inLernaLional oriqin, and lor services, LhaL Lhese were provided lully
overseas, wiLh Lhe paymenL or conLracL noL beinq sullcienL prool ol Lhis condiLion,
1haL Lhe price paid lor Lhe qood or service received by Lhe Laxpayer is reasonable in relaLion Lo Lhe value
of the good or service rendered, and
1haL Lhe inLernaLional business in quesLion is conducLed inside Lhe Republic ol Panama and LhaL iLs clienL's
portfolio is at least 40% foreigners. An exception to this requirement is cargo of merchandise going
toward national territory.
Dividends distributed from earnings arising out of Panamanian source income are taxable at the rate of 10%
in the case of dividends derived from nominal registered shares and 20% in the case of dividends derived
from bearer shares. This withholding tax applies regardless of whether the dividends are paid to legal entities
or individuals, resident or nonresident. When dividends are distributed from earnings arising from non-
Panamanian source income, the applicable withholding rate is 5%.
If a corporation does not distribute dividends in a given period, or if the amount distributed is less than 40% of
the periods net taxable income less income tax paid thereon, the difference is subject to a deemed dividend
tax of 4% (2% if the earnings derive from non-Panamanian source income). The deemed dividend tax paid in
a given period can be used as a credit to offset actual dividend withholding taxes due in subsequent periods.
For companies operating in Panama that require a Notice of Operations or that generate Panamanian source
income, the rate of 5% applies to dividends distributed from:
1. Foreign source income
2. Export operations
3. Panamanian source income exempt from income tax, as listed in literals f and I of Article 708 of the Tax
Code:
"l) lnLeresLs paid or crediLed over securiLies issued by Lhe SLaLe and prolLs derived lrom Lheir Lranslers;
l) Interests recognized or paid over savings deposits, time deposits or any other deposits in banking
institutions established in Panama, whether the deposits are local or foreign. In addition, interests
and commissions LhaL such bankinq insLiLuLions recoqnize or pay Lo inLernaLional banks or lnancial
insLiLuLions esLablished abroad lor loans, bank deposiLs or oLher lnancial resources."
No subsidies or special incentives available.
There are no special incentives for environmental awareness in Panama.
4.4 Advantaes and disadvantaes cf Byin the Panamanian Ba
With the largest registration of ships at the global level, the Panamanian registry offers many advantages,
which can be ol considerable inLeresL Lo Lhe shipowners who wish Lo reqisLer Lheir vessels under Lhe laq ol
Panama.
Competitive costs
The costs of registering a ship in Panama are considerably lower than in other jurisdictions.
No minimum tonnage requirement
There is no minimum tonnage required for the registration of a vessel in Panama.
All nationalities accepted
There are no restrictions regarding nationality, which means that any person or company may register a
vessel under Lhe Panamanian laq.
Dual registration is possible
Vessels reqisLered under Lhe Panama laq LhaL are under charLer Lo a company incorporaLed in anoLher
country may also be simultaneously registered in that country.
AdvanLaqe ol a preliminary reqisLraLion ol LiLle/morLqaqe
Preliminary reqisLraLion ol LiLle/morLqaqe is easily accepLed by US, Luropean and worldwide banks as
providing satisfactory security.
Major class survey societies accepted
All ma|or class socieLies and members ol Lhe lnLernaLional AssociaLion ol ClassilcaLion SocieLies LLd. {lACS)
are authorized by Panama to survey Panamanian vessels.
Tax advantages
Income derived by vessels engaged in international trade is not taxed by the Republic of Panama, except for
Lhe lreiqhL whose lnal desLinaLion or oriqin is a Panamanian porL.
Vessels under construction can obtain provisional registration
Vessels under construction may also apply for the provisional registration and radio call letters.
Advantages for pleasure vessels (yachts, boats, sailing vessels)
1here is a sole enrollmenL charqe ol USS1,500 lor yachLs; however, il Lhe yachL is owned by a Panamanian
naLural ciLizen, Panamanian company or a Panama loundaLion, Lhis charqe is USS1,000.
None.
5.1 Infrastructure
The shipping industry is considered very important to the Panamanian economy; since 1994, Panama has
been the worlds leading register of ships.
5.1.1 Major ports
1he qeoqraphical locaLion ol Panama means LhaL iL has porLs in boLh Lhe Pacilc and ALlanLic oceans, which
are separated by land by a distance of approximately 75 kilometers, and linked by the Panama Canal. This
makes them an important crossing point between the most important shipping routes.
Panama is on iLs way Lo become Lhe main cenLer ol LransshipmenL ol conLainers in LaLin America and Lhe
Caribbean, specilcally in Lhe area ol Coco Solo NorLh, which is experiencinq a susLained and qrowinq porL
development.
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During the past 10 years, the evolution of port activities has presented its highest level of growth and
development. This fast expansion is projected with the privatization of major port terminals and the
consLrucLion ol new Lerminals, and is relecLed primarily in Lhe number ol ships berLhed and Lhe conLainerized
cargo volume reached in recent years.
1herelore, Lhe Manzanillo lnLernaLional 1erminal, Colon ConLainer 1erminal and CrisLobal are Lhe main porLs
ol LaLin America.
Panamanian maritime access
The port system of Panama comprises 26 ports of which 19 are administered by the maritime authority
ol Panama Lhrouqh Lhe Ceneral DirecLoraLe ol porLs and mariLime auxiliary indusLries, mainly small porLs
that provide service to international transport and cabotage. The remaining seven ports are managed and
operaLed by privaLe companies under Lhe conLrol ol Lhis Ceneral DirecLoraLe, Lhrouqh Lhe capLaincies ol porLs
locaLed in Lhe ALlanLic and Lhe Pacilc.
1he porLs are classiled inLo Lhree caLeqories accordinq Lo Lhe naLure ol Lheir operaLions:
Specialized porLs
PorL complexes
Ceneral carqo porLs
CurrenLly, Lhe Lerminal porLsBalboa on Lhe Pacilc side and CrisLobal on Lhe ALlanLicare under Lhe
administration of Panama Ports Company, a member of the group Hutchison Port Holding (HPH).
Several newer ports are under the operation and administration of private enterprise:
Since 1997, CC1, an allliaLe ol Lhe Lverqreen Croup, has operaLed Colon ConLainer 1erminal, locaLed on
Lhe ALlanLic side aL Lhe Manzanillo Bay, Coco Solo NorLh, CiLy ol Colon.
PeLroLerminales de Panama {P1P) is Lhe adminisLraLoroperaLor ol Lhe porLs ol Charco Azul in Chiriqu
and Chiriqui Crande, Bocas del 1oro
Since 199^, Ml1, a wholly owned subsidiary ol SLevedorinq Services ol America {SSA), has
operaLed Manzanillo lnLernaLional 1erminal, locaLed aL Lhe Manzanillo Bay, Coco Solo NorLh, CiLy
of Colon.
Another important terminal on the Atlantic side is Colon Port Terminal, at Coco Solo South, City of Colon. The
terminal was granted in concession to a Panamanian corporation in 1997.
MainLenance and repair laciliLies
Dockinq laciliLies
SLoraqe laciliLies
Airports are located in the Colon Free Zone, approximately 5 to 10 kilometers from the major ports on the
ALlanLic side, and in 1ocumen, approximaLely 30 kilomeLers lrom Lhe porLs on Lhe Pacilc side.
1he ma|or mariLime educaLional insLiLuLion in Panama is Lhe Universidad MarLima lnLernacional de Panam
{Panamanian lnLernaLional MariLime UniversiLy).
Compliance wiLh Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code is mandaLory lor companies operaLinq
large vessels in international trade.
Under Lhe lSM Code, a company musL be declared Lo Lhe AdminisLraLion. ln accordance wiLh SecLion 1.1.2 ol
lMO ResoluLion A.7^1 {18), Lhe lSM Code, "a Company means Lhe Owners ol a ship or any orqanizaLion or
person such as Lhe Manaqer, or Lhe BareboaL CharLers, who has assumed Lhe responsibiliLy lor operaLion ol
the ship from the ship Owners and who on assuming such responsibility has agreed to take over all the duties
and responsibility imposed by the Code.
ln order Lo comply wiLh Lhe inLernaLional Lechnical cerLilcaLes, Lhe lollowinq orqanizaLions have been
enLrusLed wiLh Lhe survey ol ships and issuance ol relevanL convenLion cerLilcaLes on behall ol Lhe Republic
of Panama:
1. American Bureau of Shipping
2. Bureau Veritas
3. China Corporation Register of Shipping
^. China ClassilcaLion SocieLy
5. Det Norske Veritas
6. Cermanischer Lloyd
7. Clobal Shippinq Bureau
8. Hellenic Register of Shipping
9. Indian Register of Shipping
10. lnLermariLime CerLilcaLion Services, SA
11. lnLernaLional MariLime ReqisLer {Panama), lnc.
12. International Naval Survey Bureau (INSB)
13. International Register of Shipping (Panama), Inc.
14. Isthmus Bureau of Shipping
15. Korean ReqisLer ol Shippinq
16. Lloyd's ReqisLer ol Shippinq
17. Macosnar CorporaLion
18. National Shipping Adjuster, Inc.
19. Nippon Kai|i Kyokai
20. Overseas Marine CerLilcaLion Service, lnc.
21. Panama Bureau of Shipping
22. Panama Register Corporation
23. Panama Marine Survey & CerLilcaLion Services, lnc.
2^. Panama MariLime DocumenLaLion Services, lnc.
25. Panama Shipping Registrar, Inc.
26. Phoenix Register of Shipping, SA
27. Polski Rejestr Statkow
28. Qualitas Register of Shipping, SA
29. Registro Italiano Navale
30. Russian MariLime ReqisLer ol Shippinq
31. Universal Shippinq Bureau, lnc.
Lach recoqnized orqanizaLion {RO) is auLhorized Lo carry ouL surveys and Lo issue specilc Lechnical
cerLilcaLes accordinq Lo Lhe naLional and inLernaLional requlaLions adopLed by Panama. ROs' specilc
Lechnical cerLilcaLes auLhorizaLion lisL is available in Lhis ollce aL Lhe owner's/operaLor's requesL.
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Strict reference is made to Chapter V, Regulation 13 of the Solas Convention, which mandates that each
contracting government undertakes to maintain and, if necessary, to adopt measures for the purpose of
ensurinq LhaL, lrom Lhe poinL ol view ol saleLy ol lile aL sea, all ships shall be sullcienLly and ellcienLly
manned.
ResoluLion 61^308ALCN daLed 31 December 1982 esLablished Lhe minimum sale manninq required on
board vessels ol over 200 CR1.
CerLilcaLed survival cralLsmen: every passenqer vessel and every carqo vessel ol 500 CR1 and above
shall carry a sullcienL number ol cerLilcaLed survival cralLsmen as deLermined by Lhe AdminisLraLion. 1he
allocaLion ol Lhe survival cralLsmen Lo each survival cralL remains wiLhin Lhe discreLion ol Lhe MasLer.
1he survival cralLsmen musL hold cerLilcaLes ol prolciency issued under Lhe auLhoriLy ol an accepLed
adminisLraLion. Also, examiners have been desiqnaLed Lo examine Lhe ellciency and compeLence ol
lileboaLmen on Panamanian vessels. 1hese examiners lollow Lhe US CoasL Cuard requiremenLs.
ResoluLion A^81 {Xll) on "Principles ol Sale Manninq" adopLed by Lhe lMO Assembly 1wellLh Session urqes
all members ol Lhe orqanizaLion Lo insLiLuLe Lhe "Minimum Sale Manninq CerLilcaLe."
Based on Lhe aloremenLioned, Lhe Republic ol Panama has insLiLuLed lor vessels reqisLered under iLs laq a
Minimum Sale Manninq CerLilcaLe, which should be on board every passenqer and carqo vessel ol more Lhan
200 CR1.
International conventions regarding safety and environment include, among others, Regulations for the
PrevenLion ol Collisions aL Sea, 1972/1981; SOLAS, 197^/1981; S1CW, 1978/1995; lNMARSA1, 1976;
MARPOL, 1973/1978; PrevenLion ol Marine PolluLion by Dumpinq ol WasLes and oLher MaLLers, 1972;
lnLervenLion on Lhe Hiqh Seas on cases ol Oil PolluLion CasualLies, 1969; Civil LiabiliLies lor Oil PolluLion,
PolluLion Damaqes, 1969; Load Lines, 1966/1971/1975/1979, and 1onnaqe MeasuremenLs ol Ships, 1969.
lnLernaLional ManaqemenL Code and Revised Cuidelines on lmplemenLaLion ol Lhe lSM Code Amended by
ResoluLion MSC.179{79) lnLernaLional SaleLy ManaqemenL Code ResoluLion A.7^1{18) Amended by
ResoluLion MSC.10^{73) ParL A lmplemenLaLion ^ DesiqnaLed Person{s); MSCMLPC.7/ ClRC.6.
5.3 Registration
1he procedure lor reqisLraLion ol vessels under Lhe Panamanian laq is very simple and sLraiqhLlorward.
Conditions:
1he owner ol Lhe vessel may be an individual or enLiLy, eiLher Panamanian or loreiqn, domiciled in
Panama or elsewhere.
1here is no minimum Lonnaqe requiremenL or aqe requiremenL.
Vessels builL more Lhan 20 years belore reqisLerinq under Lhe Panamanian laq musL underqo an
Prescribed complement of
lifeboat
Minimum number oI certihcated survival craItsmen
Fewer than 41 persons 2
From 41 to 61 persons 3
From 62 to 85 persons 4
More than 85 persons 5
Over 50,000 0.50
inspecLion. Vessels LhaL may be reqisLered under Lhe Panamanian laq include cralLs inLended lor
LransporLaLion ol passenqers and carqo, ponLoons, dredqes, loaLinq docks or oLher hulls made ol
wood, cement, iron, steel or mixed materials or other objects that are used or may be used in maritime
commerce.
lL is possible Lo reqisLer a vessel LhaL is under consLrucLion.
lL is possible Lo obLain a special Lype ol reqisLraLion lor vessels on accounL ol scrappinq, delivery voyaqe or
any other purpose of a provisional nature.
lL is possible Lo have dual reqisLraLion ol vessels, under cerLain circumsLances, whereby a vessel reqisLered
under Lhe Panamanian laq will be allowed Lo ly anoLher laq as a special reqisLry on accounL ol a charLer
party arrangement. The opposite is also permissible.
Required documents:
Power ol aLLorney lrom owner Lo person requesLinq reqisLraLion, auLhenLicaLed, leqalized and enabled.
Notice of name proposed for the vessel and property title of the ship properly registered in the public
registry
AppoinLmenL ol a residenL aqenL {leqal represenLaLive in Panama)
1ax clearance cerLilcaLe ol Lhe ship
CerLilcaLe ol Lonnaqe or Lonnaqe issued by an auLhoriLy recoqnized by Panama and iLs conlrmaLion by
Lhe ollce in New York
Lvidence ol LiLle ol ownership, which Lakes one ol Lhe lollowinq lorms: builder's cerLilcaLe lor a newly
consLrucLed vessel; oriqinal bill ol sale, cerLilcaLe ol Lhe LiLle deed or a cerLiled copy ol Lhe previous
cerLilcaLe ol reqisLry showinq Lhe owner
CerLilcaLion ol cancellaLion or deleLion cerLilcaLe
CerLilcaLe ol consLrucLion {il new)
1echnicians cerLilcaLes carried by Lhe vessel in accordance wiLh inLernaLional convenLions
ApplicaLion lor radio license
1he procedure lor reqisLerinq ships under Lhe Panamanian laq may sLarL wiLh Lhe applicaLion lor a provisional
reqisLraLion Lhrouqh a leqal represenLaLive {qualiled in Panama) or in Lhe Panamanian consulaLes accrediLed
abroad, lor which Lhe required inlormaLion should be lled alonq wiLh Lhe correspondinq paymenL ol Lhe lee.
The provisional registration may be obtained in two days after the application. It will be necessary to provide
complete information about the vessel and to pay the government taxes. Once the provisional registration
is obtained, the registrant has six months to present all the original documents in order to obtain the
permanent registration.
Once all the documents and payment of the corresponding rights have been received, a provisional six-month
paLenL lrom eiLher Lhe auLhorized consulaLe or Lhe main ollce in Panama, and a provisional license ol radio
for three months, will be issued. The entire procedure takes approximately one business day.
The regulatory patent and the radio license are issued only in Panama, for a four-year term. The patent
is awarded once all documents have been submitted and delivered and the title of the ship has been duly
registered in the public registry. The radio license is issued when the applicant has duly completed the
application of the communication equipment that the ship will have on board, and has complied with the
Clobal MariLime DisLress SaleLy SysLem {CMDSS).
A shipowner who does not provide any of the documents referred to in the provisional register may request a
period of grace of six months through a legal representative.
All vessels may be registered at a Panamanian consulate or directly at the Shipping Bureau in Panama. The
registration process begins with an application for registration. The following information is required to
complete the application for provisional registration:
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1. Present name of the vessel
2. Previous name of the vessel (if applicable)
3. Type of vessel
4. Name, nationality and full address of the owner
5. Previous country of registration, if applicable
6. Net and gross tonnage in accordance with 1969 International Tonnage Convention, if applicable
7. Principal dimensions ol Lhe vessel, in accordance wiLh 1969 lnLernaLional 1onnaqe CerLilcaLe, il
applicable
8. Number of decks, masts, funnels and bridges
9. Type and number of engines and cylinders with an indication of their length and diameter, as well as the
name and full address of the engine manufacturers, and year of manufacture
10. Speed of the vessel
11. NaLure ol service or Lrallc Lo be rendered by Lhe vessel
12. Name and address of the builder of the vessel, place and year of construction and material out of which
the hull was built
13. Name and full address of the party responsible for the radio station
14. Vessels legal representative in Panama
15. Name ol Lhe classilcaLion socieLy LhaL will issue Lechnical cerLilcaLes
16. Horsepower
17. Information about the radio and equipment
18. Areas of navigation
1he lollowinq documenLs required lor obLaininq Lhe permanenL reqisLraLion are Lo be lled wiLhin six monLhs
after the issuance of the provisional registration and authenticated by a Panamanian consul or by Apostille:
Prool ol ownership {bill ol sale or buildinq cerLilcaLe)
Power ol aLLorney on behall ol lrm lor reqisLerinq Lhe vessel
DeleLion cerLilcaLe/cancellaLion ol previous reqisLry {noL required lor new vessels)
Expenses and fees payable to the Panamanian authorities in connection with the registration of vessels under
Lhe Panamanian laq and annual currenL charqes are:
Annual tax at the rate of US$0.10 per net tonne or part thereof
Annual charge for investigation of accidents and participation in international conferences and treaties,
including tankers, drilling rigs, vessels engaged in the transportation of passengers, gas carriers and vessels
enqaqed in Lhe LransporLaLion ol chemical producLs: USS850
Registration fees (except yachts) US$
Vessels wiLh a CR1 ol up Lo 2,000 500
CR1 beLween 2,000 and 5,000 2,000
GRT between 5,000 and 15,000 3,000
GRT over 15,000 US$0.10 per each gross tonne 6,500
Fee Ior other vessels not specihed above: US$
WiLh a CR1 ol up Lo 500 300
GRT between 500 and 10,000 400
GRT over 10,000 500
ln addiLion, all vessels lisLed above shall pay USS0.03 per neL reqisLered Lonne or parL Lhereol.
Vessels exempted from the application of the above-mentioned charge included pleasure or private use
vessels and those without self-propulsion, other than drilling rigs.
Annual service rate
Vessel enqaqed in commercial acLiviLies such as qeneral carqo, passenqer Lrade, lshinq in Lhe hiqh seas,
drilling rigs, tug boats, dredgers:
Vessel wiLhouL sellpropulsion, and Lhose enqaqed in scienLilc research, supply, exploraLion, loaLinq dry
docks, submarines, crew boaLs or in any oLher acLiviLy LhaL is nonprolL or LhaL does noL consLiLuLe Lrade:
Annual inspection charges
US$
GRT up to 1,000 1, 200
GRT between 1,000 and 3,000 1,800
GRT between 3,000 and 5,000 2,000
GRT between 5,000 and 15,000 2,700
GRT over 15,000 3,000
Tankers and cargo vessels US$
GRT up to 500 500
GRT between 1,600 and 5,000 850
GRT between 5,000 and 15,000 1,000
GRT over 15,000 1,200
US$
GRT up to 500 850
GRT between 500 and 1,000 1,400
GRT over 1,000 1,800
Drilling rigs US$
GRT up to 500 500
GRT over 5,000 1,000
Passenger vessel US$
GRT up to 1,600 900
GRT over 1,600 1,800
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Special charges for pleasure vessels
Owners ol pleasure vessels or Lhose lor privaLe use pay a sole reqisLry charqe ol USS1,500 or USS1,000
if the owner is of Panamanian nationality. The fee must be paid every two years to allow the renewal of the
corresponding navigation and ratio license. The above-mentioned charge excludes the payment of any other
recurrent annual charge.
Dual registry
Owners ol dual reqisLry vessels pay an annual charqe ol USS150, plus USS0.20 per neL Lonne or parL
thereof.
Title registration
There is no charge for the registration of titles.
Special discounts
Pursuant to Decree No. 39 of 1987, the Shipping Bureau may authorize a discount on the registration
charqes lor a vessel Lo be reqisLered under Lhe Panamanian laq where siqnilcanL Lonnaqe is beinq
Lranslerred. A special applicaLion lor discounL musL be lled wiLh Lhe Shippinq Bureau prior Lo reqisLraLion.
Special discounts of up to 20% of registration fees are granted to groups of three or more ships representing a
qross reqisLered Lonnaqe ol 50,000 Lo 100,000 Lonnes, enLerinq Lhe Panamanian ReqisLry lor Lhe lrsL Lime.
Ships wiLh a CR1 ol more Lhan 100,000 are enLiLled Lo a 507 discounL.
Any shipowner or qroup ol shipowners lrom Lhe same lnancial qroup, whose vessels represenL a qross
registered tonnage of more than 100,000 tonnes, may obtain from the Shipping Bureau a discount on
registration fees equivalent to the amount of registration fees paid to the foreign registry for the registration
ol Lhe vessels beinq Lranslerred Lo Lhe Panamanian laq. However, Lhis discounL is available only il Lhe
shipowner guarantees to maintain the vessels registration in Panama for a minimum of four years.
1he Parallel ReqisLry sysLem was esLablished by means ol Law No. 11 ol 1973 and laLer alLered by Law No.
83 of the same year. According to these laws, a foreign vessel, subject to a bareboat charter for a period of
two years, could be registered in Panama for the same period without losing its previous registration.
Features:
1he Parallel ReqisLry is no lonqer reciprocal. Any vessel lrom any naLionaliLy may be able Lo obLain
registration only if the home jurisdiction has similar provisions allowing dual registration.
1iLle Lo Lhe vessel and encumbrances may only be reqisLered in Lhe home counLry |urisdicLion.
1he lscal obliqaLions ol Lhe vessel remain in ellecL irrespecLive ol Lhe Lype ol reqisLraLion under Lhe
Panamanian laq.
Cert|hcat|on of seafarers
In order to comply with the International Convention on STCW, the Administration has taken the relevant
acLion reqardinq Lhe proper examinaLion ol Lhe crew on board all ships reqisLered under Lhe Panamanian laq.
The Administration and Panamanian consulates all over the world are authorized to issue the aforementioned
cerLilcaLes Lo any sealarer who applies lor a cerLilcaLe, wheLher or noL he or she is employed Lo work on a
vessel reqisLered under Lhe Panamanian laq.
Procedure
An applicaLion lorm musL be lled wiLh Lhe 1echnical DeparLmenL ol Lhe Shippinq Bureau or wiLh Lhe
Panamanian consulates. The application must be lodged with the following documents:
Ollcer's CerLilcaLe ol CompeLence:
- A letter of recommendation from the company where the applicant is or was employed
1his documenL should be duly cerLiled by a Panamanian consul
Sealarer's reqisLer {special lorm Lo be used):
For new applicanLs: evidence ol acLiviLies perlormed durinq Lhe lasL lve years
- For renewals or promotions: evidence of activities performed during the last two years
A copy ol Lhe paqe ol Lhe idenLiLy card or passporL wiLh Lhe applicanL's qeneral daLa; lor renewals or
promoLions, Lhe relevanL provisional cerLilcaLe
Medical cerLilcaLe {special lorm supplied on requesL), duly cerLiled by a Panamanian consul
LiqhL color phoLos, each 3cm2, each bearinq Lhe name ol Lhe applicanL on Lhe back
Sealarer's CerLilcaLe:
1he same documenLs as lor Lhe ollcer's cerLilcaLe
Criminal record
Any cerLilcaLes or LiLles ol compeLency. A Panamanian consul should duly cerLily Lhe oriqinals and copies
of such documents
lL should be noLed LhaL Lhere is a sysLem Lo validaLe CerLilcaLes ol CompeLency or Sealarer's CerLilcaLes
issued by third parties. Countries that qualify are: Argentina, Australia, Brazil, Belgium, Canada, Colombia,
Croatia, Cuba, Czech Republic, Chile, Denmark, Ecuador, the Russian Federation, Slovenia, Spain, Finland,
France, Creece, Lhe NeLherlands, lndia, lreland, lsrael, lLaly, Japan, Mexico, Norway, New Zealand, PakisLan,
Peru, Poland, PorLuqal, Lhe Republic ol Korea, Cermany, Lhe People's Republic ol China, Sweden, SouLh
Alrica, 1aiwan, Ukraine, Lhe UniLed Kinqdom, Lhe UniLed SLaLes, Uruquay and Venezuela.
1echnical cerLilcaLes required by inLernaLional convenLions:
Passenqer Ship SaleLy CerLilcaLe
Carqo Ship SaleLy LquipmenL CerLilcaLe
Carqo Ship SaleLy RadioLeleqraphy CerLilcaLe
Carqo Ship SaleLy RadioLelephony CerLilcaLe
lnLernaLional Loadline CerLilcaLe
Minimum Manninq CerLilcaLe
ClassilcaLion CerLilcaLe
Duties have to be paid in order to register the ship.
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Philippines
1. Tax
Shipping income
Pursuant to Republic Act (RA) No. 9301 (approved on 27 July 2004) amending RA No. 7471, otherwise
known as the Philippine Overseas Shipping Development Act, a Philippine shipping enterprise is exempt from
payment of income tax on income derived from Philippine overseas shipping for a period of 10 years from the
date of approval of RA No. 9301 or until 27 July 2014, provided that:
1he enLire neL income, alLer deducLion ol noL more Lhan 157 Lhereol lor disLribuLion ol prolLs or
declaration of dividends, is reinvested in the construction, purchase or acquisition of vessels and related
equipmenL and/or in Lhe improvemenL or modernizaLion ol vessels and relaLed equipmenL.
1he cumulaLive amounL so reinvesLed shall noL be wiLhdrawn lor a period ol seven years alLer Lhe
expiration of the period of income tax exemption or until the vessel or related equipment so acquired has
been paid for in full, whichever date comes earlier.
Any amount not so invested or withdrawn prior to the expiration of the period stipulated above shall be
subject to the corresponding corporate income tax of 30%, including penalties, surcharges and interests.
Philippine shipping enterprise means a citizen of the Philippines or an association or corporation organized
under the laws of the Philippines, at least 60% of the capital of which is owned by citizens of the Philippines
and engaged exclusively in Philippine overseas shipping.
Philippine overseas shipping means the operation of a Philippine shipping enterprise in the overseas trade
of any type of Philippine-registered ship for any kind of shipping operation, which shall include, but shall not
be limiLed Lo, Lhe LransporL ol qoods and/or passenqers, Lhe purchase ol ships lor operaLion and Lhe sale ol
ships after operation, except when the ship is operated solely between ports in the Philippines.
On the other hand, an international carrier doing business in the Philippines pays tax at a rate of 2.5% on
iLs qross Philippine billinqs. "Cross Philippine billinqs" means qross revenue, wheLher lor Lhe LransporLaLion
ol passenqers, carqo or mail oriqinaLinq lrom Lhe Philippines up Lo Lhe lnal desLinaLion, reqardless ol Lhe
place ol sale or paymenL ol Lhe passaqe or lreiqhL documenLs {SecLion 28 [A| [3| [b| ol Lhe NaLional lnLernal
Revenue Code [NlRC|, as amended).
However, existing tax treaties entered into by the Philippine government allow residents of certain countries
to avail of reduced tax rates on their gross Philippine billings as low as 1.5%.
At present, tax treaties with the following 37 countries are in force in the Philippines:
Australia, Austria, Bahrain, Bangladesh, Belgium, Brazil, Canada, China, Czech Republic, Denmark,
Finland, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Malaysia, Netherlands, New
Zealand, Norway, Pakistan, Poland, Romania, Russian Federation, Singapore, South Korea (ROK),
Spain, Sweden , Switzerland, Thailand, United Arab Emirates, United Kingdom, United States of America,
Vietnam.
An exchanqe ol noLilcaLion ol a LreaLy wiLh Poland is pendinq, and LreaLies wiLh Chile {limiLed Lo shippinq),
Finland (protocol amending the convention), France (protocol amending the agreement), Indonesia
{reneqoLiaLed LreaLy), KuwaiL, Niqeria, OaLar and Sri Lanka are pendinq approval by Lhe Philippine SenaLe.
The treaties with Thailand (renegotiated) and Turkey are pending signature while the treaties with Brunei
Darussalam, Cermany {reneqoLiaLed), lran, Myanmar, Oman, Papua New Cuinea, Saudi Arabia {air
transport) and Tunisia are under negotiation.
Value-added tax
Domestic sea carriers are subject to 12% value-added tax (VAT) on their transport of passengers, goods or
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cargoes from one place in the Philippines to another place in the Philippines. Transport of passengers and
cargo from the Philippines to a foreign country by domestic sea carriers is subject to 0% VAT while the income
derived from their transport operations from a foreign country to the Philippines is VAT exempt. Any other
income incidenLal Lo Lheir operaLions shall be sub|ecL Lo 127 VA1 {SecLion 108 [B|[6| ol Lhe NlRC, amended
and Revenue Memorandum Circular [RMC| No. 03108, 30 January 2008).
Online international sea carriers are not subject to VAT. Instead, they are subject to a tax of 3% imposed
on their gross receipts from outbound fares and freight pursuant to Section 118 of the NIRC, as amended.
However, if online international sea carriers engage in other transactions that are not VAT-exempt under
SecLion 119 ol Lhe NlRC, Lhey shall be liable Lo Lhe 127 VA1 on Lhese LransacLions {RMC No. 03108).
The sale, importation or lease of passenger or cargo vessels, including engine, equipment and spare parts
lor domesLic or inLernaLional LransporL operaLions, are exempL lrom VA1 {SecLion 109 [S| ol Lhe NlRC, as
amended). To avail of these VAT exemptions, the requirements set forth in Republic Act No. 9295 must be
meL. Said requiremenLs include, amonq oLhers: 1) LhaL Lhe imporLaLion and local purchase ol passenqer and/
or cargo vessels shall be limited to those of 150 tons and above, including engine and spare parts of said
vessels, and 2) that the vessels to be imported shall comply with the age limit requirement, at the time of
acquisiLion counLed lrom Lhe daLe ol Lhe vessel's oriqinal commissioninq, as lollows: {i) lor passenqer and/
or cargo vessels, the age limit is 15 years; (ii) for tankers, the age limit is 10 years; and (iii) for high-speed
passenqer cralLs, Lhe aqe limiL is 5 years {SecLion ^, RA No. 9295 and RMC No. 03108).
Importation of fuel, goods and supplies for use by persons engaged in international shipping is VAT-exempt
provided that said fuel, goods and supplies shall be used exclusively in or shall pertain to the transport of
qoods and/or passenqers lrom a porL in Lhe Philippines direcLly Lo a loreiqn porL wiLhouL sLoppinq aL any
oLher porL in Lhe Philippines Lo unload passenqers and/or carqoes loaded in and lrom anoLher domesLic
port. Should any portion of such fuel, goods or supplies be used for purposes other than the foregoing, such
porLion ol luel, qoods and supplies shall be sub|ecL Lo 127 VA1 {SecLion 109 [1| ol Lhe NlRC, as amended,
and RMC No. 03108).
The sale of goods, supplies, equipment, fuel and services (including leases of property) to a common carrier
to be used in its international sea transport operations is subject to 0% VAT. It is required however, that the
same be limited to goods, supplies, equipment, fuel and services pertaining to or attributable to the transport
of goods and passengers from a port in the Philippines directly to a foreign port without docking or stopping
aL any oLher porL in Lhe Philippines Lo unload passenqers and/or carqoes loaded in and lrom anoLher domesLic
port. Thus, if any portion of such fuel, equipment, goods or supplies and services be used for purposes other
than those mentioned, such portion of fuel, equipment, goods, supplies, and services shall be subject to 12%
VA1 {SecLions 108 [B| [^| and 109 [S| ol Lhe NlRC, as amended and RMC No. 03108).
Import duties and taxes
Importation by a Philippine shipping enterprise operating or to operate ocean-going vessels that are
reqisLered or Lo be reqisLered under Lhe Philippine laq is exempL lrom imporL duLies and Laxes. Spare parLs
lor Lhe repair and/or overhaul ol vessels are likewise exempL lrom imporL duLies and Laxes, provided LhaL
such items are destined for or consigned to either: (a) a Philippine dry-docking or repair facility that is
accrediLed by Lhe MariLime lndusLry AuLhoriLy {MARlNA) and reqisLered as a cusLomsbonded warehouse
and will undertake the necessary repairs and work on the vessel or (b) the vessel in which the items are to
be installed. If such items are found in locations other than the two aforementioned ones or in places not
authorized by customs, the person or entity in possession of such items will be subject to full duties and taxes,
including surcharges and penalties.
Local manulacLurers or dealers who sell machinery, equipmenL, maLerials and spare parLs Lo a Philippine
shipping enterprise are entitled to tax credits for the full amount of import duties and taxes actually
paid, or on parts or components thereof, subject to the approval of the Secretary of Finance, upon the
recommendaLion ol Lhe MARlNA.
An individual citizen of the Philippines who is working and deriving income from abroad as an overseas
contract worker (OCW) is taxable only on income from sources within the Philippines. A seafarer who is a
citizen of the Philippines and who receives compensation for services rendered abroad as a member of the
complemenL ol a vessel enqaqed exclusively in inLernaLional Lrade is LreaLed as an OCW {SecLion 23 [C| ol Lhe
NIRC, as amended). To be considered an OCW, a seafarer must be duly registered as such with the Philippine
Overseas LmploymenL AdminisLraLion {POLA) and should have a valid Overseas LmploymenL CerLilcaLe
{OLC) wiLh a valid Sealarers ldenLilcaLion Record Book {SlRB) or Seaman's Book issued by Lhe MARlNA
{Revenue RequlaLions [RR| No. 0111).
With RA No. 10022 in effect, Filipino seafarers are now exempt from paying documentary stamp tax (DST)
on remittances and travel tax (Section 22).
1.3 Freight taxes (common carriers tax)
International shipping carriers doing business in the Philippines shall be taxed 3% of their quarterly gross
receipts (Section 118 of the NIRC, as amended). There are no shipping treaties that grant relief from freight
tax. Note, however, that since international shipping carriers doing business in the Philippines are already
subject to 3% tax on quarterly gross receipts, they shall no longer be subject to VAT pursuant to Section 109
(E) of the NIRC, as amended.
As discussed in secLion ^, CranLs and incenLives, Lhe shipowner can Lake advanLaqe ol special Lax benelLs
under RA No. 9295 (Domestic Shipping Development Act of 2004) or those provided by the Board of
Investments (BOI) under the Investments Priorities Plan (IPP) if the shipping operations are registered with
the BOI.
The House of Representatives adopted and approved Senate Bill (SB) No. 3343, which allows international
carriers to avail of preferential tax rates or exemption from the 3% tax on gross receipts from outbound fares
and freight on the basis of tax treaties to which the Philippines is a signatory or on the basis of reciprocity. SB
No. 3343 further expressly exempts the transport of passengers by international carriers from the 12% VAT.
SB No. 3343 |s enc|n arova| :or veto; w|tn tne ofhce of tne Pres|cent.
1he lorLhcominq Philippine MariLimeCode is a piece ol leqislaLion inLended as an omnibus code lor Lhe
country. It consolidates and updates exsting laws in Philippine shipping as well as incorporates standards
set forth in international agreements. Several versions of the legislation are pending with the House of
Representatives.
2. Human capital
According to the 2010 Overseas Employment Statistics issued by the POEA, an estimated 340,000 Filipino
seafarers were deployed worldwide for 2010.
DeploymenL ol sealarers by Lop 10 laqs ol reqisLry 200911
Flag of registry 2009 2010 2011
1. Panama 67,361 66,523 73,198
2. Bahamas 36,054 41,814 42,594
3. Liberia 29,796 32,561 38,752
4. Marshall Islands 18,068 21,824 24,026
5. Singapore 15,674 16,417 17,404
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2.1 Formalities for hiring and training personnel
Foreign and domestic shipping companies owning or operating vessels engaged in overseas shipping are required
to hire Filipino seafarers through a POEA-licensed manning agency (2003 POEA Rules and Regulations).
An employer who has idenLiled a Philippine manninq aqenL musL submiL Lhe lollowinq Lo Lhe POLA:
Manninq aqreemenL conLaininq, amonq oLher Lhinqs, Lhe responsibiliLies ol boLh principal and manninq
agency with respect to the employment of seafarers
Special power ol aLLorney
LisL ol ships and Lheir parLiculars, includinq lnLernaLional MariLime OrqanizaLion {lMO) number
Crew complemenL
Valid business license reqisLraLion cerLilcaLe or equivalenL documenL, or prool ol exisLence ol business
validaLed or cerLiled by Lhe issuinq auLhoriLy in Lhe hosL counLry
OLher documenLs Lhe POLA may lnd necessary
Lach sealarer assiqned on board a ship should hold Lhe appropriaLe cerLilcaLe in accordance wiLh Lhe
provisions ol Lhe 1978 SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq {S1CW) ConvenLion, now
amended as STCW 95. Personnel serving on board apart from the crew have to receive familiarization
training on safety matters.
1he Labor Code ol Lhe Philippines applies Lo crew members ol all Philippinelaqqed vessels.
RA No. 80^2, oLherwise known as Lhe MiqranL Workers and Overseas Filipino AcL ol 1995, as amended by RA
No. 10022, institutes the policies of overseas employment and establishes higher standards of protection and
promotion of the welfare of migrant workers, their families and overseas Filipinos in distress. With the amendment
of RA No. 8042 by RA No. 10022, Filipino seafarers deployed by a manning agency are now required to be
covered by a compulsory insurance policy at no cost to said workers (Section 23, RA No. 10022).
The POEA Standard Employment Contract for Seafarers primarily governs the employment relations between
Filipino seafarers on board oceangoing vessels and their employers.
In the Philippines, the prevailing requirement is that the personnel to be hired hold at least a tertiary degree
(i.e., a college degree). Seafarers must have passed the examinations required by the government and must
have oLher qualilcaLions and skills. OperaLions personnel should prelerably hold a Bachelor ol Science deqree
with a major in Customs. Previous work experience is important but not essential.
The collective agreements entered into by the seafarers and the management of the shipping company are
contained in the contract(s) signed by both parties. Seafarers are usually hired on a contract basis, covering a
period LhaL usually ranqes lrom 10 monLhs lor Lankers Lo 12 monLhs lor carqo rollon/rolloll {roro) vessels,
for example. These may be renewed or extended as agreed upon by the personnel and the management.
Shipping companies provide the personnel to man the ships. Shipowners pay the shipping companies
Flag of registry 2009 2010 2011
6. Malta 18,068 16,971 16,314
7. Bermuda 9,281 9,562 13,241
8. Italy 11,447 11,927 12,818
9. United Kingdom/ Cyprus (2011) 10,313 11,805 10,684
10. Netherlands 9,425 9,602 10,332
TOTAL 225,487 239,006 259,363
lor Lhe services ol Lhe crew. As delned by Lhe POLA, shippinq companies in Lhe Philippines musL
strictly abide by the laws of the republic with regard to the minimum wage and other mandatory
payments. The shipping companies are accountable for remitting wages to the seafarers. Shipowners,
on the other hand, are responsible for the health and disability insurance of the seafarers on board
their vessels.
Shipping companies in the country abide by the terms of the contract between the management and their
personnel so as to eliminate the risk of lawsuits arising from unlawful dismissal. Seafarers work a standard
eight-hour day, or as assigned by the management of the vessel. Furthermore, shipping personnel are also
given up to two and one-half days leave per month.
2.4.1 Dispute settlement procedures
In cases of claims and disputes arising from employment, parties covered by collective bargaining
agreements are governed by grievance procedures and arbitration clauses wherein both parties undertake
to avail of, or resort to, said grievance procedure before submitting the claim or dispute to the original and
exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators.
If the parties are not covered by a collective bargaining agreement, the parties may at their option submit the
claim or dispuLe Lo eiLher Lhe oriqinal and exclusive |urisdicLion ol Lhe NaLional Labor RelaLions Commission
{NLRC) or Lo Lhe oriqinal and exclusive |urisdicLion ol Lhe volunLary arbiLraLor or panel ol arbiLraLors. ll Lhere
is no provision as to the voluntary arbitrators to be appointed by the parties, the same shall be appointed
lrom Lhe accrediLed volunLary arbiLraLors ol Lhe NaLional ConciliaLion and MediaLion Board ol Lhe DeparLmenL
ol Labor and LmploymenL {DOLL).
The POEA shall exercise original and exclusive jurisdiction to hear and decide disciplinary action on cases that
are administrative in character, involving or arising out of violations of recruitment laws, rules and regulations
involving employers, principals, contracting partners and Filipino seafarers.
The Philippines has bilateral agreements on social security with Austria, Belgium, Canada, the Netherlands,
SwiLzerland and Lhe UniLed Kinqdom.
The salient features of the treaties include:
MuLual assisLance beLween Lhe Philippines and Lhe oLher counLry in Lhe leld ol social securiLy covered
members or benelciaries may lle Lheir claims wiLh Lhe desiqnaLed liaison aqencies ol Lhe Philippines or
the other country, which will extend assistance to facilitate the processing of claims.
LqualiLy ol LreaLmenL a Filipino covered by social securiLy shall be eliqible lor benelLs under Lhe same
conditions as the nationals of the other country, as shall his or her dependents and survivors.
LxporL ol social securiLy benelLs a Filipino shall conLinue Lo receive his or her benelLs wherever he or
she decides to reside, whether in the Philippines, in the other country or even in a third country.
1oLalizaLion crediLable membership periods in boLh Lhe hosL counLry and Lhe Philippines {excludinq
overlaps) shall be added Lo deLermine qualilcaLion lor benelLs.
ProraLed paymenL ol benelLs boLh Lhe hosL counLry and Lhe Philippines shall pay a lracLion ol Lhe
benelL due lrom Lheir respecLive sysLems, in proporLion Lo Lhe acLual conLribuLions or crediLable periods.
2. Mannin issues with Byin the PhiIippine Ba
PhilippinereqisLered ships are manned lully by Philippine ollcers and raLinqs, excepL as auLhorized by Lhe
MARlNA. Crew members musL meeL cerLain qualilcaLions reqardinq educaLion and skills {see secLion 2.3).
MosL shippinq companies operaLe as corporaLions and/or parLnerships and accordinqly are sub|ecL Lo
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applicable tax rates.
POEA-licensed manning agencies may be Filipino single proprietorships, partnerships or corporations at least 75%
of the authorized and voting capital stock of which is owned and controlled by Filipino citizens. POEA rules and
requlaLions require a minimum capiLalizaLion ol PHP2 million {t31,600) in Lhe case ol a sinqle proprieLorship or
parLnership and a minimum paidup capiLal ol PHP2 million {t31,600) in Lhe case ol a corporaLion.
ProlL disLribuLion will be Laxed based on Lhe lollowinq Lax raLes:
For corporaLions: 07 lor domesLic and residenL loreiqn corporaLe sLockholders and 157 lor nonresidenL
foreign corporations, subject to the condition that the country in which the nonresident foreign
corporation is domiciled allows a credit against the tax due from the nonresident foreign corporation,
equivalent to 15% of the taxes deemed to have been paid in the Philippines, beginning 1 January 2009
{SecLion 28 [B|[5|[b| ol Lhe NlRC, as amended). NonresidenL loreiqn corporaLions may avail ol Lhe
preferential rates under certain tax treaties.
For individuals, Lhe Lax raLe is 107 lor ciLizens and residenL loreiqners. However, lor nonresidenL
foreigners, the tax rate is 20% if they are engaged in trade or business in the Philippines and 25% if they
are not engaged in trade or business in the Philippines.
Branch remiLLances, on Lhe oLher hand, are Laxed aL 157, based on Lhe LoLal prolLs applied or earmarked
for remittance without any deduction for the tax component thereof (except those activities that are
reqisLered wiLh Lhe Philippine Lconomic Zone AuLhoriLy) {SecLion 28 [A|[5| ol Lhe NlRC, as amended).
Moreover, prelerenLial raLes may be availed ol under cerLain Lax LreaLy provisions.
4.1 Investment incentives under RA No. 9295 (Domestic Shipping Development
Act of 2004)
lnvesLmenL incenLives are qranLed Lo qualiled domesLic shipowners/operaLors and lor shipbuildinq and
ship repair:
VA1 exempLion:
lmporLaLion ol passenqer and/or carqo ships ol 150 Lons and above, includinq enqine spare parLs ol Lhe
imported ship
lmporLaLion ol lilesavinq equipmenL, lrelqhLinq sysLems and saleLy and rescue equipmenL
lmporLaLion ol carqohandlinq equipmenL LhaL is reasonably needed and Lo be used exclusively by Lhe
reqisLered domesLic shipowner/operaLor in his LransporL operaLions
Sale, Lransler and disposiLion ol Lhe abovemenLioned arLicles
NeL operaLinq loss carryover:
A neL operaLinq loss in any Laxable year immediaLely precedinq Lhe currenL Laxable year LhaL had noL been
previously offset as a deduction from gross income shall be carried over for the next three consecutive
taxable years immediately following the year of such loss.
"Oualiled domesLic shipowner/operaLor" shall mean a ciLizen ol Lhe Philippines, a commercial parLnership
wholly owned by Filipinos or a corporation at least 60% of the capital of which is owned by Filipinos that is
duly auLhorized by Lhe MARlNA Lo enqaqe in Lhe business ol domesLic shippinq.
4.2 Investment incentives granted by the BOI for shipping companies and the shipbuilding
industry under the IPP
A. Fiscal incentives
1. Income tax holidays:
1.1. New projects with pioneer status for six years
1.2. New projects with a non-pioneer status for four years
1.3. Expansion projects for three years
1.4. New or expansion projects in less-developed areas for six years
1.5. ModernizaLion pro|ecLs lor Lhree years
2. Exemption from taxes and duties on imported spare parts
3. Exemption from wharfage dues and export tax, duty, impost and fee
4. Tax credits
5. Additional deductions from taxable income
B. Nonlscal incenLives
1. Employment of foreign nationals
2. SimplilcaLion ol cusLoms procedures
3. Importation of consigned equipment for a period of 10 years
^. 1he riqhL Lo operaLe a bonded manulacLurinq/Lradinq warehouse
Requirements to qualify for BOI incentives pursuant to the 2012 IPP
Shipbuilding
Shipbuilding covers the construction and repair of ships or boats and includes ship breaking or ship recycling.
Prior to the start of commercial operations, the registered enterprise may be required to submit a copy of a
CerLilcaLe ol ReqisLraLion or iLs equivalenL lrom Lhe MARlNA or appropriaLe qovernmenL auLhoriLy.
Any of the following may qualify for pioneer status:
Shipbuildinq or ship repair laciliLies wiLh a minimum lilLinq capaciLy ol 20,000 deadweiqhL Lonnaqe
(DWT)
Shipbuildinq or ship repair laciliLies wiLh a minimum berLhinq capaciLy ol 7,500 DW1
Pro|ecLs LhaL cosL aL leasL Lhe Philippine peso equivalenL ol USS100 million {t7^ million) may be qranLed
pioneer status.
Water transport
Domestic/interisland shipping
DomesLic/inLerisland shippinq covers pure carqo, passenqer and passenqercarqo vessel operaLions, includinq
ro-ro terminal system (RRTS) operations.
1he lollowinq are Lhe qualilcaLions lor reqisLraLion:
1he reqisLranL musL be a MARlNAaccrediLed Philippine shippinq enLerprise.
Vessel musL be reqisLered and operaLed under Lhe Philippine laq.
Vessel musL comply wiLh Lhe lollowinq aqe limiLaLions:
1ankers, 10 years
Hiqhspeed cralL, 5 years
Passenqer/carqo, 15 years
1ankers, hiqhspeed cralL, roro vessels servinq primary rouLes and passenqer/carqo vessels musL have a
qross weiqhL ol 150 qross Lonnaqe {C1) or above.
1ankers musL be double hulled.
1he aqe ol Lhe vessel shall be reckoned lrom Lhe daLe ol launchinq based on Lhe Builder's CerLilcaLe or
CerLilcaLe ol Vessel ReqisLry.
Roro operaLors/enLerprises servinq missionary rouLes, as indicaLed in Lhe cerLilcaLe ol public convenience
{CPC) issued by Lhe MARlNA, may qualily lor pioneer sLaLus.
Overseas shipping
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1he reqisLranL musL be a MARlNAaccrediLed Philippine shippinq enLerprise.
Vessels musL be reqisLered and operaLed under Lhe Philippine laq.
Vessels musL be aL leasL 1,000 C1 and may noL be more Lhan 15 years old.
The acquisition of brand-new vessels may qualify for pioneer status.
The acquisition of additional vessels may be registered as a new project.
The lease or charter of a foreign-owned vessel with the option to purchase may be allowed.
Pure lease or bareboat charter may be allowed provided that (1) the lease contract is at least one year, and
(2) any replacement of vessels shall be covered by the enterprises existing registration involving the leased
vessel, which shall be valid for at least one year.
All applicaLions lor reqisLraLion musL be endorsed by Lhe MARlNA.
All vessels musL be seaworLhy and musL have valid class and sLaLuLory cerLilcaLes as may be required by
MARlNA.
Salvaging operations
Salvaqinq perLains Lo Lhe rescue ol a seriously damaqed or incapaciLaLed ship LhaL may include reloaLinq
and towing of the ship to a safe place. It also pertains to the removal of a sunken or wrecked ship, derelict or
hazardous, including its cargoes.
Only income from salvaging operations may be entitled to an income tax holiday.
All applications for registration must be endorsed by the concerned agency.
Logistics
This covers ports, terminals, warehouses and relocation of oil terminals.
Ports
This covers the development and operation of seaports.
All applications for registration must be endorsed by the PPA.
Terminals
This covers the development and operation of the following:
{a)Passenqer/inLermodal Lerminals
MusL provide shuLLle services and have new laciliLies wiLh parkinq, comlorL rooms, LickeLinq and
reservaLion ollce, and aircondiLioned waiLinq area
MusL caLer Lo shippinq lines or airlines and/or dillerenL land LransporLaLion sysLems {e.q., rail sysLem,
buses, taxis)
MusL have a sysLem ol inqress and eqress Lo prevenL Lrallc buildup and obsLrucLion ol Lhorouqhlares
on a 2^hour basis as cerLiled by Lhe DeparLmenL ol 1ransporLaLion and CommunicaLions {DO1C),
MeLropoliLan Manila DevelopmenL AuLhoriLy {MMDA) and/or oLher concerned aqency
{b)Carqo Lerminals/conLainer yards
MusL have new laciliLies
MusL have a sysLem ol inqress and eqress Lo prevenL Lrallc buildup and obsLrucLion ol Lhorouqhlares on a
2^hour basis as cerLiled by DO1C, MMDA and/or oLher concerned aqency
{c) LNC/CNC sLoraqe, disLribuLion and markeLinq laciliLies
MusL have new laciliLies
MusL caLer Lo shippinq vessels and land LransporL or a combinaLion ol boLh
MusL caLer Lo aL leasL one clienL oLher Lhan Lhe proponenL's own business
Prior to beginning commercial operation, the registered enterprise must submit a copy of its Permit to
Operate issued by the Department of Energy (DOE).
Autonomous Region of Muslim Mindanao (ARMM) list
ln addiLion Lo Lhe above, Lhe Reqional BOl ol Lhe ARMM has independenLly deLermined Lhe lollowinq prioriLy
activities in accordance with EO No. 458:
Shipbuildinq
Ship breakinq
Ship repair
WaLercralL
The above-mentioned activities will be entitled to incentives only when these activities are undertaken
wiLhin Lhe ARMM reqion, which comprises Lhe provinces ol Sulu, Maquindanao, Lanao del Sur, 1awiLawi,
Basilan and Sharill Kabunsuan. Pro|ecLs locaLed in Lhe ARMM reqion musL be reqisLered wiLh Lhe BOl
ARMM.
No special incentives are provided for environmental awareness in the Philippine shipping industry.
4.4 !ssues with Byin the PhiIippine Ba
A possible issue wiLh lyinq Lhe Philippine laq is Lhe imposiLion ol Lhe ^.57 wiLhholdinq Lax under SecLion 28
[B|[3| ol Lhe NlRC, as amended, which provides:
A nonresident owner or lessor of vessels shall be subject to a tax of 4.5% of gross rentals, lease or charters to
Filipino citizens or corporations, as approved by the Maritime Industry Authority.
1he MARlNA believes LhaL Lhe abovequoLed provision ol Lhe NlRC as amended is a disincenLive aqainsL
reqisLerinq under Lhe Philippine laq since Lhe lnancial burden is imposed on Philippinelaqqed vessels while
Lhe same Lax may noL be imposed on loreiqnlaqqed vessels carryinq Philippine carqo.
House Bill (HB) No. 4935, or The Investments and Incentives Code of the Philippines, rationalizes and
consolidates several tax incentive laws of the Philippines, including EO No. 226. Similar to EO No. 226, HB
No. 4935 grants various tax incentives based on areas of investment set out in an Investment Priorities Plan,
which, under the HB, shall be issued every three years.
Under HB No. ^935, incenLives qranLed Lo exisLinq reqisLered enLerprises shall conLinue Lo be leqally bindinq
in accordance with the terms and conditions stated thereof.
HB No. 4935 was approved by the House of Representatives on 15 August 2011 and submitted to the
Senate on 18 August 2011.
5.1 Infrastructure
5.1.1 Major ports
The Philippine Port System comprises more than 1,000 ports. Of this number, around 12%, or 123 seaports,
belong to or come under the PPA Port System, which consists of 21 base ports and 102 secondary ports (or
Lerminal porLs). 1he remaininq porLs are under Lhe |urisdicLion ol Lhe DO1C. 1he PPA PorL SysLem has lve
PorL DisLricL Ollces, each havinq |urisdicLion over all porLs wiLhin Lheir qeoqraphical LerriLory. 1he 21 ma|or
ports are:
1. Batangas City, Batangas
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2. Caqayan de Oro CiLy, Misamis OrienLal
3. CoLabaLo CiLy, Maquindanao
4. Davao City, Davao del Sur
5. Dumaguete City, Negros Oriental
6. Cen. SanLos CiLy, SouLh CoLabaLo
7. lliqan CiLy, Lanao del NorLe
8. Iloilo City, Iloilo
9. Jolo, Sulu
10. Leqaspi CiLy, Albay
11. Nasipit, Agusan del Norte
12. NorLh Harbor, Manila
13. Ozamis CiLy, Misamis OccidenLal
14. Puerto Princesa, Palawan
15. Pulupandan, Negros Occidental
16. San Fernando CiLy, La Union
17. SouLh Harbor, Manila
18. Surigao City, Surigao del Norte
19. 1acloban CiLy, LeyLe
20. Tagbilaran City, Bohol
21. Zamboanga City, Zamboanga del Sur
MosL porLs are required by Lhe PPA Lo have compulsory piloLaqe and Lowaqe.
The PPA provides a variety of facilities that support the Philippine shipping services, such as:
DomesLic and loreiqn qeneral carqo berLhs
MulLipurpose berLhs
Roro lerry laciliLies
FasLcralL and small lasLcralL berLhs
1ransiL sheds lor handlinq boLh domesLic and loreiqn carqo
Passenqer Lerminal buildinqs
ArrasLre service {carqo handlinq)
Open sLoraqe areas and oLher sLoraqe laciliLies
Carqocumpassenqer vessels
CoasLal Lowaqe services
MainLenance and repair laciliLies wiLh dockinq laciliLies
1wo ol Lhe ma|or porLs, SouLh Harbor and NorLh Harbor in Manila, are locaLed in Lhe NaLional CapiLal
Region (NCR), where a domestic airport and Ninoy Aquino International Airport are also located.
Domestic airports can also be found in major cities and provinces where various major and minor ports
are situated.
lnsurance companies and brokers lor Lhe shippinq indusLry
The BOI has listed the shipping industry under the IPP. Industries listed in the IPP are
eligible for several incentives. A number of associations and organizations composed of
companies involved in shipping have grouped together to espouse common interests. These
are Lhe AssociaLion ol lnLernaLional Shippinq Lines lnc. {AlSL), Lhe Philippine lnLernaLional
Sea Freight Forwarders Association (PISFA) and the Philippine Shippers Council
(SHIPPERCON).
There are 90 maritime schools in the Philippines providing education with the objective of complying with
national and international quality standards. The maritime courses offered in the Philippines are Bachelor
ol Science in Marine 1ransporL {BSM1) lor deck ollcers and Bachelor ol Science in Marine Lnqineerinq
{BSMarL) lor enqine ollcers. 1hese mariLime courses include Lraininq in naviqaLion, LechnicaliLies and
engineering of the vessel. Furthermore, these courses meet the present international requirements provided
in the STCW 95 Convention.
1he MARlNA, LoqeLher wiLh Lhe Prolessional RequlaLions Commission {PRC), has implemenLed a modern
sysLem ol examinaLion, includinq compuLerized services and a quesLion/answer daLabank lor Lhe examinaLion
and cerLilcaLion ol marine ollcers and raLinqs, in accordance wiLh Lhe convenLion.
Accordinq Lo Lhe Commission on Hiqher LducaLion {CHLD) Memorandum Order No. {CMO)
08, series ol 2001, and CHLD Memorandum Order No. {CMO) 19, series ol 2001, Lhere are 62
mariLime insLiLuLions. Ol Lhe idenLiled insLiLuLions, 55 are ollerinq BSM1 and 50 are ollerinq
BSMarL proqrams complianL wiLh Lhe S1CW 95 requiremenLs. An addiLional seven insLiLuLions
have also complied with the requirements and were approved by the Commission en banc during
its 147th meeting on 15 October 2001 (see list below). Through the coordinated efforts of
various agencies concerned, the Philippines is among the countries that made it to the white list
ol Lhe lMO.
1he CHLD's MariLime LducaLion UniL {MLU) was also cerLiled by Lhe inLernaLional cerLilyinq body, DeL
Norske Veritas (DNV), on 2 June 2000 for having complied with the Quality Standards System (QSS)
per RequlaLion l/8 ol Lhe S1CW 95. For Lhe year 2001, MLU's OSS successlully passed iLs lrsL surveillance/
periodic audit by DNV.
LisL ol mariLime schools LhaL have lully complied wiLh CHLD S1CW 95 requiremenLs
PLR CMO 8, S. 2001 AND CMO 19, S. 2001
Seven additional maritime education institutions were approved by the Commission en banc during its 147th
meeting on 15 October 2001:
Region Name and location
Programs
MT MarE
I 1 lnLernaLional MariLime and 1echnoloqy lnsLiLuLe, Daqupan CiLy ** P.O.
I 2 NorLhern Phil. Col. lor MariLime Science and 1echnoloqy, San
Fernando, La Union
* *
I 3 NorLhwesLern UniversiLy, Laoaq CiLy ** **
I 4 Panqasinan MerchanL Marine Academy, Daqupan CiLy * *
I 5 Philippine College of Science and Technology, Calasiao,
Pangasinan
** **
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MT MarE
I 6 PlMSA1 Colleqes, Daqupan CiLy * *
III 7 Baliwaq MariLime Academy, San Ralael, Bulacan * *
III 8 CenLral Luzon Colleqe ol 1echnoloqy, Olonqapo CiLy * *
III 9 MariLime Academy ol Asia and Lhe Pacilc, Mariveles, BaLaan ** *
III 10 Midway MariLime FoundaLion, CabanaLuan CiLy * *
III 11 Philippine MerchanL Marine Academy, Narciso Zambales ** **
IV 12 lnLerClobal MariLime Colleqe, Lucena CiLy ** N.O.
IV 13 Lyceum ol BaLanqas, BaLanqas CiLy * *
IV 14 Manuel S. Lnverqa UniversiLy, Lucena CiLy * *
IV 15 Palawan Polytechnic College, Puerto Princesa, Palawan * *
IV 16 UniversiLy ol PerpeLual Help SysLem ol Bian, Bian, Laquna P.O. **
V 17 Bicol MerchanL Marine Colleqe, Sorsoqon, Sorsoqon ** P.O.
V 18 Mariners PolyLechnic Colleqe FoundaLion, Canaman, Cam. Sur * *
V 19 Mariners PolyLechnic Colleqe FoundaLion, Rawiz, Leqaspi CiLy * *
V 20 UniversiLy ol SainL AnLhony, San Miquel, lriqa CiLy ** **
VI 21 Aklan PolyLechnic lnsLiLuLe, Osmena Ave., Kalibo, Aklan ** **
VI 22 Colegio dela Purisima Concepcion, Arsobispo Street, Roxas City N.O. **
VI 23 Iloilo State College of Fisheries, B. Nuevo, Iloilo ** N.O.
VI 24 John B. Lacson Colleqe FoundaLion, Arevalo, lloilo CiLy * N.O.
VI 25 John B. Lacson Colleqe FoundaLion, Bacolod CiLy * *
VI 26 John B. Lacson Colleqe FoundaLion, Molo, lloilo CiLy N.O. *
VI 27 M1C Colleqe, 1uqbauan, lloilo CiLy * *
VI 28 SainL 1herese Colleqes, Cen. Luna SLreeL, lloilo CiLy * *
VI 29 Visayan MariLime Academy, Sumaq, Bacolod CiLy ** **
VI 30 West Negros College, Bacolod City ** **
VII 31 Cebu State College of Science and Technology, Carmen, Cebu N.O. **
VII 32 PMl Colleqes Bohol, 1aqbilaran, Bohol ** **
VII 33 UniversiLy ol Cebu, Cebu CiLy * *
VII 34 UniversiLy ol Lhe Visayas, Cebu CiLy ** **
VIII 35 Naval Institute of Technology, Naval, Biliran ** **
VIII 36 Palompon lnsLiLuLe ol 1echnoloqy, LeyLe ** **
IX 37 Zamboanqa del Sur MariLime lnsLiLuLe ol 1echnoloqy, Paqadian CiLy ** **
IX 38 Zamboanqa SLaLe Col. ol Marine Sci. and 1ech., Zamboanqa CiLy ** *
Programs
MT MarE
X 39 Cagayan Capitol College, Cagayan de Oro City * *
X 40 Misamis lnsLiLuLe ol 1echnoloqy, Ozamis CiLy * *
X 41 Misamis UniversiLy, Ozamis CiLy * N.O.
X 42 Southern de Oro Philippine College, Cagayan de Oro City * N.O.
Xl 43 Agro-Industrial Foundation College of the Philippines, Davao City * *
Xl 44 Davao MerchanL Marine Academy, Davao CiLy * *
Xl 45 Holy Cross of Davao College, Davao City * N.O.
Xl 46 MA1S Colleqe ol 1echnoloqy, Davao CiLy * *
Xl 47 Mindanao PolyLechnic Colleqe, Ceneral SanLos CiLy * *
Xll 48 Lyceum ol lliqan, lliqan CiLy ** N.O.
CARACA 49 Agusan Institute of Technology, Butuan City * N.O.
CARACA 50 St. Joseph Institute of Technology, Butuan City * *
CARACA 51 Surigao Education Centre, Surigao City ** **
NCR 52 Asian lnsLiLuLe ol MariLime SLudies {AlMS), Pasay CiLy * *
NCR 53 NAMLl PolyLechnic lnsLiLuLe, Mandaluyonq CiLy P.O. **
NCR 54 Our Lady ol FaLima Colleqe, Valenzuela, Manila * *
NCR 55 Philippine MerchanL Marine School, 1alon, Las Pias * *
NCR 56 Philsin Marine 1echnoloqical Colleqes, SLa. Mesa, Manila * N.O.
NCR 57 PMl Colleqes, RoosevelL Ave., Ouezon CiLy * *
NCR 58 PMl Colleqes, LscolLa, Manila * N.O.
NCR 59 Technological Institute of the Philippines, Quezon City N.O. **
NCR 60 1echnoloqical lnsLiLuLe ol Lhe Philippines, Ouiapo, Manila * *
NCR 61 UniversiLy ol PerpeLual Help ol Rizal, Pamplona, Las Pias, MM P.O. **
NCR 62 WesL Bay Colleqes, MunLinlupa CiLy * *
35
(*)
31
(*)
20
(**)
19
(**)
Total 55 50
XII 1 Cotabato City Central College, Cotabato City For inspection
Crand LoLal 56 51
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5.1.6 Maritime training
1he MariLime 1raininq Council {M1C) was esLablished on 1 May 198^ by virLue ol LeLLer ol lnsLrucLion No.
1^0^ in keepinq wiLh Lhe Philippines' commiLmenL as a siqnaLory Lo Lhe lnLernaLional MariLime OrqanizaLion's
S1CW 78, now amended as S1CW 95. 1he M1C is aLLached Lo Lhe DOLL lor adminisLraLive and policy conLrol.
M1C's vision is Lo mainLain Lhe sLaLus ol Lhe Philippines as Lhe ma|or provider ol qualiled and compeLenL
seafarers in the world maritime labor market. Its mission is to ensure quality education and training for
Filipino sealarers and develop a sealarinq worklorce who are duly cerLiled, are qlobally compeLenL and
compliant with national and international standards, and aid the countrys maritime sector.
As of 23 December 2011, the following are the maritime training centers authorized and accredited by the
M1C:
Legend:
* Included in CMO 8, s. 2001
** Included in CMO 19, s. 2001
P.O. Phased out
N.O. Not offering
Region School Program
I 1
Philippine Academy ol MariLime LducaLion and 1echnical SLudies,
Aqoo, La Union
BSM1
I 2
Panqasinan Colleqe ol Science and 1echnoloqy, UrdaneLa,
Pangasinan
BSM1
IV 3 SouLhern Luzon Colleqe, Dasmarias, CaviLe BSM1
IV 4 UniversiLy ol PerpeLual Help SysLem ol Bian, Laquna BSM1
V 5 Bicol MerchanL Marine Colleqe, Sorsoqon, Sorsoqon BSMarL
NCR 6 Dr. Carlos S. LanLinq Colleqe 1andanq Sora Avenue, OC
BSM1
BSMarL
NCR 7 UniversiLy ol PerpeLual Help ol Rizal, Pamplona, Las Pias, MM BSM1
REGION MARITIME TRAINING CENTER
National Capital 1. Assessment and Research Center of the Philippines, Inc.
2. Baliwag Navigation, Inc.
3. Britannia Training Center
4. CompeLenL MariLime Prolessionals and Sea SLall 1raininq
Center, Inc.
5. Consolidated Training Systems, Inc.
6. LasLqaLe MariLime 1raininq CenLer, lnc.
7. Lpsilon MariLime Services, lnc.
REGION
National Capital 8. Excellence and Competency Training Center
9. FMFl MariLime FoundaLion, lnc.
10. FSC Training Center
11. Far LasL MariLime FoundaLion, lnc.
12. Clobal 1raininq CenLer
13. CPN lnLernaLional MariLime 1raininq CenLer, lnc.
14. CreaL Seas Mariners 1raininq and AssessmenL CenLer, lnc.
15. HanseaLic Shippinq Philippines, lnc. HanseaLic 1raininq
Institute
16. Harbor Training Center
17. Intership Navigation Training Center, Inc.
18. lLalian MariLime Academy Philippines, lnc.
19. l1l Philippines, lnc. Manila
20. KLine MariLime 1raininq CorporaLion
21. Lucky SLar MariLime 1raininq and Allied Services, lnc.
22. Maqsaysay 1raininq CenLer
23. Mariners PolyLechnic 1raininq CenLer
24. MariLech MariLime 1raininq SLudies and Manninq Services, lnc.
25. MariLime 1echnoloqical and Allied Services, lnc.
26. MariLime 1raininq CenLer ol Lhe Philippines
27. Marlow NaviqaLion 1raininq CenLer
28. Meridian lnLernaLional MariLime 1raininq CenLer
29. New Simulator Center of the Philippines
30. NN Ocean Link lnsLiLuLe
31. Northstar Training and Consultancy, Inc.
32. Norwegian Training Center
33. Nautical Options Training Institute of the Philippines, Inc.
34. Nyk-Fil Maritime E-Training
35. OSG Ship Management Manila, Inc.
36. Pentagon Maritime Foundation, Inc.
37. Philippine Center for Advanced Maritime Simulation and
Training, Inc.
38. Philippine Nautical Training Institute
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REGION
National Capital 39. Philippine Seafarers Training Center
40. Philsin MariLime 1echnoloqical Colleqe FoundaLion
41. PosFil M1C CorporaLion
42. Propellers FoundaLion MariLime Science and 1echnoloqy
Resources, Inc.
43. ProLecL Marine Deck and Lnqine Ollcers ol Lhe Philippines,
Inc.
44. Sandiqan MariLime 1raininq, lnc.
45. Seabase Training Center for Watchkeeping, Inc.
46. Seamac International Training Institute, Inc.
47. Sea OuesL MariLime 1raininq, lnc.
48. SeaLech MariLime 1raininq CenLer
49. Sharp MariLime SecuriLy 1raininq Services, lnc.
50. SouLhleld MariLime 1raininq FoundaLion, lnc.
51. SouLhern lnsLiLuLe ol MariLime SLudies Manila
52. Technological Institute of the Philippines
53. 1owers MariLime 1raininq CenLer
54. Tram Integrated Training Solutions, Inc.
55. ZRC Training Center Phils. Inc.
Reqion l llocos 1. Far LasL MariLime FoundaLion, lnc. Panqasinan
2. Panqasinan MerchanL Marine Academy
Reqion lll CenLral 1. International Development and Environmental Shipping
School
2. MariLime Academy ol Asia and Lhe Pacilc Amosup
Seamens Training Center
3. Philippine MerchanL Marine Academy
4. WarLsila Land and Sea Academy, lnc.
Reqion lV SouLhern Luzon 1. SouLhern lnsLiLuLe ol MariLime SLudies CaviLe
2. Lyceum ol Lhe Philippines UniversiLy MariLime 1raininq
Center
Reqion V Bicol 1. Mariners PolyLechnic Colleqe FoundaLion
2. Mariners 1raininq lnsLiLuLe
To underscore the governments commitment to further the maritime safety culture in the country, the
lnLernaLional SaleLy ManaqemenL {lSM) Code was ollcially adopLed lor implemenLaLion on domesLic vessels
of certain sizes required to be classed through the issuance of Flag State Administration Advisory No. 18 on
6 October 1998.
1o address Lhe needs and problems beseLLinq Lhe indusLry, specilcally ol mariLime saleLy, Lhe MARlNA board
issued Lhe lollowinq memorandum circulars {MCs):
Reqion Vl WesLern Visayas 1. Aklan PolyLechnic UniversiLy
2. Excellence and Competency Training Center
3. John B. Lacson FoundaLion, lnc.
4. SL. 1herese M1C Colleqes 1iqbauan
5. VMA 1raininq CenLer
Reqion Vll CenLral Visayas 1. Far LasL MariLime FoundaLion, lnc.
2. Cebu Reliable Excellent Seafarers Training Center
3. MariLech MariLime 1raininq SLudies and Manninq Services, lnc.
4. New Simulator Center of the Philippines
5. ProLecL Marine Deck and Lnqine Ollcers ol Lhe Philippines, lnc.
6. Philasia MariLime Services 1raininq CenLer, lnc.
7. UniversiLy ol Cebu MariLime 1raininq CenLer
8. UniversiLy ol Lhe Visayas MariLime Colleqes
Reqion Vlll LasLern Visayas 1. l1l Philippines, lnc. Samar
2. Netherlands Shipping Training Center
Reqion lX Zamboanqa
Peninsula
1. Zamboanqa MariLime 1raininq CenLer, lnc.
Reqion X Caqayan De Oro 1. NorLhwesLern Mindanao lnsLiLuLe ol 1echnoloqy
2. Surigao Education Center
Reqion Xl Davao 1. DMMA Colleqe ol SouLhern Philippines
2. Holy Cross of Davao College, Inc.
3. MA1S Colleqe ol 1echnoloqy
Reqion Xll SOCCSARCLN 1. MA1S 1raininq CenLer Cen San
Reqion Xlll CARACA 1. Surigao Education Center
CovernmenL MariLime 1raininq
Institution
1. NaLional MariLime PolyLechnic
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1he MARlNA board also issued Lhe lollowinq relaLed MCs and advisories {MAs):
MC No. Year Subject
175 2002 MandaLory Display ol Lhe Maximum AuLhorized Passenqer CapaciLy
for Passenger-Carrying Bancas with Open-Deck Accommodation
and Similar Watercrafts
176 2002 Wearinq or Holdinqs ol LileJackeLs by Passenqers ol MoLorized
Bancas and Similar Water Transport Carrying Passengers
177 2002 RequlaLions Amendinq ChapLer XV ol Lhe 1997 PMMR on Lhe
ReqisLraLion, DocumenLaLion and Licensinq ol Ships
178 2002 AmendmenLs Lo Memorandum Circular No. 152 on Lhe MandaLory
Dry-Docking of Ships
193 2003 Rules on Lhe lmplemenLaLion ol MariLime SecuriLy Measures lor
Philippine-Registered Ships Engaged in International Voyages
194 2003 Rules on Lhe Provision/lnsLallaLion ol Ship SecuriLy LquipmenL
197 2003 Revised Rules Lo RaLionalize LileSavinq Appliances RequiremenLs
under ChapLer lX ol Lhe PMMRR 1997
203 2005 Rules Coverninq Lhe lmplemenLaLion ol Lhe Ship SaleLy lnspecLion
System (SSIS)
205 2005 Amendinq MC No. 203 on Lhe Rules Coverninq Lhe lmplemenLaLion
of the SSIS
2006-01 2006 Rules on AccrediLaLion ol ManulacLurers/Suppliers/Servicinq
LnLiLies ol LileSavinq and OLher SaleLyRelaLed Appliances/
Equipment
2006-03 2006 Revised Cuidelines in Lhe AccrediLaLion ol DomesLic Shippinq
Enterprises or Entities
2006-04 2006 AmendmenL Lo MARlNA Circular No. 200601 on Lhe Rules on
AccrediLaLion ol ManulacLurers/Suppliers/Servicinq LnLiLies ol Lile
Savinq and OLher SaleLy RelaLed Appliances/LquipmenL
2006-06 2006 Revised Cuidelines in Lhe lssuance ol Special PermiL {SP)
Lo OperaLe Ships in Lhe DomesLic 1rade Due Lo MeriLorious
Circumstances
MC No. Year Subject
01-07 2007 Rules Lo lmplemenL Double Hull RequiremenL under MARPOL 73/78,
Annex I, as Amended, on Oil Tankers Operating in Philippine Domestic
Waters
02-08 2007 Rules Lo lmplemenL MasLer's OaLh ol Voyaqe
03-08 2007 Rules and Regulations to Implement the Code of Safe Practice for Cargo
Stowage and Securing in Domestic Shipping
08-08 2008 Rules Lo lmplemenL SaleLy Measures lor Passenqer Ships wiLh Open
Deckhouse
01-09 2009 Rules Coverninq MandaLory Marine lnsurance Lo Cover Leqal LiabiliLies
Arisinq ouL ol Any MariLime RelaLed AccidenLs
1he MARlNA is Lhe aqency Lasked wiLh implemenLinq Lhe rules and requlaLions on minimum manninq
requiremenLs lor domesLic/inLernaLional vessels and lshinq vessels. ln adopLinq Lhe 1able ol Minimum Sale
Manninq prescribed, Lhe MARlNA recoqnized Lhe principles ol sale manninq under lMO ResoluLion No. A.
^81 {Xll). Sale manninq under Lhese rules will Lherelore mean LhaL Lhe crew includes sullcienL ollcers and
raLinqs wiLh appropriaLe skills and experience Lo ensure compliance wiLh Lhe principles. FurLhermore, MARlNA
will issue a cerLilcaLe ol inspecLion wiLh each vessel's minimum sale manninq requiremenLs, indicaLinq Lhe
numbers and grades of the personnel required to be carried, together with any special conditions or other
remarks.
1he MARlNA implemenLs special requlaLions on saleLy and Lhe environmenL by issuinq various MCs. lL has
also organized the Vessel Safety Inspection System (VSIS) to help to ensure vessel seaworthiness. The
system provides a manual of procedures for the conduct of periodic vessel safety inspections by authorized
MA No. Year Subject
01-07 2007 ApplicaLion lor AuLhoriLy Lo Allow Marine Surveyors, Supercarqoes,
Shipowner Representatives and Other Persons on board Ships in the
Domestic Trade
02-07 2007 Allowing Certain Personnel to Command Fishing Vessels Irrespective of
Lhe LimiLaLion in 1heir License
03-07 2007 LxLension ol Lhe lmplemenLaLion ol Lhe MARlNA Advisory Nos. 2006
004 (Acquired Recurrency Training for Seafarers on board Ships
Lnqaqed in DomesLic 1rade) and 2006005 {OualilcaLion DocumenL
CerLilcaLe [ODC| RequiremenL ol All DomesLic Sealarers)
05-07 2007 Compulsory Passenger Insurance Coverage
06-08 2008 lmplemenLaLion ol lMO ResoluLion A.955{23) AmendmenLs Lo Lhe
Principles ol Sale Manninq ResoluLion A.890{21)
11-08 2008 ReporLs on Marine CasualLies and lncidenLs
04-09 2009 Marine Circular 200901 on Lhe "Rules Coverninq Lhe MandaLory
Marine lnsurance Lo Cover Leqal LiabiliLies Arisinq ouL ol Any MariLime
Related Accidents
07-09 2009 Measures Lo PrevenL and Suppress Lhe AcLs ol Piracy and Armed
Robbery Against Ships off the Coast of Somalia
11-09 2009 PracLical Measures Lo Survive as a HosLaqe in a Piracy ALLack
12-09 2009 BesL ManaqemenL PracLices Lo DeLer Piracy in Lhe Cull ol Aden and oll
the Coast of Somalia
13-09 2009 ProhibiLion ol MandaLory Sale ol AddiLional lnsurance Policy Lo
Passengers Prior to Boarding
14-09 2009 PrevenLion and ConLrol ol lnluenza A {H1N1) in MARlNA
15-09 2009 Submission ol NoLice Lo MARlNA Whenever a Ship lnLends Lo Pass
1hrouqh Lhe CoasL ol Somalia or Cull ol Aden or Horn ol Alrica or Areas
of Enhanced Risk
18-09 2009 lnluenza A {H1N1) PrevenLion and ConLrol in Lhe DillerenL 1ransporL
Facilities
29-09 2009 MoraLorium on AccrediLaLion/Renewal ol AccrediLaLion ol
ManulacLurers/Suppliers/Servicinq LnLiLies ol LileSavinq and OLher
SaleLyRelaLed Appliance/LquipmenL
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and trained government inspectors.
5.3 Registration
1he MariLime SaleLy Ollce Ship ReqisLraLion and Licensinq Division under MARlNA qoverns vessel
registration in the country. New foreign-built vessels, locally built vessels and vessels leased from foreign
nationals for a period of time are required to submit the items listed in section 5.3.2 below for registration.
ln addiLion Lo Lhe above, Lhe Bureau ol CusLoms {BOC) and Lhe MARlNA have siqned a memorandum ol
aqreemenL {MOA) daLed 15 AuqusL 2007, which requires vessel owners Lo submiL a cerLilcaLe ol conversion
(COC) as clearance for payment of duties and taxes from the BOC as a requirement for registration of
imporLed vessels in Lhe MARlNA.
1he MOA covers loreiqn and imporLed ships and oLher vessels converLed Lo Lhe Philippine laq or reqisLry. 1he
MOA excludes miliLary or qovernmenL seacralL or vessels.
lmporLed ships and vessels previously reqisLered wiLh Lhe MARlNA will also be sub|ecL Lo a posLenLry audiL by
Lhe BOC wiLhin Lhree years Lo check wheLher Lhere have been any delciencies in Lhe duLies and Laxes.
Vessels should be reqisLered wiLh Lhe MariLime SaleLy Ollce Ship ReqisLraLion and Licensinq Division.
1he ollce provides a checklisL ol iLems Lo be compleLed and presenLed wiLh reqard Lo Lhe applicaLion lor
reqisLraLion. Four Lypes ol reqisLraLion are accepLed and processed by Lhe ollce. 1he ollcial requiremenLs ol
such applications are as follows:
New foreign-built vessels:
ApplicaLion lor cerLilcaLe ol ownership {CO)/cerLilcaLe ol vessel reqisLraLion {CVR)
Approved plans by MARlNA under Lhe Shipyard RequlaLion Ollce {SRO)
CerLilcaLe lrom Lhe classilcaLion socieLy LhaL supervised or manaqed Lhe consLrucLion ol Lhe vessel
DomesLic Shippinq Ollce {DSO) approval lor imporLaLion
Clearance lrom DSO lor reqisLraLion ol Lhe vessel
CerLilcaLe lrom Lhe MariLime Shippinq Ollce {MSO) reqardinq Lhe BOC release
Builder's cerLilcaLe
AdmeasuremenL cerLilcaLe
AlldaviL ol ownership
Company's Lax idenLilcaLion number
Prool ol paymenL ol imporL duLies and Laxes lrom Lhe BOC
Clearance ol Lhe vessel's name lrom Lhe MariLime lnlormaLion SysLem Ollce {MlSO)
New buildinq/alLeraLion/conversion ol vessels locally:
ApplicaLion lor CO/CVR
MARlNA approval Lo acquire Lhrouqh local consLrucLion
Approval ol plans belore consLrucLion/alLeraLion/conversion under Lhe SRO
CerLilcaLe in evidence ol Lhe lacL LhaL Lhe vessel is builL in accordance wiLh approved plans {SRO)
Builder's cerLilcaLe
AlldaviL ol ownership
ll Lhe applicanL is a new company or a corporaLion, accrediLaLion lrom DSO
Prool ol remiLLance Lo Lhe Bureau ol lnLernal Revenue {BlR) ol Lhe 107 VA1 lrom Lhe builders
Clearance ol Lhe vessel's name lrom MlSO
Cert|hcate of vesse| re|strat|on for oareooat cnarterec vesse|s:
ApplicaLion lor CVR
Approval ol DSO ol Lhe bareboaL charLer
Clearance lrom DSO Lo reqisLer Lhe vessel
Prool ol paymenL ol BlR documenLary sLamp Lax on charLer properLy
CerLilcaLe lrom MSO reqardinq Lhe BOC's release
Approval ol plans lrom SRO
Clearance ol Lhe vessel's name lrom MlSO
1o proLecL iLs inLeresLs, a morLqaqee ol a bareboaL charLered vessel may lle a precauLionary noLice wiLh Lhe
MARlNA.
Change of ownership of vessel/local sale of vessel:
ApplicaLion lor CO/CVR
Deed ol absoluLe sale wiLh board resoluLion, il Lhe seller is a corporaLion
Clearance lrom DSO il Lhe vessel is imporLed
Surrender ol oriqinal CO/CVR {il losL, submiL alldaviL ol loss duly noLarized)
Check or verily il Lhe vessel is morLqaqed; il morLqaqed, proponenL is Lo secure Lhe consenL ol morLqaqe
A Philippine shipping company may bareboat charter foreign vessels, and this should be registered with the
MariLime SaleLy Ollce Ship ReqisLraLion and Licensinq Division. Submission ol a cerLilcaLe ol consenL by Lhe
original port of registry is required.
PhilippinereqisLered ships are manned wholly by Philippine ollcers and raLinqs, excepL as auLhorized by Lhe
MARlNA. MasLers, ollcers and raLinqs on board PhilippinereqisLered ships should be qualiled, compeLenL
and medically lL in accordance wiLh Lhe rules and requlaLions. Crew who are perlorminq waLchkeepinq duLies
have Lo meeL Lhe cerLilcaLion requiremenLs ol S1CW, as amended, and Lhose noL perlorminq waLchkeepinq
duties have to attend basic safety training.
MasLers and lrsL ollcers lor voyaqes {coasLwise, bay, river) musL be holders ol a ship radio mobile operaLor's
cerLilcaLe issued by Lhe NaLional 1elecommunicaLions Commission {N1C). Vessels cerLiled by a recoqnized
classilcaLion socieLy and/or Lhe N1C lor compliance wiLh Lhe Clobal MariLime DisLress and SaleLy SysLem
{CMDSS) requisiLe are noL required Lo have a radio ollcer on board.
Ships should have medical personnel on board in proportion to the number of passengers and the duration
ol Lhe voyaqe. Such medical pracLiLioners and paramedics have Lo aLLend an orienLaLion/relresher course on
public health in relation to ship sanitation conducted by the health authority.
Special manninq requiremenLs apply only Lo lshinq vessels enqaqed in inLernaLional voyaqes.
1he Philippines is a member ol Lhe lMO ol Lhe UniLed NaLions {UN), an aqency Lasked Lo improve mariLime
safety and reduce pollution from ships.
ln a meeLinq on 6 December 2007 wiLh lMO SecreLary LlLhimios MiLropoulos, Philippine PresidenL Cloria
Macapaqal Arroyo inviLed Lhe lMO Lo hold a conlerence on Lhe S1CW lor Sealarers ConvenLion and iLs
AmendmenLs in Lhe Philippines in Lhe lrsL quarLer ol 2010. On 11 December 2007, Lhe lMO, Lhrouqh
SecreLary MiLropoulos, accepLed Lhe inviLaLion lrom PresidenL Arroyo.
ln addiLion Lo Lhe above, Lhe Philippines is also parL ol Lhe BruneilndonesiaMalaysiaPhilippinesLasL
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ASLAN CrowLh Area {BlMPLACA), qranLinq inLerisland/coasLwise vessels an LACA special permiL, which is
renewable yearly. By virLue ol Lhe BlMPLACA, Lhe PhilippinereqisLered ship LhaL will enqaqe in inLernaLional
Lrade wiLhin Lhe BlMPLACA is exempL lrom Lhe requiremenL LhaL domesLic vessels serve Lhe domesLic Lrade
for at least one year. Furthermore, the special permit may be used during the whole duration of the charter
period. 1he vessels are also required Lo comply wiLh Lhe lSM Code.
Philippine shipping companies that own, manage or operate Philippine-registered vessels plying international
waters should submit the following documents for special registration:
A MARlNA cerLilcaLe ol accrediLaLion
A cerLiled copy ol Lhe arLicles ol incorporaLion, duly reqisLered wiLh Lhe SecuriLies and Lxchanqe
Commission {SLC), in Lhe case ol a corporaLion or parLnership, or a cerLilcaLe ol reqisLraLion ol Lhe lrm
or business name with the Bureau of Domestic Trade, in the case of single proprietorship
A sureLy bond ol PHP200,000 {t3,650) lrom a repuLable bondinq company, duly accrediLed by Lhe
Insurance Commission, the validity of which should be coterminous with the validity of registration
A copy ol Lhe cerLilcaLe ol approval ol Lhe bareboaL charLer
A Philippine CoasL Cuard cerLilcaLe ol reqisLraLion
Portugal
1. Tax
Corporate income tax (IRC)
The standard IRC rate is 25%. The standard IRC rate is reduced to 17.5%, except for certain activities in the
Azores. In addition, a municipal surcharge is due, although not imposed on certain municipalities, of up to
1.57 ol Laxable prolLs {income belore deducLion ol Lax losses, il any). An addiLional sLaLe surcharqe, which
is cumulative with the municipal surcharge, is also applicable in all Portuguese territory, including the Azores
and Madeira. 1his surcharqe is levied aL Lhe raLe ol 37 lor Laxable prolL exceedinq t1,500,000 and up Lo
t7,500,000 and 57 lor Lhe Laxable prolL exceedinq t7,500,000.
IRC and applicable surcharges apply to companies and other corporate entities, including public enterprises,
cooperaLives and nonprolL orqanizaLions. Branches ol loreiqn companies in PorLuqal are sub|ecL Lo Lhe same
tax regime as resident entities.
However, under Lhe PorLuquese lRC Code, Lhe PorLuquesesourced prolLs ol a nonresidenL shippinq company
derived from the exploitation of ships may be exempt, provided there is reciprocity towards Portuguese
companies and such reciprociLy is recoqnized by Lhe MinisLer ol Finance. Such recoqniLion has already been
granted to several companies. An exemption may also be available under double tax treaties.
1he lRC Code allows lor an exempLion ol 507 ol Lhe capiLal qains realized wiLh Lhe disposal ol Lanqible lxed
assets, investment properties or biological assets for transforming if the sales proceeds are reinvested in the
acquisiLion or consLrucLion ol oLher lxed asseLs, invesLmenL properLies or bioloqical asseLs lor Lranslorminq
in the year of sale, in the previous year, or in the two subsequent years after the sale.
As lor naLional merchanL shippinq companies, Lhe 1ax lncenLives Code {LBF) sLaLes LhaL only 307 ol prolLs
arising exclusively from maritime transport activity are subject to tax.
Stamp duty
Foreiqn lnancinq operaLions lor Lhe acquisiLion ol ships, conLainers and oLher equipmenL enLered inLo by
merchanL shippinq companies are exempL lrom sLamp duLy, even il such lnancinq is obLained Lhrouqh
naLional lnancial insLiLuLions.
Madeira International Shipping Register (RIN-MAR)
Currently, a favorable tax regime is in force for income arising from qualifying shipping activities carried out
wiLhin Lhe Madeira lnLernaLional Business CenLre {MlBC). 1his reqime was approved as in line wiLh Luropean
Union {LU) sLaLe aid rules and qrandlaLhered by Lhe LU Commission.
1he RlNMAR applies Lo companies licensed and incorporaLed in Lhe MlBC lrom 2007 Lo 2013, which may
benelL lrom Lhe Lax reqime currenLly in lorce in Lhe MlBC. Shippinq companies LhaL were licensed Lo operaLe
wiLhin Lhe MlBC under Lhe previous Lax reqimes, which were in lorce unLil 2011, lall under Lhe currenL
Lax reqime in lorce in Lhe MlBC {il a declaraLion was issued by Lhe licensinq auLhoriLies no laLer Lhan 30
December 2011).
1he MlBC Lax reqime applies only Lo income obLained by:
LnLiLies licensed lrom 2007 unLil 31 December 2013 {or by enLiLies licensed under Lhe previous Lax
reqimes in lorce unLil 2011 and ellecLively Lranslerred Lo Lhe currenL reqime) Lo operaLe wiLhin Lhe MlBC
Carryinq on LransporLaLion acLiviLies, provided LhaL such acLiviLies are carried ouL wiLhin Lhe scope ol Lhe
MlBC, excepL lor income arisinq lrom Lhe LransporL ol passenqers or carqo beLween PorLuquese porLs
Accordinq Lo Lhe MlBC reqime, companies benelL lrom a reduced lRC raLe ol 57 unLil 31 December 2020.
1he enLiLies LhaL wish Lo en|oy Lhe benelLs ol Lhis special reqime will have Lo iniLiaLe Lheir acLiviLy wiLhin
six months, in the case of international services, or one year, in the case of industrial activities or maritime
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registration, as from the date of license. They must also comply with one of the following requirements:
CreaLion ol one Lo lve |obs in Lhe lrsL six monLhs ol acLiviLy and a minimum invesLmenL ol t75,000 in Lhe
acquisiLion ol Lanqible or inLanqible lxed asseLs durinq Lhe lrsL Lwo years ol acLiviLy
CreaLion ol six or more |obs in Lhe lrsL six monLhs ol acLiviLy
1hese enLiLies will be sub|ecL Lo a limiLaLion on Lhe benelLs Lo be qranLed Lhrouqh Lhe applicaLion ol ceilinqs
on taxable income, according to the following terms:
t2 million lor Lhe creaLion ol 1 Lo 2 |obs
t2.6 million lor Lhe creaLion ol 3 Lo 5 |obs
t^0 million lor Lhe creaLion ol 51 Lo 100 |obs
t150 million lor Lhe creaLion ol more Lhan 100 |obs
The application of these ceilings shall be undertaken according to the number of jobs at the end of each year
of activity.
On 18 August 2009, an administrative order was issued by the Regional Secretary for the Plan and Financing
ol Lhe AuLonomous Reqion ol Madeira, which delnes several siLuaLions where a |ob exisLs lor Lhe purposes
ol ascerLaininq Lhe applicable ceilinq on an enLiLy operaLinq in Lhe MlBC. 1he delniLion ol |ob conLemplaLed
in Lhis order is very broad. 1he aim ol Lhis broad delniLion is Lo qranL lexibiliLy Lo Lhe enLiLies operaLinq in
Lhe MlBC Lo have an appropriaLe number ol |obs, connecLed wiLh MlBC acLiviLies, allowinq Lhese enLiLies Lo
achieve the desirable ceiling of taxable income.
LnLiLies invesLinq in companies licensed in Lhe MlBC are qenerally enLiLled Lo a LoLal exempLion lrom
PorLuquese wiLhholdinq Lax on mosL Lypes ol inLeresL, royalLy and service paymenLs. Under Lhe ParenL
Subsidiary DirecLive, dividends paid Lo LU qualilyinq shareholders may be exempL ol wiLhholdinq Laxes,
provided that certain conditions are met. Portugal has an extensive double tax treaty network that may
entitle reduced withholding tax rates on dividends paid to nonresident entities eligible under such treaties.
Accordinq Lo Lhe Reqional Decree No. 2/2011/M, Lhe sLaLe surcharqe does noL apply Lo enLiLies incorporaLed
and licensed Lo operaLe wiLhin Lhe MlBC.
MlBC enLiLies benelL lrom a lull sLamp duLy exempLion on documenLs, books, papers, conLracLs, LransacLions,
acts and products, provided no Portuguese entities (including permanent establishments of foreign
companies) ouLside Lhe MlBC are involved.
1he crew members ol Lhe vessels reqisLered in Lhe RlNMAR lallinq wiLhin Lhe scope ol Lhe MlBC will be
exempt from personal income tax (IRS). Such exempt income, however, will count in the determination of
the progressive rates of the tax on income not so exempted.
As sLaLed above, crew members who are reqisLered in Lhe RlNMAR and who are wiLhin Lhe scope ol Lhe MlBC
are exempt from IRS.
Portugal has concluded several bilateral tax treaties for the avoidance of double taxation and the prevention
ol lscal evasion reqardinq Laxes on income and capiLal, which are based on Lhe OrqanisaLion lor Lconomic
Co-operation and Development (OECD) model convention, with the following countries:
Algeria, Austria, Belgium, Barbados*, Brazil, Bulgaria, Canada, Cape Verde, Chile, China, Colombia*, Cuba,
Cyprus*, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Guinea-Bissau*, Hong
Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan*, Korea (ROK), Kuwait*, Latvia ,
Lithuania , Luxembourg, Macau, Malta, Mexico, Moldova, Morocco, Mozambique, Netherlands, Norway,
Pakistan, Panama, Peru*, Poland, Qatar*, Romania, Russia, Singapore, Slovak Republic, Slovenia, South
Africa, Spain, Sweden , Switzerland, Timor-Leste*, Tunisia, Turkey, Ukraine, United Arab Emirates, United
Kingdom, United States of America, Uruguay, Venezuela.
* Treaty already signed but not yet in force
Based on the OECD model convention, the place of effective management determines the country that will
have the right to tax international shipping operations.
See section 1.1 above.
No major changes are expected to Portuguese tax law in the near future regarding shipping activities.
2. Human capital
According to Portuguese law, an individual to be hired as a seafarer must be registered as a maritime
ollcer" and hold a valid mariLime cerLilcaLe.
FurLhermore, Lhe employmenL aqreemenL musL be drawn up in wriLinq and musL conLain specilc clauses,
including the professional category and remuneration.
In general, national labor law applies to vessels registered in Portugal.
Accordinq Lo PorLuquese labor law, collecLive labor aqreemenLs {CLAs) Lake precedence over labor law il
they are more favorable.
Several CLAs have been concluded, includinq Lhe CLA wiLh Lhe Union ol MariLime Lmployers, which have
special requlaLions. CLAs diller amonq employers.
EU social security regulations
Under Lhe LU social securiLy requlaLions, a sealarer who is an LU naLional or cerLain persons who are
leqally residenL in Lhe LU and employed on board a vessel lyinq Lhe laq ol an LU Member SLaLe will
normally be sub|ecL Lo Lhe social securiLy leqislaLion ol LhaL Member SLaLe. CerLain excepLions apply Lo Lhis
general rule.
Bilateral agreements
PorLuqal has siqned bilaLeral social securiLy aqreemenLs wiLh several nonLU counLries, alLhouqh
the terms of the agreements vary considerably. In order to determine an individuals liability or
benelL enLiLlemenL, iL is imporLanL Lo consulL Lhe parLicular aqreemenL relaLinq Lo Lhe individual's
home country.
1o prevenL double social securiLy Laxes and Lo ensure benelL coveraqe, PorLuqal has concluded bilaLeral
agreements with the following countries:
Andorra, Argentina, Australia, Brazil, Canada Quebec, Cape Verde, Channel Islands, Chile, Moldova,
Morocco, Tunisia, Ukraine, United States of America, Uruguay, Venezuela.
BilaLeral aqreemenLs have also been siqned wiLh Anqola, Cuinea and So 1ome and Principe, buL Lhey are noL
yet in force.
2.5 Mannin issues with Byin the Pcrtuuese Ba
Please see secLion 1.1 above, reqardinq Lhe advanLaqes ol Lhe RlNMAR.
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PorLuqueseresidenL companies Lypically adopL Lwo main dillerenL sLrucLures/Lypes:
PrivaLe limiLed companies {Lda)
Share capiLal: minimum share capiLal ol t1 {lor a Lda wiLh a sole shareholder) and t2 {lor Ldas wiLh Lwo
or more shareholders). 1he minimum nominal value LhaL each quoLa should have is t1.
Shareholder{s): minimum ol Lwo, buL iL is possible Lo incorporaLe a soleshareholder Lda
ManaqemenL: aL leasL one manaqer, appoinLed in Lhe arLicles ol associaLion or by Lhe qeneral meeLinq ol
shareholders
Statutory
auditor: a statutory auditor or board may have to be appointed if certain thresholds are met
JoinL sLock corporaLion {SA)
Share capiLal: minimum share capiLal ol t50,000, divided inLo shares, each wiLh a minimum nominal value
ol t0.01.
Shareholder{s): aL leasL lve shareholders, excepL when noL required by law {lor companies incorporaLed
in Lhe MlBC, one shareholder is allowed)
ManaqemenL: a manaqemenL board composed ol aL leasL Lhree direcLors. ln some cases, iL is possible Lo
have one single director
Statutory
auditor: a statutory auditor or board must be appointed
NeverLheless, iL is imporLanL Lo sLress LhaL companies licensed Lo operaLe wiLhin Lhe MlBC are noL sub|ecL Lo
the minimum share capital rules, although the shareholders must comply with the remaining requirements.
As a general rule, a 25% withholding tax rate applies to dividends paid to non-residents, unless the
shareholder is an LU/Luropean Lconomic Area {LLA) company or a double Lax LreaLy applies.
ln Lhe lrsL case, Lhe wiLhholdinq Lax raLe applied Lo dividends paid Lo LU/LLA companies will be 07, provided
that the shareholder holds at least 10% of the share capital for an uninterrupted period of one year (Parent-
Subsidiary Directive). In the event that the one-year period has not yet lapsed by the time of the dividend
distribution, a refund of the withholding tax can be claimed upon expiry of this holding period.
In the event of a dividend distribution to companies resident in countries that have entered into a double
tax treaty with Portugal, the withholding tax rate can be reduced to 5%, 10% or 15%. These reductions of
withholding tax may be obtained through up-front or refund procedures.
Financial and tax grants may be available in certain circumstances and conditions for shipping- related
activities and investments. A case-by-case analysis should be performed.
5.1 Infrastructure
5.1.1 Major ports
Anqra do Heroismo
Aveiro
Fiqueira da Foz
Funchal {Madeira)
HorLa {Azores, Faial lsland)
Leixes {PorLo)
Lisbon
PorLimo {Alqarve)
Sesimbra
SeLubal
Sines
Viana do CasLelo
Dockinq
SLoraqe
Ouayside equipmenL, parkinq and securiLy
5.1.3 Airports close to the major port(s)
The following airports are close to the major ports:
Faro AirporL {Faro)
Funchal {Funchal)
HorLa {HorLa)
Lisbon {Lisbon)
PorLo {Leixes)
Lscola NuLica de Recreio {near Lisbon)
Lscola NuLica lnlanLe D. Henrique {civil) {near Lisbon)
Marinha de Cuerra PorLuquesa {miliLary) {Lisbon)
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1.1 Taxation of shipping companies
Shipping companies in Qatar are taxed in a similar manner to any other company operating in Qatar. Qatar
Lax residenL shippinq companies wholly owned by OaLari or Cull CooperaLion Council {CCC) naLionals are
exempt from corporate income tax.
Non-Qatari shipping companies operating in international waters are exempt from tax in Qatar provided the
Qatari shipping companies enjoy similar reciprocal treatment in the respective foreign country under a double
tax treaty (DTT).
MariLime Law No. 15 ol 1980 {Lhe MariLime Law) qoverns cerLain specilc maLLers in relaLion Lo shippinq
acLiviLies. Where a maLLer is noL specilcally provided lor under Lhe MariLime Law, relerence musL be made Lo
the relevant general applicable law in Qatar.
1.2 Double tax treaties
Qatar has entered into 54 DTTs with other countries and is actively expanding its treaty network. DTTs are in
force with the following countries:
Algeria, Armenia, Austria, Azerbaijan, Belarus, Brazil*, Bulgaria, China, Croatia, Cuba, Cyprus, France,
Georgia, Greece, Hungary, India, Indonesia, Isle of Man, Italy, Jersey, Jordan, South Korea (ROK),
Lebanon, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Monaco, Morocco, Nepal, Netherlands,
Norway, Pakistan, Panama, Philippines, Poland, Romania, Russia, Senegal, Serbia, Seychelles, Singapore,
Slovenia, Sri Lanka, Sudan, Switzerland, Syria, Tunisia, Turkey, United Kingdom, Venezuela, Vietnam and
Yemen.
There are 28 pending tax treaties with the following countries:
Albania, Barbados, Belgium, Bermuda, Bosnia and Herzegovina, Brunei, Egypt, Eritrea, Fiji, Finland,
Germany, Guernsey, Iceland, Iran, Ireland, Kazakhstan, Kyrgyzstan, Libya, Lithuania, Mauritania, Mexico,
Montenegro, Portugal, San Marino, Spain, Turkmenistan, Ukraine and Uzbekistan.
*The treaty with Brazil covers only income taxes pertaining to international air carriers.
1.3 Bilateral agreements
OaLar and Japan siqned an exchanqe ol noLes on 21 May 2009 concerninq Lhe avoidance ol double LaxaLion
on income lor Lhe operaLion ol ships and aircralL in inLernaLional Lrallc. 1he exchanqe ol noLes is aimed aL
exempting the activities of shipping and air companies from income tax in both countries on a reciprocal
basis. Further details are still pending.
Aside lrom Lhe above, OaLar does noL have bilaLeral aqreemenLs in place wiLh oLher counLries in Lhe leld ol
maritime transport and ports.
1.4 International maritime conventions
OaLar has been a member ol Lhe lnLernaLional MariLime OrqanizaLion {lMO) ol Lhe UniLed NaLions {UN)
since 1977. 1he lMO works Lo improve mariLime saleLy and reduce polluLion lrom ships.
As at 2 January 2013, Qatar has accepted the following conventions:
lMO ConvenLion ^8
lMO AmendmenLs 93
SOLAS ConvenLion 7^
LL ConvenLion 66
1ONNACL ConvenLion 69
COLRLC ConvenLion 72
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S1CW ConvenLion 78
SAR ConvenLion 79
lMSO ConvenLion 76
lNMARSA1 OA 76
lNMARSA1 AmendmenLs 9^
MARPOL 73/78 {Annex l/ll)
MARPOL 73/78 {Annex lll)
MARPOL 73/78 {Annex lV)
MARPOL 73/78 {Annex V)
lN1LRVLN1lON ConvenLion 69
CLC ProLocol 92
FUND ProLocol 92
SUA ConvenLion 88
SUA ProLocol 88
OPRC ConvenLion 90
Qatar has denounced the following conventions:
CLC ConvenLion 69
CLC ProLocol 76
FUND ConvenLion 71
1.5 Withholding tax
Withholding tax (WHT) may be imposed on payments received by nonresident shipping companies in
relation to services rendered totally or partially in Qatar as further discussed in section 6.5.
Sea transport of petroleum and its derivatives as well as manufactured products made from the same are
specilcally exempL lrom WH1.
1.6 Value added tax
1here is no value added Lax {VA1) sysLem aL presenL. lL is anLicipaLed LhaL a sinqle CCCwide VA1 will be
introduced within the next few years, although this is unlikely to occur before 2015. It is expected that the
rate will be low, around 3% to 5%, and that VAT would be chargeable on a broad range of goods and services.
1.7 Freight tax
There is no freight tax applicable at Qatar ports currently.
1.8 Customs duty
Import duties are charged on goods brought into Qatar for onward sale, as follows:
Ceneral raLes/LreaLmenL: 57 or exempL
CemenL: 207
SLeel: 207
Urea: 307
Records and musical insLrumenLs: 157
1obacco: 1007
Certain staple food products, equipment, materials and other supplies belonging to government entities or
state companies and the personal effects of foreign employees arriving in Qatar for the purposes of residence
are exempt from import duty.
Pork and pork producLs are prohibiLed lrom imporL under Lhe OaLar CusLoms DuLy Law.
Coods manulacLured in CCC counLries and imporLed inLo OaLar are also exempL lrom such duLies, provided
Lhey are accompanied by a cerLilcaLe ol oriqin lrom Lhe Chamber ol Commerce ol Lhe CCC counLry.
lndividual imporLers musL have OaLari naLionaliLy. MosL businesses operaLinq in OaLar LhaL are lully reqisLered
with the appropriate government departments will be permitted to obtain a license to import goods.
2. Human capital
OaLar's Labour Law No. 1^ ol 200^ {OaLar Labour Law) qoverns requlaLions lor employmenL, includinq
those pertaining to social welfare and workers compensation during the course of employment in Qatar.
However, seafarers in particular are also bound by the maritime employment contract requirements in the
MariLime Law.
2.1 Employment requirements under Qatar Labour Law
All persons workinq in OaLari shippinq companies are required Lo have a valid business/residenL visa or
residence permiL and should have a valid employmenL conLracL duly submiLLed Lo Lhe DeparLmenL ol Labour.
1he OaLar Labour Law aims Lo balance Lhe riqhLs ol employer and employee, insLiLuLes a hirinq prioriLy lor
OaLari naLionals and speciles a number ol obliqaLions lor enLiLies visvis Lheir employees.
1hese obliqaLions include Lhe requiremenL ol Lhe inclusion ol Lhe lollowinq benelLs in a labor conLracL, which
will also apply to seafarers.
fncofserv|ce oenehts
Lmployers are obliqed Lo pay endolservice benelLs Lo an employee upon compleLinq employmenL provided
that the employee has performed at least one year of service. The end-of-service payment should not be less
than three weeks basic salary per year of service based on the last drawn basic salary level. However, the
employer need noL pay Lhe endolservice benelLs where an exisLinq employerprovided pension or similar
scheme provides lor a hiqher benelL.
Paid sick leave
The employee is also entitled to paid sick leave for each year of service. However, the leave will be granted
only alLer compleLion ol aL leasL Lhree monLhs ol employmenL, or, il Lhe employee produces a cerLilcaLe lrom
a physician approved by the employer. If the sick leave is two weeks or less, the employee will be paid in full. If
the sick leave does not exceed four weeks, the employee will be paid half of his or her wage. Extension of sick
leave beyond four weeks will be without pay until the employee resumes work or resigns or the employees
service is terminated for health reasons.
lL should be noLed LhaL under Lhe MariLime Law, il a sealarer lalls ill or is in|ured durinq Lhe course ol a
voyage, the employer is obliged to treat the illness or injury without compensation for the medical fees except
in cases of disobedience, intoxication or other misconduct. In such cases, the compensation will be deducted
from the seafarers wages.
The ill or injured seafarer will be entitled to his or her full wages, provided the illness or injury did not result
from disobedience, intoxication or other misconduct, where no entitlement is provided for. Once the voyage
is over, Lhe provisions ol Lhe OaLar Labour Law will apply in Lerms ol sick pay enLiLlemenL.
Annual leave
If the employee has completed one year of service with the employer, the employee is entitled to annual
leave. 1he leave should noL be less Lhan Lhree weeks, il employee service is less Lhan lve years, and lour
weeks lor employees whose service is more Lhan lve years.
Other paid leave entitlements
The employees are also entitled for additional fully paid leave as follows:
1hree workinq days on Lhe occasion ol Lid AlFiLer
1hree workinq days on Lhe occasion ol Lid AlAdha
One workinq day on Lhe occasion ol NaLional Day ol Lhe SLaLe ol OaLar
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1hree workinq days Lo be decided by Lhe employer
2.2 Maritime employment contract
A maritime employment contract should be in place for individuals working on board a maritime navigation
ship in reLurn lor a waqe. 1he qeneral rules ol Lhe OaLar Labour Law should be applied Lo Lhe conLracL on all
maLLers noL specilcally provided lor in Lhe MariLime Law.
1he lollowinq maLLers are specilcally provided lor in Lhe MariLime Law. 1he mariLime employmenL conLracL
must be in writing in order for the employer to rely on same. If the contract is not written, only the seafarer
may rely on contract.
The maritime employment contract should be edited in three copies. The employer, ports administration and
seafarer should each retain a copy. Except in cases where it is a collective and joint contract, the employer
should maintain the contract and the seafarer has the right to receive a copy of the relevant extract of the
contract that concerns him or her at that time. The contract should mention the:
ConLracL daLe and place where iL was concluded
Sealarer's name, aqe, naLionaliLy, domicile, Lhe work Lhe sealarer is obliqed Lo perlorm, waqe and Lhe
manner ol iLs specilcaLion and Lhe number
DaLe and Lhe place ol issuance ol Lhe sealarer's mariLime passporL
DaLe ol Lravel and Lhe deparLure and arrival porLs
2.3 Securing a seafarers visa
Transit visas are issued to sailors of Qatar Navigation Company or Qatar Petroleum to board or disembark
ships in Qatars territorial water. They are issued upon arrival in Qatar and are valid for a period of 48 hours.
1he lee lor issuance is 120 riyals {OAR). Also, a Lemporary enLry permiL can be issued by Lhe Ceneral
Directorate of Border Passports and Expatriates Affairs to seafarers for seven days amounting to QAR20 for
each sealarer. A clear copy ol Lhe sealarer's book and/or passporL is required. ln mosL cases, iL Lakes Lhree Lo
four working days to obtain a seafarers visa.
2.4 Taxation of seafarers
Currently, there is no form of legislation in Qatar requiring the payment of tax on income earned by
employees. Hence, persons employed by shipping companies (including seafarers) and whose work is
undertaken wholly in Qatar are not required to submit income tax returns in Qatar, and shipping companies
should not retain any taxes from their salaries or allowances.
2.5 Social insurance
Qatar does not levy any social security taxes.
3.1 Legal structures of shipping companies
1he MariLime Law provides lor Lhe lollowinq leqal sLrucLures LhaL shippinq companies may uLilize as a suiLable
vehicle for conducting their business operations in Qatar:
JoinL liabiliLy company
ParLicular parLnership
JoinL sLock company or limiLed liabiliLy company
MosL shippinq companies operaLe as a |oinL sLock company or limiLed liabiliLy company.
In order for the vessel to carry a Qatari nationality, it should be registered at any of the Qatari ports and
its owners must be Qatari nationals. However, if the owner is a company, it should meet the following
requirements:
ln Lhe case ol a |oinL liabiliLy company, all parLners musL be OaLari naLionals.
ln Lhe case ol a parLnership in commendam, all simple parLners musL be OaLari naLionals, provided Lhose
partners own at least 51% of the companys capital.
ln Lhe case ol a limiLed liabiliLy company, all parLners and direcLors musL be OaLari naLionals.
ln Lhe case ol a shareholdinq company, more Lhan hall ol Lhe board members, includinq Lhe chairman ol
the board and the managing director, must be Qatari nationals.
If a shipping company wishes to act as a shipping agent in Qatar, the scope of its activities falls under the
OaLar Commercial AqenLs Law No. 8 ol 2002 {Lhe Commercial AqenLs Law). Under Lhe Commercial AqenLs
Law, Lhe lollowinq condiLions musL be complied wiLh in order lor a person {naLural or leqal) Lo enqaqe in an
agency activity in Qatar. The person or agent must:
Be lisLed on Lhe Commercial AqenLs Law aL Lhe MinisLry ol Commerce
Be a OaLari naLional or a company where lull ownership is held by OaLari naLionals
Have exclusive riqhLs Lo a producL
3.2 Taxaticn cn prcht distributicns
Dividends are noL Laxed. 1ax is assessed on Lhe share ol prolLs aLLribuLable Lo loreiqn shareholders accordinq
Lo Lhe lnancial sLaLemenLs ol Lhe company, as ad|usLed lor Lax purposes. lncome disLribuLed lrom prolLs LhaL
have already been subject to Qatar taxation will not be subject to double taxation in the hands of the recipient
where these amounts are included in the investment income of a taxpayer.
Dividends paid by an entity that has a tax exemption are tax exempt in the hands of the recipient.
4.1 Shipping industry in Qatar
The shipping sector in Qatar has been growing at a rapid pace due to rising exports of natural gas, which are
mosLly carried by Lhe naLional carrier OaLar Cas 1ransporL {NakilaL). 1he developmenL ol Lhe New Doha PorL
will further advance the shipping industry in the country by increasing the scope for foreign container and
dry bulk shipping activities thus enabling the tapping into the vast amount of potential revenues available in
transshipment trade.
For example, in the case of Doha Commercial Seaport, the volume of goods and activity levels measured by
reference to container throughput is expected to grow 4% by 2013 and 3.6% growth on average per year up
to 2017. The total tonnage throughput for 2013 is expected to expand by 4% to 8.31 million tonnes and to
average at 4.2% growth per year up to 2017.
Additionally, Qatar is making its presence felt in ports in foreign jurisdictions. Currently, facilities are being
developed in Egypt that have been funded by the Qatari government, in keeping with Qatars increasing
presence in prime real estate ownership globally.
4.2 Infrastructure
Qatar has spared no effort to develop and expand its seaports and provide all necessary facilities there. The
Ports and Sea Customs Department actively participates in international maritime activities as a member
ol Lhe lnLernaLional MariLime OrqanizaLion, Arab Academy lor MariLime 1ransporL and Lhe lnLernaLional
Association of Ports and Harbours.
The major seaports in Qatar are equipped to receive giant ships, i.e., Doha Commercial Seaport (Doha Port),
Mesaieed Commercial and lndusLrial SeaporL and Ras Lallan lndusLrial SeaporL.
Doha Commercial Seaport
Qatars original port gateway was located in Doha Bay. Todays deepwater port, located farther along the
Corniche, was selected due to its deepwater access. The port was further expanded and the number of quays
increased to nine with a total length of 1,700m with two container berths of 600m and 207m for Qatar Flour
Mills. A series ol larqe warehouses were builL alonq wiLh 10 hecLares ol sLoraqe yards.
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Qatar is embarking on a massive project to create a brand new Doha Port located 25km south of Doha near
Mesaieed lndusLrial CiLy. lL will be builL in Lhree phases; Lhe lrsL phase will have a capaciLy ol six million
20looLequivalenL uniLs ol volume a year. CompleLion ol Lhe lrsL phase is expecLed in 2016.
1he new Doha PorL is seL Lo become an inLeqral parL ol Lhe mulLibillion dollar pro|ecL Lo develop Lhe lrsL
integrated freight and passenger rail network in Qatar.
The existing port will be decommissioned as the new Doha Port is inaugurated, with operations transferring
over a six-month-long handover period. Part of the old port area is already earmarked as the site for the
45,000-seat covered Doha Port Stadium, one of a series of new eco-friendly, cutting-edge football stadiums,
which will host the FIFA World Cup in 2022.
Mesaieed Commercial and Industrial Seaport
1he porL ol Mesaieed was iniLially selecLed Lo exporL Lhe crude oil produced lrom Lhe onshore Dukhan leld
due Lo iLs accessibiliLy Lo a naLural channel and relaLively deep waLer. 1he lrsL crude oil was exporLed in
December 19^9 lrom Lwo common berLhinq mechanism {CBM) berLhs. FurLher indusLrializaLion lollowed
Lhe producLion ol oLher peLroleum producLs and liqueled peLroleum qas {LPC) lor exporL.
1he lrsL indusLry Lo seL up in Mesaieed was Lhe NaLional Oil DisLribuLion Company {NODCO) {1968) Lo
operaLe Lhe Mesaieed Relnery Lo meeL local requiremenLs ol qasoline and diesel and exporL ol Lhe surplus
to world markets. Qatar Fertiliser Company (QAFCO) followed in 1974 producing fertilizer products such
as urea and ammonia. Qatar Steel Company (QASCO) steel mill inaugurated in 1978 marked the start of
non-hydrocarbon commercial activities and imported iron ore for the production of steel products. Qatar
Petrochemical Company (QAPCO) was established in 1981 for the production of ethylene and low-density
polyethylene. Additional oil- and gas-related industries such as Qatar Fuel Additives Company (QAFAC)
(1998) and Qatar Vinyl Company (QVC) (1999) followed.
The port also contains two ship repair and fabrication yards for dry-docking and repairing and manufacturing
all types of marine units. The fabrication yards serve the construction needs of the oil and gas industries.
Mesaieed PorL has advanced sLeadily over Lhe years Lo service Lhe needs ol Lhe indusLries and has qrown
from a relatively small crude oil export terminal into a world-class port handling a wide range of petroleum
products and has become an important commercial port.
1he PorL OperaLions DeparLmenL {Lhe DeparLmenL) ol Mesaieed lndusLrial CiLy {MlC) provides a ranqe ol
services Lo Lhe users ol Mesaieed PorL. 1hese include piloLaqe ol all vessels as speciled in porL requlaLions,
vessel Lrallc conLrol usinq sophisLicaLed vessel Lrallc service {V1S) equipmenL and marine services such
as the hiring of harbor crafts and crew. The Department is the sole agent for all hydrocarbon vessels. Other
services comprise the maintenance and inspection of all berths and oil pollution combating and control. The
DeparLmenL, as Lhe PorL AuLhoriLy, requlaLes marine acLiviLy lor a sale, smooLh and ellcienL clearinq ol
shipping throughout the designated port area as required by national and international regulations.
CommodiLies imporLed and exporLed Lhrouqh Mesaieed PorL accounL lor abouL 607 ol OaLar's qross domesLic
producL. Mesaieed PorL handles more Lhan 1,000 vessels per year consisLinq ol Lankers, qas carriers,
chemical tankers, bulk carriers, feeder container vessels, military vessels, general cargo ships and other types
ol cralLs. Mesaieed PorL manaqemenL conLinues Lo enhance Lhe porL and marine laciliLies lor indusLries and
commercial activities and has become the premier seaport in Qatar and gateway to Qatar.
Mesaieed PorL has published procedures and requlaLions LhaL should be lollowed by vessels enLerinq Lhe porL.
Ras Laffan Industrial Seaport
1he PorL ol Ras Lallan is siLuaLed on Lhe norLheasL coasL ol OaLar and has been desiqned and builL primarily
as Lhe exporL laciliLy lor liqueled naLural qas {LNC), LPC, condensaLes, peLroleum producLs and sullur
derived lrom Lhe processinq ol qas landed lrom Lhe NorLh Field Cas Reservoir siLuaLed 67 km norLhnorLheasL
of the Port.
Ras Lallan PorL is able Lo accommodaLe LNC carriers, LPC carriers, and parLly laden/ballasLed Lankers up Lo
300,000 SDWT, dry cargo vessels and supply vessels.
1he PorL ol Ras Lallan is manaqed and adminisLered by OaLar PeLroleum {OP). Lvery vessel LhaL arrives aL
Ras Lallan PorL is required Lo abide and comply wiLh Lhe specilc rules and requlaLions ol Lhe porL, which are
updated regularly at the discretion of QP. Vessels are also required to have on board and abide by the latest
ediLion ol "Rules and RequlaLions lor SeaporLs" enacLed by Lhe CCC.
4.3 Maritime education
A maritime college will be set up soon in Qatar, funded and supported by the Qatar Foundation for Education,
Science and CommuniLy DevelopmenL, Lo meeL markeL need lor qualiled OaLari marine and dry dock
engineers and ship captains.
5. Registration
5.1 Vessel registration
Unlike in Lhe pasL, when OaLar had no resLricLions on securinq vessels lrom Lhe reqional markeL wiLhouL
reqard Lo laqqinq {primarily due Lo Lhe unavailabiliLy ol OaLarilaqqed vessels), wiLh Lhe new emphasis
on ship building, maintenance and repairs, there will be more emphasis on requiring vessels to be
reqisLered and laqqed in OaLar. 1his process will make iL more expensive and unpredicLable lor loreiqn
companies to participate in tenders and offer their services as they will not be able to participate unless
the vessel is registered. This contrasts sharply with the previous policies where there were no such
restrictions on tendering.
Foreiqn vessels enqaqed in operaLions in OaLari LerriLorial waLers are required Lo reqisLer wiLh Lhe MinisLry ol
Business and Trade. The following documents are required:
CerLilcaLe ol reqisLry
lnLernaLional AssociaLion ol ClassilcaLion SocieLies {lACS) Members' Class CerLilcaLe
Carqo Ship SaleLy LquipmenL CerLilcaLe
Minimum Sale Manninq documenL
DocumenL ol compliance
lnLernaLional Load Line CerLilcaLe
lnLernaLional Oil PolluLion PrevenLion CerLilcaLe
lnLernaLional Air PolluLion PrevenLion CerLilcaLe
lnLernaLional Sewaqe PolluLion PrevenLion
lnLernaLional Ship SecuriLy CerLilcaLe
lnsurance Company and period ol lnsurance
SaleLy ManaqemenL CerLilcaLe
Carqo Ship SaleLy Radio CerLilcaLe
Ship Radio SLaLion License
Crew lisL
Flaq LndorsemenL as Minimum SaleLy Manninq
lnLernaLional 1onnaqe CerLilcaLe {1969)
Area ol work and conLracL period
ConLacL person and conLacL phone numbers
1he MinisLry ol Business and 1rade has issued a circular addressed Lo shippinq aqencies ol loreiqnlaqqed
vessels operating in the Qatari territorial waters that the class of the vessels, barges, rigs and mobile offshore
drilling units operating in Qatari territorial waters must be one of the IACS members in order for agencies to
obtain work permits for the vessels.
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5.2 Ships Byin 0atari Ba
Lvery ship holdinq OaLari naLionaliLy should raise Lhe laq ol OaLar, and iL should noL adopL anoLher laq unless
it is for the purpose of avoiding capture by the enemy or a foreign military ship and as such, it is exercising
one of the legitimate rights in war.
6. Taxation in Qatar
6.1 Basis and method of taxation in Qatar
1axaLion in OaLar is based on Lhe OaLar lncome 1ax Law No. 21 ol 2009 {Lhe lncome 1ax Law), which was
enacLed in OaLar on 17 November 2009 and became ellecLive lrom 1 January 2010. 1he lncome 1ax Law
is supported by the Executive Regulations (the Regulations) and various circulars issued by the Qatar
tax authority, the Public Revenues and Taxes Department (PRTD), of which Circular No. 2 of 2011 (the
Circular) is ol qreaL siqnilcance Lo enLiLies operaLinq in OaLar. 1he Circular provides quidance on when
taxpayers should withhold WHT and contract retention on payments to subcontractors and service providers.
The method by which an entity is subject to tax in Qatar depends on whether the entity is tax resident in
OaLar or wheLher iL has a permanenL esLablishmenL {PL) in OaLar. Cenerally, a company LhaL is a Lax residenL
or has a PL is liable Lo pay corporaLe income Lax aL 107 ol iLs Laxad|usLed prolLs. A nonresidenL company
that does not have a PE in Qatar but receives income from Qatar for services performed in Qatar is taxed via
the WHT system where the payer is obliged to withhold the tax and remit these amounts to the PRTD.
6.2 Taxes on corporate income and gains
6.2.1 Corporate income tax
Foreign companies, including partnerships and joint ventures, carrying on business activities in Qatar are
subject to tax. Tax is imposed on a foreign entity operating in Qatar, regardless of whether it operates through
a branch or in a joint venture with a locally registered company. For a company with Qatari and foreign
shareholders, Lax is assessed on Lhe LoLal prolLs ol Lhe company. 1he resulLinq Lax liabiliLy is apporLioned
between the foreign and Qatari shareholders. The foreign shareholders must pay their share of the tax
liability to the tax authorities, but the Qatari shareholders are exempt from tax.
6.2.2 Rates of corporate income tax
While income is subject to tax at a standard rate of 10%, a standard rate of 35% is applicable for petroleum
companies involved in oil and gas exploration activities (or rates ranging from 35% to 55% for agreements
LhaL precede Lhe enacLmenL ol Lhe lncome 1ax Law).
6.2.3 Tax exemptions
OaLar Lax residenL companies wholly owned by OaLari or CCC naLionals are exempL lrom corporaLe
income tax.
CiLizens ol oLher CCC counLries {Bahrain, KuwaiL, Oman, Saudi Arabia and UniLed Arab LmiraLes) are LreaLed
as OaLari ciLizens lor Lhe purposes ol Lhe lncome 1ax Law. ConsequenLly, companies LhaL are Lax residenLs in
OaLar and LhaL are wholly owned by OaLaris and oLher CCC naLionals are exempL lrom Lax.
However, if these entities are tax resident outside Qatar, they are subject to taxation in Qatar. When an entity
is noL a OaLar Lax residenL buL derives income lrom OaLar sources under Lhe lncome 1ax Law, iL will be sub|ecL
to tax (either by way of the application of income tax or alternatively WHT, as appropriate) even if it is wholly
owned by OaLari or CCC naLionals.
1he lncome 1ax Law provides LhaL Laxpayers carryinq on a LaxexempL acLiviLy are required Lo lle an annual
income tax return with the PRTD.
1ax Circular No. ^ ol 2011 clariled LhaL Lax residenL companies and PLs in OaLar LhaL are LaxexempL
and wholly and ulLimaLely owned by naLionals ol OaLar or oLher CCC sLaLes are sub|ecL Lo Lhe Lax llinq
requirements discussed in section 6.4.2 where the:
Share capiLal ol Lhe enLiLy is OAR2 million or more
Or
Annual revenue ol Lhe enLiLy is OAR10 million or more
Tax exemption of foreign shipping and aviation companies
Foreign shipping and aviation companies operating in international waters are exempt from tax in Qatar if
the Qatari shipping and aviation companies enjoy similar reciprocal treatment under a DTT in the respective
foreign country.
1ax exemt|on for notforroht ent|t|es
1he income ol noLlorprolL enLiLies LhaL are reqisLered in OaLar or in anoLher counLry is also exempLed lrom
taxation.
Tax exemption based on the activity by application to Tax Exemption Committee
A tax exemption may be granted for certain projects, regardless of whether they are performed by Qatari
nationals or foreigners. The Tax Exemption Committee in the PRTD will consider the following factors in
reviewing applications for tax exemption:
WheLher Lhe pro|ecL provides social or economic benelLs Lo OaLar
WheLher Lhe pro|ecL lalls wiLhin Lhe planned developmenL and economic ob|ecLives ol Lhe qovernmenL,
is approved by appropriate government department and contributes to the overall development of the
economy
WheLher Lhe pro|ecL uses modern Lechnoloqy
WheLher Lhe pro|ecL creaLes employmenL opporLuniLies lor OaLari naLionals
It should be noted that the criteria above apply to expansion projects, provided that the expansion costs
exceed 50% of the cost of the original project.
The principal contractor involved in an exempt project applies for exemption from tax. The exemption
normally does noL low Lhrouqh Lo Lhe subconLracLors unless Lhe wordinq ol Lhe pro|ecL exempLion specilcally
address exemptions for the subcontractors. The period of exemption ranges from three years to six years,
depending on which legislative body approves the exemption periods.
It is highly unlikely that a commercial shipping company would be granted a tax exemption under this process.
Income tax exemption under special laws
OaLari companies whose sLocks are lisLed aL Lhe Doha SecuriLies MarkeL and are OaLar Science and
1echnoloqy Park {OS1P) licensed enLiLies are exempLed under Lhe lncome 1ax Law.
Income tax exemption under agreements with the government of Qatar
Certain joint venture agreements with the relevant government departments provide for an exemption from
income Lax, which may be lor a specilc Lime period only.
6.2.4 Supply contracts
ProlLs lrom "supply only" operaLions in OaLar are exempL lrom Lax because Lhe supplier Lrades "wiLh"
but not in Qatar. If the supply contract includes other accessory services such as transport, installation,
maintenance, training and other services performed in Qatar without a clear split of the nature and pricing of
the supply and service portion in the contract, there is a risk that the entire contract value will be subject to
tax. Accessory services include loading and unloading activities carried out in ports.
In the same manner, offshore services are exempt from Qatari tax. However, if there is no clear separation
between the nature and pricing of supply and services performed in Qatar and those which are not, or the
seqreqaLion is noL clearly delned on a commercial basis, Lhe enLire conLracL value may be sub|ecL Lo Lax.
6.2.5 Capital gains
Capital gains are aggregated with other income and are subject to tax at the regular corporate income tax
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rate.
6.2.6 Dividends
As menLioned in secLion 3.2, income on dividends received is noL Laxed. Moreover, dividends received lrom
companies incorporated and tax resident outside of Qatar are considered outside the scope of Qatari income
tax.
In addition, WHT is not applied on dividends paid to nonresidents.
6.2.7 Foreign tax relief
Foreign tax relief may be available due to an effective DTT. The provisions of tax treaties prevail over
Lhose ol Lhe lncome 1ax Law, excepL when Lhe lncome 1ax Law provides a more lavorable Lax LreaLmenL.
However, taxpayers should note that generally only retrospective relief from WHT is available. WHT must be
wiLhheld Lhe lrsL insLance and a subsequenL applicaLion lor a relund may be submiLLed Lo Lhe PR1D by Lhe
nonresident, i.e., a withholding and reclaiming system is in operation.
Alternatively, a pre-clearance may be sought by the payer prior to making any payments to the non-
resident.
6.3 Determination of trading income
6.3.1 Income
The following lists the types of income included in taxable income:
lnLeresL derived ouLside ol OaLar lrom amounLs qeneraLed by Lhe Laxable acLiviLy carried on in OaLar
Commissions due Lo aqencies, mediaLion or commercial represenLaLion incurred ouLside OaLar lor
activities practiced therein
1oLal income resulLinq lrom an acLiviLy pracLiced in OaLar
1oLal income resulLinq lrom parLial or LoLal implemenLaLion ol conLracLs in OaLar
1oLal income resulLinq lrom real esLaLe locaLed in OaLar, includinq sale ol sLocks and shares in
corporations or shareholding companies of assets mainly constituting real estate located in Qatar
1oLal income resulLinq lrom sLocks or shares ol companies residenL in OaLar or lisLed on iLs lnancial
market
Service lee income received by head ollces, branches or relaLed companies
lnLeresL on loans acquired in OaLar
1oLal income resulLinq lrom excavaLion, exLracLion or exploiLaLion ol naLural resources locaLed in OaLar
1oLal Laxable income in OaLar in accordance wiLh aqreemenLs lor avoidinq double LaxaLion
6.3.2 Fixed assets and depreciation charges
1he lncome 1ax Law and supporLinq requlaLions inLroduced Lwo caLeqories lor Lhe deLerminaLion ol Lax
depreciaLion on business asseLs. 1he lrsL caLeqory comprises hiqh value asseLs such as buildinqs, ships,
vessels and excavaLion Lools, and Lhe second caLeqory qenerally comprises lower value asseLs. For Lhe lrsL
category, tax depreciation is calculated on a straight-line basis. The depreciation rates vary from between 5%
and 507 per year dependinq on Lhe asseL classilcaLion. ln parLicular, ships and boaLs are depreciaLed aL a
rate of 10% per year.
For the second category, tax depreciation is calculated using a reducing-balance method. Further, where
there is a disposal of assets under the second category, the sales proceeds are deducted from the cost of the
asseLs. 1he depreciaLion raLes vary lrom 157 Lo 33.337 dependinq on Lhe asseL caLeqory. Civen Lhe special
rules, iL is imperaLive LhaL lxed asseLs are classiled inLo Lhe appropriaLe caLeqory Lo ensure Lhe applicaLion ol
the correct tax depreciation rates and method.
Tax depreciation should be calculated based on the rates outlined in the Regulations. Article 10 of the
Regulations outlines the various applicable tax depreciation rates. However, the depreciation that should be
recognized is only permitted up to the amount of the accounting depreciation.
6.3.3 Limits and deductibility of certain expenses
Owner and partner salaries
Salaries, waqes and similar remuneraLion, includinq lrinqe benelLs paid Lo Lhe owner, his or her spouse
and children, members of a general or limited partnership or the director of a limited liability company who
owns, directly or indirectly, the majority of the shares of the company, are not allowed as a deduction for tax
purposes.
Donations
DonaLions, qilLs, aids and subscripLions Lo chariLable, humaniLarian, scienLilc, culLural or sporLinq acLiviLies
paid in Qatar to governmental authorities, public bodies or institutions or any other authorized body in Qatar
are deductible provided their value does not exceed 5% of the net income before these and certain other
deductions.
Entertainment and representation
Total expenses on leisure, hotel accommodation, restaurants, holidays, club fees and gifts to customers are
deductible up to 2% of the net income before these and certain other deductions, capped at QAR200,000
per year.
General provisions
Ceneral provisions, such as bad debLs and sLock obsolescence, are qenerally noL allowed. Specilc bad
debts that are written off are deductible to the extent they satisfy conditions set by the tax administration.
Deductions by banks for loan loss provisions are the subject of periodic instructions from the Central Bank of
OaLar and in qeneral, provisions are allowable up Lo a ceilinq ol 107 ol neL prolLs.
Provisions for travel tickets
Provisions for travel tickets are not deductible on an accrual basis. However, the ticket value may be deducted
if it is effectively incurred, is provided for in the labor contract and meets the other requirements for
deductibility.
6.3.4 Relief for losses
Losses may be carried lorward lor up Lo Lhree years. Carryback ol losses is noL allowed.
6.3.5 Groups of companies
There are no tax regulations covering groups of companies, however, in practice, the PRTD requires a
taxpayer to aggregate income from all Qatari sources.
UnuLilized losses cannoL be Lranslerred Lo anoLher prolLmakinq qroup enLiLy lor ollseL.
6.4 Tax administration
6.4.1 Tax registration
Every taxpayer who carries on an activity or derives a taxable income in Qatar is required to register (and in
turn receives a tax card) with the PRTD within 30 days from the earliest of the following:
DaLe ol obLaininq approval ol Lhe compeLenL auLhoriLy Lo commence Lhe acLiviLy
DaLe ol Lhe sLarL ol Lhe acLiviLy
FirsL day ol realizaLion ol income
Noncompliance wiLh Lhe Lime lrame will incur a lne ol OAR5,000 under Lhe provisions ol Lhe lncome 1ax
Law.
.4.2 AnnuaI tax decIaraticn hIin requirements
CorporaLe income Lax reLurns musL be lled wiLh Lhe PR1D wiLhin lour monLhs ol Lhe end ol a reporLinq
period. In general, entities must have an accounting period of 12 months and based on the calendar year, i.e.,
ending on 31 December.
LxcepLions Lo Lhis rule may be permiLLed lor an enLiLy's lrsL accounLinq period, which may be beLween 6 and
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18 months in length starting from the commencement of the activity in Qatar, and when permission has been
sought and obtained from the PRTD to have an accounting period ending on a date other than 31 December.
PaymenL ol Lax due, il any, has Lo be remiLLed Lo Lhe PR1D on or belore Lhe reLurn llinq due daLe. ln Lhe case
ol a lnancial year endinq on 31 December, Lhe Lax submission LoqeLher wiLh any Lax liabiliLy will be due on or
before 30 April.
Where the submission of the income tax return is delayed, the PRTD has the right to levy a penalty of
QAR100 per day of delay (capped at QAR36,000). In addition, every taxpayer who fails to pay the tax on
time are subject to a penalty of 1.5% of the amount of the tax due per month of delay or part thereof up to
the amount of the tax due.
.4.3 Audited hnanciaI statements
Annual audiLed lnancial sLaLemenLs musL be submiLLed LoqeLher wiLh Lhe annual corporaLe Lax reLurn,
where:
1he capiLal exceeds OAR100,000
1he annual Laxable income exceeds OAR100,000
Or
For branches ol loreiqn companies, Lhe head ollce is siLuaLed ouLside ol OaLar or Lhe place ol ellecLive
management of a branch is situated outside of Qatar
1he lnancial sLaLemenLs are required Lo be audiLed by a reqisLered audiLor in OaLar and should be prepared
under International Financial Reporting Standards.
6.4.4 Tax objections and appeals
The taxpayer may object, by registered letter, to the assessment decision made by the PRTD within 30 days
ol Lhe Laxpayer's noLilcaLion ol Lhe amounL due. From Lhe receipL ol Lhis, Lhe PR1D has 60 days in which
to consider the objection. If a negative response or no response is received following these 60 days, the
taxpayer can appeal the decision to the Tax Appeal Committee.
6.4.5 Statute of limitations
1he riqhL ol Lhe PR1D Lo assess Lhe Lax lor a Laxable year expires alLer lve years lollowinq Lhe Laxable year in
which the return is submitted. Where the taxpayer fails to submit the return, the right of the PRTD to assess
Lax expires alLer 10 years lollowinq Lhe Laxable year lor which Lhe Laxpayer lailed Lo lle Lhe reLurn.
Once a tax clearance has been issued for a particular year, the PRTD may not reassess that taxable year
unless the PRTD discovers new information affecting the tax liability that was not taken into account in the
previous assessment.
6.5 Withholding tax
WHT should be withheld by tax resident individuals and companies as well as by nonresidents with a PE in
Qatar on certain payments made to certain nonresidents for services rendered totally or partially in Qatar. In
accordance with the Circular, documentation is key for determining when WHT is applied.
WHT is applicable as follows:
57 ol Lhe qross amounL ol royalLies and Lechnical lees
77 ol Lhe qross amounL ol inLeresL, commissions, brokeraqe lees, direcLors' lees, aLLendance lees and any
other payments for services carried out wholly or partly in Qatar
1he delniLion ol royalLies under Lhe lncome 1ax Law specilcally includes Lhe hire ol equipmenL {indusLrial,
commercial or scienLilc). As such, il a OaLar residenL Laxpayer charLers a ship Lo be used in OaLar LerriLorial
waters, WHT at 5% will apply on the payments made where the vessels owner is nonresident and not
registered for Qatari tax.
All entities subject to WHT will pay the amounts withheld to the PRTD by the 15th day of the month
following the month in which the payment was made using the prescribed WHT forms (i.e. Form no. 2-1
and sLaLemenL ol paymenLs sub|ecLed Lo wiLhholdinq Lax) issued by Lhe PR1D. A cerLilcaLe ol deducLion
{i.e. Form no. 22) is issued Lo Lhe recipienL Lo conlrm amounLs wiLhheld lrom source and Laxpayers LhaL
have been subject to WHT.
A 1007 lnancial penalLy equivalenL Lo Lhe Lax noL deducLed, in addiLion Lo Lhe paymenL ol Lhe amounL due,
will be imposed on failure to withhold tax at source.
6.6 Contract retention
In accordance with the Circular, effective for transactions starting from 1 January 2010, contract retention
should be withheld by principals on payments to certain subcontractors and service providers who operate
in OaLar Lhrouqh a Lemporary branch LhaL is reqisLered lor a specilc pro|ecL{s) and whose acLiviLy in OaLar
lasts 12 months or more. The contract retention rate is 3% of contract value (excluding supply and offshore
services) or the last payment, whichever is greater. The contract retention is withheld by the principal
and should not be released to the subcontractor or service provider until receipt of a tax clearance or a no
objection letter has been received from the PRTD.
6.7 Anti-avoidance and transfer pricing
1he lncome 1ax Law conLains anLiavoidance provisions LhaL allow Lhe PR1D Lo iqnore arranqemenLs LhaL
taxpayers enter into for the purpose of gaining a tax advantage, such as a reduction of tax liability, obtaining
a tax exemption or obtaining a tax refund. Therefore, if the PRTD believes that a company entered into
transactions or arrangements with the main purpose of gaining a tax advantage, the PRTD can set aside
those arrangements and disallow any tax advantage obtained.
WiLhin Lhe anLiavoidance provision in Lhe lncome 1ax Law, OaLar inLroduced a Lransler pricinq reqime wiLh
effect from 1 January 2010 under which transactions, arrangements and operations between related parties
should be conducted at an arms length price. In accordance with the Qatar transfer pricing rules, an arms
lenqLh price should be deLermined in accordance wiLh Lhe comparable unconLrollable price {CUP) meLhod.
1he CUP meLhod deLermines Lhe price on Lhe basis ol a comparison wiLh similar qoods or services provided
between unrelated parties, taking into account the following:
1he characLerisLics ol Lhe qoods or service
ConLracLual Lerms
FuncLions perlormed, asseLs used and risks incurred
Lconomic circumsLances
When Lhe daLa required Lo apply Lhe CUP meLhod is unavailable, Lhe Laxpayer should submiL an applicaLion
to the PRTD for the use of any other transfer pricing method approved by the Organisation for Economic
CooperaLion and DevelopmenL {OLCD), such as Lhe cosLplus, resaleprice, prolLspliL or LransacLionalneL
margin method.
6.8 Contract reporting
Taxpayers are required to notify the PRTD within 30 days from the date of the PRTDs request or the date
of the commencement of the contract, agreement or dealing, as the case may be, regarding the following
contracts:
ConLracLs wiLh nonresidenLs wiLh no PL in OaLar reqardless ol Lheir value
ConLracLs wiLh residenLs or nonresidenLs who have a PL in OaLar il Lhe conLracL value is equal Lo or
greater than QAR200,000 for service contracts or QAR500,000 for supply and service and supply
contracts
6.9 Miscellaneous matters
6.9.1 Foreign exchange controls
Qatar does not impose foreign exchange controls. Equity capital, loan capital, interest, dividends, branch
prolLs, royalLies and manaqemenL lees can be remiLLed wiLhouL resLricLions.
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6.9.2 Thin-capitalization rules
1here are no specilc LhincapiLalizaLion rules in lorce under Lhe OaLar Lax leqislaLion.
6.9.3 Miscellaneous taxes
Qatar does not levy estate, inheritance or gift tax.
Russia
1. Tax
There are two tax regimes that may be applied by shipping companies in the Russian Federation (Russia):
Ceneral LaxaLion reqime {applicable Lo all oLher companies operaLinq in Russia)
Shippinq incenLive reqime {applicable Lo shipowners who have reqisLered Lheir vessels in Lhe Russian
International Register of Vessels)
1.1.1 General taxation regime
Under Lhe qeneral LaxaLion reqime, shippinq companies are sub|ecL Lo Lhe lull ranqe ol Russian Laxes,
includinq valueadded Lax {VA1), prolLs Lax, social insurance conLribuLions, asseLs Lax, LransporL Lax and
stamp duty.
VAT
Cenerally, Lhe provision ol services in Russia, includinq charLerinq ol vessels, is sub|ecL Lo Russian VA1. Where
a supplier or a buyer of services is located in a foreign jurisdiction, Russian VAT may or may not be due
depending on whether the place of supply of services is deemed to be Russia from a VAT perspective.
In case a foreign company without tax registration in Russia performs services that are subject to
Russian VAT, a buyer of such services should act as a tax agent and calculate, withhold from the payment
(remuneration) and remit to the Russian budget the relevant VAT amounts (similar to VAT withholding
mechanism). 1hus, where a loreiqn company renders services Lo a Russian buyer, iL becomes ol siqnilcanL
imporLance lrom a cash low and pricinq perspecLive Lo deLermine Lhe "place ol supply" ol such services lor
VAT purposes.
Under Lhe currenL VA1 leqislaLion, "Lhe place ol supply" ol carriaqe and LransporLaLion services and various
related services is regulated by the following main principles:
Carriaqe and LransporLaLion services, as well as services {or works) direcLly connecLed wiLh carriaqe and
transportation, are considered to be supplied in Russia and, consequently, should be subject to Russian
VAT, if such services (or works) are provided (performed) (i) by a Russian company or a Russian
individual entrepreneur and the point of departure and (or) the point of destination of the shipment is
in Russia or (ii) by foreign entities and the points of departure and of destination are in Russia (apart
from carriage of passengers and baggage, executed by foreign entities not through their permanent
establishment).
1he "place ol supply" is also considered Lo be in Russia il Lhe means ol LransporLaLion are provided by
a Russian company or a Russian individual entrepreneur under a charter contract (which provides for
carriage (transportation) on those means of transport) and the point of departure and (or) the point of
destination is (are) in the Russian territory.
Services {or works) direcLly connecLed wiLh Lhe carriaqe and LransporLaLion ol qoods placed under Lhe
international customs transit procedure upon transportation of foreign goods from the customs authority
at the place of arrival to Russian territory to the customs authority at the place of departure from Russian
territory are considered to be supplied in Russia if they are rendered (performed) by companies or
individual entrepreneurs who performed their business activity in Russia.
1he works {services) LhaL are direcLly connecLed wiLh seaqoinq vessels and inland vessels LhaL are
situated in the Russian territory should be deemed as rendered in Russia. Such works (services) shall
include, in particular, installation, assembly, processing, treatment, repair and technical servicing.
Russia is noL supposed Lo be Lhe "place ol supply" when Lhe means ol LransporLaLion are provided under
a charter agreement and are rendered by a Russian company or a Russian individual entrepreneur
for carrying out activities related to the capture of aquatic biological resources and (or) research and
development purposes, or for the purposes of transportation between two ports outside Russia.
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1he Russian LerriLory should be considered as Lhe place ol supply ol Lhe carriaqe and LransporLaLion
services, as well as services directly connected with them, performed by Russian and (or) foreign
companies, if the services are executed for the purpose of geologic search, exploration and extraction of
hydrocarbon materials on subsoil plots, located on the continental shelf or in an exclusive economic zone
of Russia.
ln oLher cases, il noL speciled above, Lhe place ol supply ol Lhe services should be deLermined under Lhe
default rule, i.e., should be VATable at the place of a suppliers activity.
Furthermore, the VAT legislation provides for VAT exemption (exemption without credit) for the works
{services, includinq repair services) lor operaLion ol vessels, inland vessels and mixed {riversea) vessels,
during the standing time in port (all types of port charges, services of the harbor craft); for pilotage and for
Lhe classilcaLion and inspecLion ol vessels.
The VAT legislation provides for the following VAT rates applicable to carriage and transportation services as
well as to services (works) directly connected with carriage and transportation services:
07 VA1 raLe is available lor Lhe VA1 payers Lo Lhe lollowinq operaLions:
Services involvinq Lhe inLernaLional carriaqe ol qoods. 1he inLernaLional carriaqe ol qoods should be
meant as the carriage of goods by inter alia seagoing, river-going and combined (river-sea) vessels,
where the departure point or destination point of the goods is situated outside the territory of Russia.
FreiqhL lorwardinq services LhaL are rendered on Lhe basis ol a lreiqhL lorwardinq aqreemenL in Lhe
context of the arrangement of international carriage.
Works {services) perlormed {rendered) by Russian orqanizaLions in seaporLs and river porLs involvinq
the transshipment and storage of goods that are moved across the border of Russia where shipping
documents indicate a departure point and (or) destination point situated outside the Russian territory.
Works {services) perlormed {rendered) by inland waLer LransporL orqanizaLions in relaLion Lo qoods
that are to be exported under the export customs procedure involving the carriage (transportation)
of the goods within the Russian territory from a departure point to a point of unloading or reloading
(transshipment) onto seagoing vessels, combined (river-sea) vessels or other modes of transport.
Works {services) direcLly connecLed wiLh Lhe carriaqe or LransporLaLion ol qoods placed under Lhe
customs transit procedure.
Works {services) involvinq Lhe carriaqe ol passenqers and baqqaqe provided LhaL Lhe poinL ol deparLure
or the destination is situated outside the Russian territory (provided standard international documents of
carriage are issued in respect of such carriage).
Works {services) associaLed wiLh Lhe exporL lrom Lhe LerriLory ol Russia or imporLed Lo Russia ol qoods
by sea vessels and mixed {riversea) vessels under Lhe Lime charLer aqreemenL. 1he lisL ol documenLs
conlrminq such operaLions is esLablished by arLicle 165 ol Lhe 1ax Code.
1he 07 VA1 raLe may be applied in Lhe abovemenLioned cases provided LhaL appropriaLe conlrmaLion
documentary is collected by a taxpayer and submitted to the tax authorities; otherwise the standard 18%
VAT rate should be charged by the taxpayer until the required set of supporting documents is collected. The
application of the 0% rate normally allows offsetting input VAT.
187 VA1 raLe applies Lo oLher services {works).
Even though the principles are stated by the Russian Tax Code, their application in practice always raises
many questions and uncertainties. It is, therefore, recommended to analyze each particular case in detail.
Prohts tax
Cenerally, Russian prolLs Lax could be imposed Lo boLh Russian and loreiqn companies operaLinq in Russia.
Russian companies
Russian companies are Laxed on Lheir prolLs {in a qeneral case, income received less deducLible expenses).
1he sLandard prolLs Lax raLe is 207 {27 Lo Lhe lederal budqeL and 187 Lo Lhe reqional budqeL).
Cenerally, only economically |usLiled and properly documenLed expenses can be deducLed. FurLher,
some expenses may have limited deductibility, i.e., they can only be deductible within the limits set by the
legislation, and some expenses may appear to be completely nondeductible.
Foreign companies
A loreiqn company may be sub|ecL Lo Russian prolLs Lax eiLher via LaxaLion ol prolLs aLLribuLable Lo a Russian
permanent establishment of such foreign legal entity or via income tax withholding applied by Russian
taxpayers paying so-called Russian source income to such foreign company.
Permanent establishment
When a foreign company is a resident in a jurisdiction having a double tax treaty (DTT) with Russia, the
provision ol an appropriaLe LreaLy shall prevail and Lhe delniLion ol a permanenL esLablishmenL {PL)
provided in Lhe D11 should be LesLed insLead ol Lhe domesLic delniLion ol a PL.
1he delniLion ol a PL ol a loreiqn company in Russian domesLic law is quiLe similar Lo Lhe delniLion provided
under Lhe OrqanizaLion lor Lconomic CooperaLion and DevelopmenL {OLCD) Model ConvenLion {which was
used as a LemplaLe lor mosL D11s concluded by Russia). PL is delned as a branch, represenLaLion, division,
bureau, ollce, aqency or any oLher economically auLonomous subdivision or oLher place ol business ol LhaL
organization through which the organization regularly carries out entrepreneurial activities in the territory of
Russia. In this respect, a PE should be recognized when the following three main criteria are met:
1he acLiviLy is ol a commercial naLure {i.e., noL preparaLory or auxiliary)
lL is conducLed on a reqular basis {qenerally more Lhan 30 days conLinuously or cumulaLively)
lL is carried ouL Lhrouqh a lxed place ol business {e.q., a branch, represenLaLion, division, bureau, ollce,
agency)
Lven where no lxed place ol business exisLs, a loreiqn enLiLy would be deemed Lo have PL in Russia should
a legal entity or an individual, other than an agent of an independent status, have the right to conclude
contracts or negotiate key parameters thereof on behalf of that foreign company and habitually exercise such
right in Russia
1
.
Should the PE of a foreign entity be created in Russia, it would be subject to the full range of Russian taxes.
Income tax withholding
Accordinq Lo Russian domesLic leqislaLion, income lrom a specilc lisL ol LransacLions LhaL is received by a
foreign company and is not connected with entrepreneurial activities of that company in Russia, i.e., do not
constitute a Russian PE, should be assessable to income tax withheld at the source. In particular, the following
could be taxed at the source:
PaymenL ol dividends
lnLeresL income lrom any kinds ol debL obliqaLions
PaymenL ol royalLies
CapiLal qain lrom Lhe sale ol properLyrich companies
RenLal income, includinq income lrom leasinq operaLions, income lrom Lhe renLal ol ships and aircralL,
and {or) means ol LransporL and conLainers used in inLernaLional Lrallc
lncome lrom inLernaLional Lrallc, includinq demurraqes and oLher paymenLs arisinq in connecLion wiLh
transportation)
We note that in case the jurisdiction where a foreign organization is a tax resident has a DTT with Russia,
the provision of that treaty should prevail over the provision of Russian domestic legislation, and therefore,
the respective income either could be not subject to withholding tax at all in Russia or it could be taxed at a
reduced tax rate in Russia.
Furthermore, income received by a foreign company from the performance of work and rendering of services
in the territory of Russia where this does not give rise to a PE in Russia shall not be taxable at the source.
1
We note that there might be other grounds for PE creation.
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Transfer pricing
New transfer pricing legislation has been adopted in Russia on 8 July 2011 and has been enacted for
periods commencinq lrom 1 January 2012 {Lhe 1P Law). Lven Lhouqh Russia is noL a member ol Lhe
OLCD, Lhe provisions ol Lhe 1P Law are lor a larqe parL consisLenL wiLh Lhe OLCD principles buL are sub|ecL
Lo some specilc Russian consideraLions. 1he rules are driven by Lhe arm'slenqLh principle and locus on a
consideration of the substance of the transaction rather than the form.
The Russian TP regime in place until the end of 2011 was considered by the Russian tax authorities as
beinq dillculL Lo apply and, Lherelore, received very liLLle pracLical applicaLion. Amonq several siqnilcanL
concepLual chanqes, one ol Lhe ma|or relorms inLroduced by Lhe new 1P Law is Lhe requiremenL lor 1P
documenLaLion and 1P noLilcaLion lor conLrolled LransacLions.
lL will Lake Lime Lo undersLand how, in pracLice, Lhe 1P Law will be inLerpreLed and applied by Lhe Russian Lax
authorities. There are signs that the intention of the Russian tax authority is to develop an OECD-like practice.
However, companies should closely monitor the development of Russian TP legislation in practice in order to
comply wiLh Russianspecilc requiremenLs LhaL may diller lrom OLCD pracLice.
Scope of TP control
The Russian TP rules primarily focus on related-party transactions, but certain third-party transactions are
also subject to TP control. All cross-border transactions with related parties are subject to TP control. Third-
party transactions subject to TP control include transactions involving goods traded on global commodity
exchanqes {such as oil and oil producLs, lerrous meLals, nonlerrous meLals, lerLilizers, precious meLals and
precious stones) and transactions with a counterparty located in certain black-listed jurisdictions if the annual
income, as a resulL ol all LransacLions beLween Lhe parLies, exceeds RUB 60m {approximaLely USS2.2m).
In the domestic market, only related-party transactions can be subject to transfer pricing control. However, a
materiality thresholds applies in the domestic market, and generally only transactions in excess of a threshold
ol 3 RUB billion in 2012 {approx. USDS100 million), 2 RUB billion {approx. USDS66 million) in 2013
and RUB 1 billion {approx. USDS33 million) lor 201^ and subsequenL years are sub|ecL Lo 1P conLrol. lL is
worLh noLinq LhaL Lhis Lhreshold is lowered down Lo RUB 60m {approximaLely USDS2.2m) lor Lhe lollowinq
transactions:
1ransacLions involvinq an ob|ecL ol assessmenL Lo mineral exLracLion Lax calculaLed aL an ad valorem Lax
rate
1ransacLions where one ol Lhe parLies is exempL lrom payinq prolL Lax or pays Lhe Lax aL Lhe 07 raLe
1ransacLions where one ol Lhe parLies is reqisLered in a special economic zone {such LransacLions will be
controlled in 2014)
As an exemption, certain domestic transactions will not be subject to TP control:
1ransacLions beLween members ol a domesLic consolidaLed qroup ol Laxpayers
1ransacLions where boLh parLies are reqisLered wiLhin Lhe same reqion ol Russia, where none ol Lhe
parties have economically autonomous subdivisions in other regions of Russia nor pay income tax to the
budgets of other regions, where none of the parties have tax losses, and there are no other grounds for
the transaction to be controlled.
For Lhe purposes ol Lhe 1P Law, Lhe main condiLion lor Lwo enLiLies Lo be reqarded as relaLed parLies is a
25% ownership threshold, i.e., if one party directly or indirectly controls more than 25% the other party.
CourLs can declare companies and/or individuals Lo be relaLed on any oLher qrounds, il iL is proven LhaL Lhe
relaLionship beLween Lhe parLies inluenced Lhe Lerms and Lhe resulLs ol Lhe LransacLions.
TP methods
1he 1P Law qenerally lollows Lhe principle seL lorLh in Lhe July 2010 OLCD Cuidelines lor MulLinaLional
LnLerprises and 1ax AdminisLraLions. ln parLicular, iL allows lor Lhe use ol one ol Lhe lve OLCD meLhods,
includinq comparable unconLrolled price {CUP), resale minus, cosL plus, LransacLional neL marqin meLhod
and prolL spliL meLhod. 1he CUP meLhod has Lhe lrsL prioriLy, whereas Lhe prolL spliL meLhod is reqarded as
the method of last resort. The resale minus method is regarded as the second priority method for activities
ol disLribuLion ol qoods in Russia. UlLimaLely, Laxpayers are able Lo use any meLhod LhaL can be shown Lo be
appropriaLe, noL only Lhe lve provided lor in Lhe 1P Law.
Documentation requirements
NoLilcaLion ol conLrolled LransacLions: inlormaLion abouL conLrolled LransacLions should be submiLLed
annually Lo Lhe Lax auLhoriLies via a 1P noLilcaLion. 1his inlormaLion should be presenLed Lo Lhe Lax
auLhoriLies no laLer Lhan 20 May ol Lhe year lollowinq Lhe year when Lhe conLrolled LransacLions Look
place. 1he lrsL reporLinq deadline will be 20 May 2013 {lor 2012 LransacLions). For 2012 and 2013, Lhis
requirement will apply only where the amount of income from all controlled transactions concluded by
the taxpayer within a calendar year with one person (a few same persons being parties to the controlled
LransacLions) exceeds RUB 100 million lor 2012 {approx. USDS3.3 million) and RUB 80 million in 2013
{approx. USDS2.6 million).
TP documentation: transactions subject to TP control should be documented. The tax authorities
may request a TP documentation proving that the transfer prices are established at arms length. This
documentation should be presented to the tax authorities within 30 business days from the tax authorities
request, which cannot be earlier than 1 June of the year following the reporting year. The earliest date
when Lhe Lax auLhoriLies can requesL 1P documenLaLion lor 2012 is 1 June 2013. Cenerally, Lhe Russian 1P
documenLaLion will need Lo conLain similar inlormaLion as recommended by Lhe OLCD 1P Cuidelines. 1he 1P
documentation must be submitted to the tax authorities in Russian language.
As an exception, TP documentation is not required for third-party transactions, transactions where the prices
conlorm Lo a requlaLed price or a price LhaL is prescribed by Lhe anLimonopoly auLhoriLies, LransacLions wiLh
securities and derivatives traded on an organized equity market, and for transactions covered by an advance
pricing agreement.
RecenLly, Russian MinisLry ol Finance adopLed Lhe meLhodoloqical requiremenLs on Lhe conLenLs ol Lransler
pricinq documenLaLion and Lhe lorm ol noLilcaLion lor conLrolled LransacLions, which Lhe Laxpayers can uLilize
in Lhe course ol preparaLion ol documenLaLion and noLilcaLions.
Advance pricing agreements
1he 1P Law provides lor Lhe possibiliLy Lo conclude an advance pricinq aqreemenL {APA) wiLh Lhe Russian
tax authority. Only Russian entities are eligible to conclude an APA, and they also have to qualify as large
taxpayers. An APA can be unilateral (with the Russian tax authority only) or multilateral (with the tax
authorities of several countries).
Penalties
1he 1P Law esLablishes a ^07 penalLy in case a Laxpayer's income is ad|usLed as Lhe resulL ol 1P audiL {based
on the amount of unpaid tax). However, no penalty can be charged by the tax authorities if the taxpayer
submitted a transfer pricing documentation or concluded an advance pricing agreement (APA).
In addition, the 40% penalty will be applied only to transactions concluded in 2017 and subsequent years.
During the transition phase, no penalty will apply to transactions concluded in 2012 and 2013, and a reduced
20% penalty will apply to transactions concluded in 2014, 2015 and 2016.
Social insurance contributions
1he social securiLy siLuaLion is currenLly as lollows: lor Lhe lrsL approximaLely USDS18,701 {RUB 568,000)
of salary per employee in a calendar year, the company should pay social security contributions at 30.2%. For
any income in excess ol USDS18,701 in Lhe same calendar year, Lhe company should pay a social securiLy
contribution of 10.2%. This procedure is in force for 2013. The rates for 2014 onwards are largely unknown
and will probably chanqe, buL iL is our beliel LhaL due Lo a siqnilcanL delciL in Lhe Pension Fund, Lhey will noL
decrease.
Four types of payments are currently made:
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1) To the Pension Fund: 22%
2) To the Social Insurance Fund: 2.9%
3) 1o Lhe Federal Fund ol Compulsory Medical lnsurance: 5.17
^) PaymenLs lor Compulsory Social lnsurance aqainsL lndusLrial AccidenLs: 0.27 lor ollce workers {Lhe raLe
is higher for dangerous industries, e.g., 8.5% for miners)
1his resulLs in a LoLal ol 30.27. 1he raLes apply Lo Lhe lrsL USDS18,701 ol salaries in a calendar year. lncome
in excess ol LhaL lqure is sub|ecL only Lo paymenLs 1) and ^) aL Lhe raLes ol 107 and 0.27.
The payments are not called taxes; instead, wholly separate legislation has been created. However, for all
pracLical purposes, Lhe paymenLs are adminisLered similarly Lo Laxes on salaries. Many Russian companies
choose to have a separate low-cost accountant dealing exclusively with payroll-related taxes as the schedules
for calculation of the above payments must be maintained separately for each individual and must be kept for
75 years (since people may live that long).
Personal income tax
In certain situations prescribed by the tax legislation, when paying out income to employees, enterprises may
act as tax agent, i.e., they should calculate, withhold and remit to the Russian budget the relevant amounts of
personal income tax (the tax rates depend on the type of the income and residency of the employees).
Assets tax
Both Russian and foreign companies (either having created permanent establishment in Russia or not) could
be subject to assets tax in Russia on their taxable assets.
Russian companies
1axable asseLs include boLh movable and immovable properLy accounLed as lxed asseLs on a Laxpayer's
balance sheet (based on the Russian Accounting Principles).
The movable property, which was put into use starting 1 January 2013, is excluded from the list of taxable
assets for Russian assets tax purposes.
Tax base is calculated as average annual net book value of taxable assets under the Russian Accounting
Standards.
The maximum assets tax rate provided by the Russian Tax Code is 2.2% (could be reduced by the local tax
authorities).
Foreign companies
In case the Russian PE of a foreign company is created, the calculation of the assets tax is similar to the
procedure discussed previously for the Russian taxpayers, i.e., 2.2% (this could be reduced by the local
tax authorities) of the movable and immovable assets net book value calculated based on the Russian
Accounting Principles.
If no PE is created, the assets tax is calculated as 2.2% (could be reduced by the local tax authorities) of
the assets inventory value with respect to immovable property only (calculated based on the data of the
technical inventory bodies). Such value only becomes known after the valuation of the immovable property
is perlormed by Lhe Lechnical invenLory bodies. Cenerally, invenLory value is much lower Lhan markeL value.
It is notable that in accordance with civil legislation, vessels should normally be considered as immovable
property.
Transport tax
Vehicles (including vessels) registered in accordance with Russian law (please see the details of the
registration below) are subject to transport tax, which for seagoing vessels is based on either number of unit
of means of transport or horsepower (HP).
The following transportation vehicles are exempt from transportation tax:
Seaqoinq harvesLinq vessels
Passenqer and lreiqhL sea vessels, which are owned by companies and privaLe enLrepreneurs whose main
type of activity is the performance of passenger and (or) freight carriage
State duties
The following major state duties are applicable to shipping companies in Russia:
* Exchange rate USD/RUB as of 1 January 2013 established by the Russian Central Bank.
1.1.2 Shipping incentive regime
The regime applies to shipowners who registered their vessels in the Russian International Register of Vessels
(RIRV).
VAT
Shipowners who have reqisLered Lheir vessels in Lhe RlRV could en|oy Lhe lollowinq benelLs:
lmporLaLion ol vessels LhaL are Lo be reqisLered in RlRV is cusLoms VA1 exempL
Sale ol builL vessels LhaL are Lo be reqisLered in RlRV is sub|ecL Lo a 07 VA1 {provided a required seL ol
documents is collected and submitted to the Russian tax authorities)
In case the registration of a ship in the RIRV has not been performed within 45 calendar days from the date
of transfer of ownership of the vessel from the taxpayer to the customer, the tax base is determined by a tax
agent (in case the vessel is deemed to be supplied in Russia, please refer to the VAT place of supply rules
above) as the value at which the ship was sold to the customer, including the amount of tax. If this is the
case, the tax agent is a person who owns the ship at the end of 45 calendar days from the date of the transfer
ol ownership. 1he Lax aqenL should accrue VA1 aL 18/118 raLe.
Though the shipping incentive regime does not provide for any additional VAT exemptions in respect of
carriage and transportation services, such services could be outside the scope of Russian VAT or be subject to
the 0% rate or be subject to the standard 18% rate under the general rules (see section 1.1.1. above).
ProlLs Lax
ProlLs received lrom LransporLaLion ol carqo and passenqers, oLher relaLed shippinq services and disposal ol
vessels are exempt from taxation in Russia, provided ships are registered in the RIRV and point of departure
and (or) point of destination of their course are located outside of Russia. However, provisions of the Russian
Tax Code disallow tax deduction of costs with respect to technical maintenance, repairs and other services
relaLed Lo mainLenance or disposal ol vessels reqisLered in Lhe RlRV. Moreover, vessels reqisLered in RlRV are
not depreciated for tax purposes.
All other non-shipping income received by a company (interest income, dividends, capital gains, including
disposal of ships registered in the RIRV, etc.) is taxed under regular rates and rules.
Social insurance contributions
Type of duty Duties RUB (USD*)
State registration in the State Register of Ships, a vessel
register or a bareboat charter register of marine vessels
6,000 (198)
State registration of amendments made to the State Register
of Ships, a vessel register or a bareboat charter register in
relation to marine vessels
1,200 (40)
Issuance oI a certihcate oI ownership and Ior the state
registration of limitations (encumbrances) of rights in a
marine vessel
6,000 (198)
Issuance oI a certihcate oI the right to hy the 5tate Flag oI
Russia
6,000 (198)
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Crew of the vessels registered in RIRV should not be subject to social insurance contributions (except for
payments for Compulsory Social Insurance against Industrial Accidents). This provision comes into force
starting 2012 and is valid until 2027.
Assets tax
Since 2013 vessels registered in the Russian International Register of Vessels shall not be deemed to be
objects of taxation.
Transport tax
Companies are exempt from transport tax with respect to vessels registered in RIRV.
Customs duties
Importation of vessels that are to be registered in RIRV is exempt from customs duties.
State duties
For registration of ships in the RIRV, state duties depend on the gross tonnage of the ship:
1he lollowinq duLies apply lor annual conlrmaLion ol a ship's reqisLraLion in Lhe RlRV:
* Exchange rate USD/RUB as of 1 January 2013 established by the Russian Central Bank.
** Gross register ton (GRT)
Considerinq Lhe above, lor shipowners involved in inLernaLional Lrallc, where Lhe poinL ol deparLure and poinL
of destination are located outside of Russia, the only Russian taxes applicable would be state duties, provided
the vessels are registered in RIRV.
Personal Income Tax (PIT) rate in amount of 13% is established for the foreign seafarers who are not tax
residenLs ol Russia buL who work on vessels LhaL are lyinq Lhe Russian laq.
1.3 Tax treaties and country of residence
Russia has raLiled Lax LreaLies wiLh 80 counLries.
Currently, tax legislation envisages criteria of residency based on country of incorporation. However, it is
being considered to introduce the effective place of management test as a residency criterion.
MosL LreaLies have a special arLicle lor inLernaLional shippinq income LhaL is qenerally consisLenL wiLh ArLicle 8
ol Lhe OLCD Model ConvenLion. Cenerally, Lhe D11s raLiled by Russia provide LhaL prolLs lrom Lhe operaLions
ol vessels in inLernaLional Lrallc should be Laxed only in Lhe counLry ol residence ol Lhe shippinq company.
Gross tonnage units Duties per vessel RUB (USD*)
803,000 52,000 (1,712) plus 9.4 (0.31) per unit**
3,0018,000 54,000 (1,778) plus 8.8 (0.29) per unit
8,00120,000 96,000 (3,161) plus 5.0 (0.16) per unit
Over 20,000 134,000 (4,412) plus 3.2 (0.11) per unit
Gross tonnage units Duties per vessel RUB (USD*)
808,000 14,000 (461) plus 22.4 (0.74) per unit**
8,00120,000 104,000 (3,424) plus 14.2 (0.47) per unit
20,00145,000 204,000 (6,717) plus 9.2 (0.30) per unit
Over 45,000 260,000 (8,560) plus 8.0 (0.26) per unit
Further, such DTTs usually exempt vessels owned by foreign companies without PE in Russia from Russian
assets tax since vessels are not treated as immovable property for the purpose of the DTTs.
2.1 Most commonly used legal forms for shipping activities
1he mosL commonly used leqal lorms in Russia are Lhe limiLed liabiliLy company {LLC, usually relerred Lo as
OOO), open joint stock company (OJSC, usually referred to as OAO) and closed joint stock company (CJSC,
usually referred to as ZAO). While the majority of shipping companies work as OOOs, most of the biggest
companies use Lhe OAO and ZAO lorms. MosL shippinq acLiviLies and shippinqrelaLed acLiviLies {e.q., carqo
handling activities) are subject to a special license requirement.
Dividends received by Russian taxpayers from Russian or foreign subsidiaries are generally subject to 9%
prolLs Lax. A parLicipaLion exempLion reqime was inLroduced lor dividends wiLh ellecL lrom 1 January 2008,
but it is subject to strict conditions, e.g., minimum ownership of 50%, minimum holding period of 12 months
and subsidiary should not be incorporated in a black-listed company (includes, in particular, all offshore
countries).
Dividends received by foreign organizations from Russian subsidiaries are subject to 15% withholding tax,
which under certain conditions may be reduced pursuant to applicable DTTs.
3.1 Specihc and {cr) eneraI subsidies avaiIabIe tc shippin ccmpanies
There are some subsidies available for shipping companies in Russia, in particular for shipping companies
carrying out navigation and hydrographic support activities for the purpose of navigation safety on the
Northern sea line.
The Russian government has approved a program to subsidize Russian shipping companies acquisition of
new vessels {includinq lnancial leases). Subsidies will be provided Lo Lhe amounL ol inLeresL on loans raised
to acquire vessels.
In 2008, the possibility of creating special economic port zones (port SEZs) was introduced in legislation. To
daLe Lhe lollowinq porL SLZs have been creaLed: SoveLskaya Cavan {Khabarovsk 1erriLory) and Murmansk.
The following tax incentives are available for the residents of port SEZs:
VA1: work/services provided by Lhe residenLs ol porL SLZs in Lhe LerriLory ol porL SLZs should be VA1
exempt; import of goods placed under the free customs zone procedure should not be subject to VAT; 0%
VAT rate may be applied for the sale of goods placed under the free customs zone procedure.
Lxcise: imporLaLion ol qoods inLo Lhe LerriLory ol porL SLZs lrom wiLhin and ouLside Lhe LerriLory ol Russia
is not subject to excise tax.
CorporaLe prolLs Lax: in accordance wiLh reqional laws, Lhe reqional parL ol Lhe corporaLe prolLs Lax raLe
can be reduced by up to 4.5% and can be as low as 13.5%.
AsseLs Lax: lxed asseLs produced or purchased lor Lhe perlormance ol acLiviLies in Lhe LerriLory ol porL
SLZs are noL sub|ecL Lo asseLs Lax lor 10 years, sLarLinq lrom Lhe daLe when Lhese lxed asseLs were puL
inLo Lhe sLaLemenL ol lnancial posiLion.
Moreover, shipbuildinq orqanizaLions LhaL are residenLs ol an indusLrial producLion special economic
zone are not subject to assets tax in relation to the property booked at their balance sheets and used
for building and repairing ships for 10 years from the date of registration of such organizations as the
resident of special economic zones, as well as in relation of the property created or acquired in order
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to build and repair ships for 10 years from the date of registration of the property, but not longer than
during the life cycle of the industrial production special economic zone.
Land Lax: land ploLs siLuaLed in Lhe LerriLory ol porL SLZs are noL sub|ecL Lo land Lax lor 10 years sLarLinq
from the date when the ownership right on each land plot was received (special provision for shipbuilding
organizations).
CusLoms duLy: imporLaLion ol qoods {e.q., equipmenL, raw maLerials, componenLs) inLo Lhe LerriLory ol
porL SLZs lrom ouLside Lhe cusLoms LerriLory ol Lhe CusLoms Union {Russia, KazakhsLan, Belarus) is noL
subject to customs duty provided these goods will be handled by SEZ residents on the territory of the port
SEZ.
3.2 Customs implications
Certain customs duties and VAT exemptions are available in the shipping industry:
For vessels ol a Lonnaqe exceedinq 1,000 CR1 {cusLoms classilcaLion codes 8901 10 100, 8901 20 100
0, 8901 30 100 0, 8901 90 100 0) owned by a Foreiqn Leqal LnLiLy {FLL) and charLered Lo a Russian
Leqal LnLiLy {RLL) under a bareboaL and Lime charLer aqreemenL lor usaqe in Lhe inLernaLional carriaqe
only (temporarily imported into Russia)
For vessels reqisLered in Lhe Russian lnLernaLional ReqisLer ol Vessels {which is open only Lo vessels used
in international transportation)
Vessels used as bunkers lor exporL ol peLroleum producLs owned by an FLL and used in cerLain areas
(temporarily imported into Russia)
Sea lerries owned by an FLL charLered under bareboaL charLer and LimecharLer aqreemenLs, used on
certain routes (temporarily imported into Russia)
Otherwise, vessels are subject to customs duties and VAT under different customs procedures:
Under Lhe procedure ol release lor domesLic consumpLion wiLh paymenL ol cusLoms duLies and imporL
VAT
Under Lhe procedure ol Lemporary imporL wiLh cusLoms duLies and imporL VA1 paid by insLallmenLs
comprising 3% of their total amount on a monthly basis within a period of temporary importation
{qenerally 2 years, 3^ monLhs lor vessels owned by FLL )
Russia is a member ol Lhe CusLoms Union ol Russia, Belarus and KazakhsLan, wiLh Lhe uniled cusLoms
LerriLory. 1he uniled cusLoms LerriLory implies lree movemenL ol Lhe qoods {includinq vessels reqarded as
goods) between the above three countries. For example, if a vessel is imported into Russia, it needs to pass
cusLoms clearance only once in Russia, and Lhen iL may be LransporLed Lo KazakhsLan {or Belarus) wiLhouL
customs clearance (no customs declaration should be submitted, and no additional customs duties should be
paid). 1he CusLoms Union has a uniled cusLoms leqislaLion wiLh respecL Lo Lransler ol vehicles.
However, some provisions are esLablished by Lhe Russian leqislaLion, e.q. by Lhe Federal Law "On CusLoms
RequlaLion" which is in line wiLh CusLoms Union leqislaLion. Accordinq Lo Lhe Law {Lhe iLem 17 ol arLicle
322), il a vessel LransporLs Russian qoods lrom Russian LerriLory Lo arLilcial islands, insLallaLions and
sLrucLures {i.e., lxed drillinq riqs) over which Russia exercises |urisdicLion {e.q., in a Russian exclusive
economic zone), such goods are not subject to declaring to customs and customs payments.
Russia has become a member of the World Trade Organization in August 2012, and the respective WTO
regulations, as well as some intermediate rules, are applied in Russia.
4.1 Infrastructure
4.1.1 Major ports
Shipping infrastructure in Russia includes over 50 ports seaports. The major ports are:
Arkhanqelsk
Azov
Kalininqrad
Kavkaz
Maqadan
Murmansk
Nakhodka
Novorossiysk
Primorsk
RosLovonDon
SL. PeLersburq
1aman
1uapse
Vanino
UsL'Luqa
VladivosLok
VosLochny
VysoLsk
Yeisk
The following support facilities are usually available in major ports in Russia:
Dockinq
SLoraqe
Airports near major ports include:
Anapa {ViLyazevo): {Kavkaz, Novorossiysk)
Celend|ick: {Novorossiysk)
Kalininqrad {Hrabovo): {Kalininqrad)
Krasnodar: {Primorsk)
RosLovonDon: {Azov)
SL. PeLersburq {Pulkovo): {SL. PeLersburq)
1aqanroq: {Azov)
VladivosLok: {VosLochny, Nakhodka)
lnsurance brokers
4.1.5 Regulatory bodies in shipping industry
The following state bodies are authorized for regulation and control of the shipping industry:
MinisLry ol 1ransporLaLion ol Russia {MinLrans) adopLinq dillerenL Lypes ol requlaLions {on sea piloLs,
marine registration, rules for safety freight shipment, etc.)
Federal Service ol 1ransporLaLion Supervision {RosLransnadzor) carryinq ouL conLrol ol mariLime saleLy
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Federal Aqency ol MariLime and River 1ransporL {RosmorrechloL) exercisinq luncLions lor sLaLe
services and state property administration in the sphere of maritime and river transport area
Federal Fishinq Aqency {RosrybolovsLvo) requlaLion ol lshinq indusLry
Federal Service lor Lcoloqical, 1echnoloqical and ALomic Supervision {RosLekhnadzor) licensinq ol
activities related to maritime safety
Federal Aqency ol WaLer Recourses {Rosvodresursy) exercisinq luncLions lor sLaLe services and sLaLe
property administration in the sphere of water recourses
OLher services auLhorized lor shippinq indusLry requlaLion and conLrol amonq oLher luncLions {Federal
Tax Service, Federal Customs Service, Federal Tariffs Service, etc.)
Ushakov BalLic Navy lnsLiLuLe {Kalininqrad)
Far LasLern SLaLe MariLime Academy {VladivosLok)
KamchaLka SLaLe MariLime Academy {PeLropavlovskKamchaLski)
Admiral Ushakov MariLime SLaLe Academy {Novorossiysk)
Admiral Nevelski MariLime SLaLe UniversiLy {VladivosLok)
Moscow SLaLe Academy ol WaLer 1ransporL {Moscow)
Novosibirsk SLaLe Academy ol WaLer 1ransporL {Novosibirsk)
Sedov RosLovonDon MariLime Colleqe {RosLovonDon)
SL. PeLersburq SLaLe UniversiLy ol WaLer CommunicaLions {SL. PeLersburq)
Sakhalin Marine Colleqe {Nevelsk)
Admiral Makarov SLaLe MariLime Academy {SL. PeLersburq)
Volzhskaya SLaLe Academy ol WaLer 1ransporL {Nizhniy Novqorod)
The universities and colleges provide specialized courses in maritime science, technology and engineering,
and oceanography.
MosL shippinq companies in Russia have implemenLed Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code, as
it would be impossible to sail ships in international territories without doing so.
Issues of maritime safety have always been given high priority in Russia. In particular, in 2000 a regulation
of the Russian government (No. 324 of 11 April 2000) was adopted that approved a statute for a federal
system of maritime industry protection from unlawful acts against security of navigation. According to
this regulation, the main task of the federal system is to strengthen the security of vessels, their crews and
passengers, the cargos transported, navigation control units, means of communication and navigation, and
port facilities and their personnel.
The security system comprises a set of legislative, organizational, administrative, operational, military and
technical arrangements aimed at foreseeing, detecting and deterring unlawful acts threatening human lives
and damage to property, and detecting and handling problems and conditions which could foster unlawful
acts in the sphere of the shipping business.
According to the regulation, the implementation of the assigned tasks of management and coordination of
proLecLive measures Lo be Laken was enLrusLed Lo MinLrans and iLs deparLmenLs. 1his work is carried ouL in
close cooperation with other federal executive authorities.
4.2.2 International regulations on safety and the environment
1he MariLime SecuriLy Service {MSS), a lederal sLaLe insLiLuLion, is Lhe execuLive body appoinLed Lo orqanize
and oversee Lhe implemenLaLion ol Lhe requiremenLs ol Lhe lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL
Sea {SOLAS) chapLer Xl2 and Lhe lnLernaLional Ship and PorL FaciliLy SecuriLy {lSPS) code in Russia. Also
in lorce is Lhe lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships, 1973, as modiled by Lhe
ProLocol ol 1978 relaLinq LhereLo {MARPOL 73/78) and Lhe UniLed NaLions ConvenLion on Lhe Law ol Lhe
Sea {UNCLOS), 11 April 1997.
Following a major accident which took place in 2011, in 2012 major amendments have been approved into
the Code of Internal Water Transport of Russia, increasing liability of the shipowners and crews.
4.2.3 Russian regulations on safety and the environment
Specilc Lypes ol acLiviLy in Lhe leld ol indusLrial saleLy operaLion, ma|or overhaul ol a hazardous
production facility (e.g., combustible liquids, gases or other combustible substances) as well as the servicing
and repair ol Lechnical equipmenL used in a hazardous producLion laciliLy are Lhe sub|ecL Lo licensinq in
Russia.
The company operating a hazardous facility must comply with certain requirements:
1he company musL obLain a license Lo operaLe a lre explosive laciliLy. Licenses are qranLed by
Rostekhnadzor.
1he company musL compleLe indusLrial saleLy experLise ol a laciliLy. LxperLise musL be carried ouL by an
expert with an appropriate license, and the experts report shall be approved by Rostekhnadzor.
1he company musL produce a declaraLion ol indusLrial saleLy.
1he company musL procure an insurance policy coverinq liabiliLy lor Lhe harm caused Lo lile, healLh,
property or environment by accidents on the hazardous facility.
1he company musL reqisLer a laciliLy in Lhe sLaLe reqisLer ol hazardous laciliLies.
1he company musL comply wiLh oLher requiremenLs seL ouL in Lhe law.
Companies also need to obtain special water permits for the use of water bodies under Russian state
(federal) ownership in case of performing different types of activities, including for:
CreaLion ol sLaLionary and {or) loaLinq plaLlorms, arLilcial islands and arLilcial land ploLs on Lhe lands,
covered by surface waters
ConsLrucLion ol hydroLechnical insLallaLions, bridqes, as well as ol submerqed and underqround passaqes,
pipelines, submarine communication lines and other linear objects, if such construction is connected with
changing the bottom and the banks of water bodies
Mineral prospecLinq and mininq
Submarine cable laying or offshore subsea pipeline shall be provided only after obtaining permission issued
by Lhe Federal Service lor Supervision in Lhe Area ol NaLural Resources' Use {Rosprirodnadzor).
4.2.4 Safety rules for crew members
Crew members must hold the necessary license to work on a ship. The license is only valid for a few years and
must then be renewed. In general, the safety rules are robust and strict.
4.3 Sailing the Russian waters and crossing the Russian border
Any state enjoys freedom of navigation in the Russian Exclusive Economic Zone (EEZ) and (or) the waters
above the continental shelf.
As regards the Russian territorial sea, its external border is considered to be the state border of Russia.
Hence, the entry into the territorial sea represents an entry into the territory of Russia. According to general
regulation of Russian law, only innocent passage of a vessel does not require any permission, implying that
all oLher acLiviLies do require such permission. On Lhe oLher hand, no specilc procedure lor qranLinq riqhL ol
sailinq in Lhe inLernal seaways and LerriLorial sea ol Russia Lo commercial vessels under Lhe loreiqn laq has
been elaborated.
1he Russian CovernmenL has developed Lhe pracLice ol qranLinq loreiqn vessels permission lor sinqle and
multiple entries into the internal waters and territorial sea of Russia for the purposes of laying pipelines,
moniLorinq condiLions ol exisLinq pipelines and oLher relaLed acLiviLies. Such permission delnes Lhe area ol
Lhe LerriLorial sea where enLrance is allowed, names and laqship sLaLes ol Lhe loreiqn vessels admiLLed and
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the type of works they are to perform, as well as the admission period. Please note that there is common
pracLice lor Lhe vessels lyinq Lhe Russian laq Lo receive such permissions lor mulLiple crossinqs ol Lhe border
as well.
In order to formally cross the border, a foreign vessel has to enter a relevant Russian seaport (some Russian
ports are closed for foreign vessels) and undergo relevant state border and customs control. Besides,
carryinq ouL acLiviLies in Lhe Russian LerriLorial sea has Lo be reporLed Lo border ollcials, and cerLain
information must be communicated.
In case a vessel needs to pass through Russian inland waterways, it will have to be registered in the bareboat-
charter register (as described below), because under Russian law, vessels are allowed to navigate in the
inland waLerways ol Russia only under Lhe Russian laq.
4.4 Flagging issues
1he riqhL Lo ly Lhe Russian laq permanenLly is normally qranLed only Lo vessels owned by Russian leqal
entities.
Ships lyinq a loreiqn laq cannoL provide services inside Lhe Russian LerriLorial sea.
1he riqhL Lo ly Lhe Russian laq may be Lemporarily qranLed Lo a ship owned by a loreiqn company il Lhe ship
is provided under a bareboat charter to a Russian company for a period of at least one year, assuming the
following conditions are met:
1he shipowner has aqreed in wriLinq Lo Lransler Lhe vessel under Lhe Russian laq.
MorLqaqees under Lhe morLqaqes esLablished and reqisLered in accordance wiLh Lhe laws ol Lhe
shipowner's sLaLe have aqreed in wriLinq Lo Lransler Lhe vessel under Lhe Russian laq.
1he laws ol loreiqn laq lown by Lhe owner ol Lhe ship do noL prohibiL qranLinq Lhe vessel Lhe riqhL Lo ly a
loreiqn laq.
1he riqhL Lo ly a loreiqn laq will be suspended by Lhe Lime Lhe riqhL Lo ly Lhe Russian laq is qranLed.
Such a right may be granted for a maximum period of two years, with a possibility of extension up to the
period ol Lhe bareboaL charLer. Foreiqn vessels wiLh Lhe Russian laq can render all kinds ol services in
Russian territorial waters.
4.5 Registration
Any vessel lyinq Lhe Russian laq musL be reqisLered in one ol Lhe lollowinq reqisLer books ol Russia:
1he Russian SLaLe Vessels ReqisLer
1he ship's book
1he BareboaL CharLer ReqisLer
1he Russian lnLernaLional ReqisLer ol Vessels
The right of ownership and other property rights to a ship, as well as limitations (encumbrances) on it
(mortgage, trust management, etc.), shall be subject to registration in the state register or the ship book.
Vessel registration in Russia is carried out at various merchant ports at the choice of the shipowner or
charterer. The registration of vessels and issuance of respective documents is done by the master of a port.
The procedure of ships registration is covered by several decrees and orders issued by the Russian
CovernmenL and MinLrans.
A vessel may be registered for a certain period of time with the right of prolongation of this period or without
establishing duration of a vessels registration. A vessels registration in the registry shall be subject to annual
conlrmaLion. A procedure lor Lhe annual conlrmaLion ol a vessel's reqisLraLion shall be esLablished by Lhe
rules for registration of ships and rights thereto in commercial seaports.
1he crew ol a ship consisLs ol Lhe shipmasLer, oLher commandinq ollcers and Lhe resL ol Lhe crew. 1he
commandinq ollcers ol a ship include, in addiLion Lo Lhe shipmasLer, Lhe maLes, mechanics, elecLric
mechanics, radio ollcers and physicians. MinLrans, RosrybolovsLvo and oLher lederal execuLive bodies may
also assign other specialists to the ship.
Russian law does noL conLain any specilc requiremenLs reqardinq Lhe naLionaliLy {ciLizenship) ol crew
ol loreiqn vessels. However, in case a loreiqn vessel obLains permission Lo ly Lhe Russian laq, cerLain
naLionaliLy requiremenLs will be applicable: Lhe capLain, Lhe chiel ollcer, Lhe chiel mechanic and Lhe radio
ollcer will have Lo be Russian naLionals.
Lach ship shall have on board a crew whose members have Lhe proper qualilcaLions Lo ensure:
1he sale sailinq ol Lhe ship and Lhe proLecLion ol Lhe marine environmenL
1he lullllmenL ol Lhe requiremenLs lor Lhe observance ol workinq Lime aboard Lhe ship
PrevenLion ol overwork ol Lhe crew members
1he inLernaLional convenLion reqardinq reqisLraLion is Lhe UniLed NaLions ConvenLion on Lhe Law ol Lhe Sea
{UNCLOS), 11 April 1997.
4.5.5 Special requirements (rules) relating to registration
The Regulations for Ship Registration in Sea Trading Ports establish an uncomplicated procedure for Russian
ship operators to register ships in the Russian International Register of Vessels, including the reregistration
ol ships lisLed in Lhe Russian SLaLe ReqisLer ol Ships or Russian BareboaL CharLer ReqisLer. Specilcally, Lhe
reregistration of foreign ships chartered by a Russian disponent under bareboat charter from the Russian
Bareboat Charter Register to the Russian International Ship Register requires neither execution of a new
bareboaL charLer nor a new permiL lor lyinq Lhe Russian laq.
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Singapore
1. Tax
1.1 Tax in general
ln Lhe absence ol specilc Lax incenLives, Lhe sLandard raLe ol corporaLe income Lax is currenLly 177. SevenLy
lve percenL ol Lhe lrsL SCS10,000 {t5,702) ol charqeable income and 507 ol Lhe nexL SCS290,000
{t165,355) are exempL lrom Lax. 1he balance ol charqeable income in excess ol SCS300,000 {t171,057)
is fully taxable at the standard rate of 17%.
1.2.1 Automatic exemption
A shipping enterprise is exempt from tax on qualifying shipping income, which includes, but is not limited to:
lncome derived lrom Lhe operaLion ol Sinqapore ships plyinq ouLside Lhe limiLs ol Lhe porL ol Sinqapore
lncome lrom carriaqe ol passenqers, mail, livesLock or qoods shipped in Sinqapore by loreiqn ships
(excluding carriage arising solely from transshipment from Singapore or carriage that is only within the
limits of the port of Singapore)
lncome derived lrom loreiqn exchanqe and risk manaqemenL acLiviLies LhaL are carried ouL in connecLion
with and incidental to the core shipping operations of Singapore ships
lncome derived lrom Lhe provision ol qualilyinq inhouse ship manaqemenL services in respecL ol
Singapore ships owned or operated by any qualifying company
Cains derived lrom Lhe sale ol Sinqapore ships and ships under consLrucLion {includinq new buildinq
contracts) and sale of all the issued ordinary shares in a qualifying special purpose company that is
the owner of Singapore ships only or is the buyer under a contract for construction of a ship that is
provisionally registered or intended to be registered as a Singapore ship
Only companies (resident and nonresident) owning or operating ships are eligible for these exemptions.
These exemptions are granted automatically if the criteria are met. In addition, such companies will enjoy
automatic withholding tax exemption on certain payments made in respect of qualifying loans entered into
on or belore 31 May 2016 wiLh loreiqn lenders Lo lnance Lhe purchase or consLrucLion ol Sinqapore ships,
subject to conditions.
A "Sinqapore ship" is delned as a ship lor which a permanenL cerLilcaLe ol reqisLry has been issued under
Lhe MerchanL Shippinq AcL in Sinqapore {i.e., iL lies Lhe Sinqapore laq) and iLs reqisLry is noL closed or
deemed to be closed or suspended. The exemptions will apply from the date of provisional registration if the
permanenL cerLilcaLe ol reqisLry has subsequenLly been obLained in respecL ol Lhe ship.
1.2.2 Maritime Sector Incentive-Approved International Shipping Enterprise Award
Shippinq companies, which own or operaLe a leeL ol loreiqn ships, can apply lor Lhe MariLime SecLor
lncenLiveApproved lnLernaLional Shippinq LnLerprise {MSlAlS) award. Successlul applicanLs would eiLher be
qranLed Lhe MSlAlS sLaLus or Lhe MSlAlS {LnLry Player) sLaLus dependinq on Lheir scale ol operaLions.
Under Lhis scheme, Lhe MSlAlS company is exempL lrom Lax on qualilyinq shippinq income, which includes,
but is not limited to:
lncome derived lrom Lhe operaLion ol loreiqn ships plyinq in inLernaLional waLers
lncome lrom carriaqe ol passenqers, mail, livesLock or qoods shipped in Sinqapore by loreiqn ships
(excluding carriage that is only within the limits of the port of Singapore)
with and incidental to the operation of ships
lncome derived lrom Lhe provision ol qualilyinq inhouse ship manaqemenL services in respecL ol loreiqn
ships owned or operated by any qualifying special-purpose vehicle
Dividend income or share ol prolLs received lrom an approved neLwork company LhaL is an overseas
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allliaLe LhaL is aL leasL 257 relaLed Lo Lhe MSlAlS company and paid ouL ol qualilyinq shippinq prolLs
Cains derived lrom Lhe sale ol loreiqn ships, ships under consLrucLion {includinq new buildinq conLracLs)
and sale of all of the issued ordinary shares in a qualifying special-purpose company that is the owner of
any ships or is the buyer under a contract for the construction of any ships
OLher benelLs include auLomaLic wiLhholdinq Lax exempLion on qualilyinq paymenLs made in respecL ol
qualilyinq loans enLered inLo on or belore 31 May 2016 wiLh loreiqn lenders Lo lnance Lhe purchase or
construction of foreign ships, subject to conditions.
1he MSlAlS award may be qranLed lor a renewable period ol 10 years {up Lo a maximum ol ^0 years per Lhe
2013 BudqeL announcemenL), and Lhe MSlAlS {LnLry Player) sLaLus may be qranLed lor a nonrenewable
period ol 5 years, wiLh Lhe opLion ol qraduaLinq Lo Lhe MSlAlS sLaLus il qualilyinq condiLions are meL. 1he
applicaLion window lor Lhe MSlAlS {LnLry Player) award is lrom 1 June 2011 unLil 31 May 2016.
1.2.3 MSI-Maritime Leasing Award
1he MSlMariLime Leasinq {MSlML) award aims aL promoLinq ship and sea conLainer lnancinq operaLions
in Singapore. It is designed to encourage entities to use Singapore as their capital and funding base to
lnance Lheir vessels and sea conLainers. Oualilyinq enLiLies include companies, lunds, business LrusLs and
partnerships incorporated or registered in Singapore.
Under Lhe MSlML {Ship) award, approved shippinq invesLmenL enLerprises may en|oy Lax exempLion on Lheir
qualifying income, which includes:
lncome derived lrom Lhe charLerinq or lnance leasinq ol seaqoinq ships Lo speciled persons lor use
outside the port limits of Singapore
with and incidental to the qualifying ship leasing activities
Cains derived lrom Lhe sale ol seaqoinq ships, seaqoinq ships under consLrucLion {includinq new buildinq
contracts) and sale of all of the issued ordinary shares in a qualifying special-purpose company that is the
owner of any seagoing ship or is the buyer under a contract for the construction of any seagoing ship
Dividend income or share ol prolLs lrom approved loreiqn shipowninq enLiLies LhaL are disLribuLed ouL ol
qualifying ship leasing activities
Under Lhe MSlML {ConLainer) award, approved conLainer invesLmenL enLerprises may en|oy a concessionary
tax rate of 5% or 10% on their qualifying income, which includes:
lncome derived lrom Lhe operaLinq or lnance leasinq ol sea conLainers LhaL are used lor Lhe inLernaLional
transportation of goods
lncome derived lrom Lhe leasinq ol inLermodal equipmenL LhaL is incidenLal Lo Lhe leasinq ol qualilyinq
containers
with and incidental to the qualifying container leasing activities
Dividend income or share ol prolLs lrom approved loreiqn conLainer asseLowninq enLiLies LhaL are
distributed out of qualifying container leasing activities
Approved investment managers of approved shipping or container investment enterprises under the above
schemes may also enjoy a 10% concessionary tax rate on their qualifying management income.
1he applicaLion window lor Lhe MSlML award is lrom 1 June 2011 unLil 31 May 2016, and successlul
applicanLs will be qranLed Lhe sLaLus lor a period ol lve years.
1.2.4 MSI-Supporting Shipping Services Award
1he MSlSupporLinq Shippinq Services {MSlSSS) award aims Lo promoLe Lhe qrowLh ol ancillary shippinq
service providers and to encourage shipping conglomerates to set up their corporate services functions in
Sinqapore. An approved MSlSSS company will en|oy a 107 concessionary Lax raLe on incremenLal income
derived from the provision of approved shipping-related support services such as ship broking, forward
freight agreement trading, ship management, ship agency, freight forwarding, and logistics services and
qualifying corporate services.
1he applicaLion window is lrom 1 June 2011 unLil 31 May 2016, and successlul applicanLs will be qranLed Lhe
MSlSSS award lor a period ol lve years.
1.2.5 Freight uplift income from Singapore
Ship owners and charterers are exempt from tax on their uplift of freight from Singapore. This exemption
applies to nonresident ship owners and charterers, resident shipping companies as well as companies granted
Lhe MSlAlS award. lL does noL, however, cover income lrom Lhe carriaqe wiLhin Lhe limiLs ol Lhe porL ol
Singapore.
1.2.6 Withholding tax
Singapore imposes withholding tax on certain payments to nonresident persons, including interest and rental
or other payment for the use of movable property if the payment is borne directly or indirectly by a person
residing or having a permanent establishment in Singapore.
Prior to 17 February 2012, time, voyage and bareboat charter payments to nonresident persons of
Singapore for the use of ships were subject to withholding tax at rates ranging from 0% to 2% of the gross fee
payable. Only companies en|oyinq Lhe MSlAlS sLaLus are noL required Lo accounL lor wiLhholdinq Lax on such
payments.
With effect from 17 February 2012, withholding tax exemption has been granted on payments for time,
voyage and bareboat charters of ships made to nonresidents, excluding permanent establishments in
Singapore. There is also no requirement to withhold tax on charter payments made to a permanent
establishment in Singapore. The permanent establishment has to declare the charter fees received in its
annual income tax return and will continue to be assessed to tax on such fees.
1.2.7 Goods and services tax
With regard to the shipping industry, supplies that qualify for zero-rating relief (i.e., goods and services tax
[CS1| aL 07) include:
1) Services (not being ancillary transport activities such as loading, unloading and handling) comprising the
transport of passengers or goods:
From a place ouLside Sinqapore Lo anoLher place ouLside Sinqapore
From a place in Sinqapore or Lo a place in Sinqapore and subsLanLially ouLside Sinqapore
Services {includinq ancillary LransporL acLiviLies such as loadinq, unloadinq and handlinq) comprisinq
the transportation of goods within Singapore to the extent that these services are supplied by the same
supplier as part of the supply of services in 1) above
2) Services supplied within any free trade zone or designated area of a port or terminal for the handling of
ships, or the handling or storage of goods carried in a ship
3) Pilotage, salvage or towage services performed in relation to ships
^) Services comprisinq surveyinq ol any ship or Lhe classilcaLion ol any ship lor Lhe purposes ol any reqisLer
5) The supply, including the letting on hire, of any ship
6) The repair and maintenance of any ship under prescribed scenarios
7) The making of arrangements for the supply (including the letting on hire) of, or of any space, in any ship
8) ManaqemenL services, in relaLion Lo any ship, provided Lo Lhe owner, operaLor or aqenL ol Lhe ship
9) The supply, including the letting on hire, of any sea container, which is used or to be used for the
international transportation of goods, under prescribed requirements
10) Repair, maintenance or management of sea container, which is used or to be used for the international
transportation of goods, under prescribed scenarios and requirements
Please also noLe LhaL Lhere is a specilc delniLion ol "ship" in Lhe CS1 AcL.
WiLh ellecL lrom 1 OcLober 2011, Lhe Approved Marine CusLomer Scheme {AMCS) was inLroduced Lo
further ease compliance for businesses procuring goods for use or installation on internationally bound
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commercial ships. Under Lhe scheme, approved businesses in Lhe shippinq and marine indusLries are eliqible
Lo purchase or renL qoods aL 07 CS1. 1he documenLary requiremenLs imposed on suppliers makinq Lhese
zeroraLed supplies Lo Lhese approved businesses have been simpliled as well.
1he sLandard raLe lor CS1 is currenLly 77.
1.3 Taxation of seafarers
1he employmenL income ol crew workinq on Sinqapore ships is specilcally exempL lrom Lax where Lhe
employment is substantially outside Singapore.
For a seafarer who is employed on board a foreign ship, if the ship operates exclusively in foreign
ports, the crew members remuneration will not be subject to Singapore income tax. However, if
the foreign ship is plying between Singapore and foreign ports, in practice, the Inland Revenue
Authority of Singapore (IRAS) will take into account the residency of the company that employs
the seafarer in determining the taxability of the seafarers employment income. If the company is
incorporated or resident in Singapore, the employment income may be deemed to be Singapore-
sourced income, and the seafarer may be liable to Singapore tax on his or her full remuneration.
Correspondingly, it is our view that if the company is incorporated or resident outside of Singapore,
the employment income relating to days spent in Singapore waters may be subject to tax in
Singapore, subject to the 60-day de minimis rule and any applicable treaty relief. Please note that
there are no clear guidelines on the taxation of seafarers working on foreign ships, and the IRAS
may not necessarily agree with the above views.
MosL ol Lhe double LaxaLion aqreemenLs LhaL Sinqapore has concluded also provide lor special LreaLmenL ol
crew who are nationals of the other treaty countries.
Singapore has concluded 69 comprehensive double taxation agreements. Each of these agreements
conLains an arLicle on shippinq. Under some ol Lhese aqreemenLs, a nonresidenL ol Sinqapore may en|oy
full exemption on income derived from qualifying shipping activities. Singapore has also entered into
limiLed LreaLies relaLinq Lo income arisinq lrom Lhe operaLion ol ships in inLernaLional Lrallc wiLh Lhe
following countries:
Chile
Honq Konq {covers also income lrom air LransporL)
UniLed SLaLes ol America {covers also income lrom air LransporL)
Cenerally, Lhe shippinq arLicle ol a Lax LreaLy ensures LhaL prolLs arisinq lrom inLernaLional Lrallc will be
taxed in the jurisdiction where the enterprise operating the ships is resident.
The tax residency of a Singapore company is determined by the location where the control and
management of the business is exercised. This is generally the place where the board of directors
normally holds their meetings, unless it is clearly stated that the control and management are exercised
in some other manner.
1.5 Freight taxes
There are no freight taxes in Singapore. However, an annual tonnage tax is payable for Singapore ships.
Please refer to section 5.3.2 below.
2. Human capital
2.1 Formalities and regulations for hiring personnel
1he domesLic leqislaLion qoverninq Lhe recruiLmenL ol seamen is conLained wiLhin Lhe MariLime and PorL
Authority of Singapore (Registration and Employment of Seamen) Regulations.
Sinqapore is recoqnized as a nonlaq ol convenience {FOC) reqisLry by Lhe UniLed NaLions Conlerence
on 1rade and DevelopmenL {UNC1AD) and Lhe lnLernaLional 1ransporL Workers' FederaLion {l1F). 1he
collecLive aqreemenLs siqned wiLh Lhe Sinqapore OrqanizaLion ol Seamen {SOS) and Lhe Sinqapore MariLime
Ollcers' Union are recoqnized by Lhe l1F. However, owners ol SinqaporereqisLered ships are lree Lo esLablish
collective agreements with the unions.
Singapore has no treaties with other countries governing social security contributions. No social security
taxes are currently levied in Singapore. However, there is a statutory savings scheme, known as the Central
Provident Fund (CPF), to provide for employees old-age retirement in Singapore. Only Singapore citizens
and permanent residents working in Singapore are required to make CPF contributions. All foreigners
{includinq Malaysians) are exempL lrom CPF conLribuLions and are noL allowed Lo make volunLary
conLribuLions. Money can be wiLhdrawn lrom Lhe CPF lor speciled purposes, includinq paymenL ol cerLain
medical expenses as well as funding investments in shares and for purchasing residential housing.
2.4 Mannin issues with Byin the Sinapcre Ba
Sinqapore ships musL be manned by a minimum number ol qualiled ollcers in accordance wiLh Lhe scales
sLaLed under Lhe MerchanL Shippinq {1raininq, CerLilcaLion and Manninq) {AmendmenL) RequlaLions 2011.
1here are no resLricLions on naLionaliLy ol crew. Owners may enqaqe ollcers and crews ol any naLionaliLy Lo
work on board Singapore ships, so long as they meet the standards laid down in the International Convention
on SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq lor Sealarers {S1CW) 1978, as amended.
The most common legal structure for owning and operating ships is the limited liability company. For private
and listed shipping funds registered in Singapore, they are typically structured as registered business trusts.
There is no dividend withholding tax in Singapore.
Under Lhe oneLier corporaLe Lax sysLem, dividends paid by a Sinqapore Lax residenL company are exempL
from Singapore income tax in the hands of the shareholders. Distributions made by a registered business
trust are also exempt from Singapore income tax in the hands of the unit holders.
4.1 Specihc and/cr eneraI subsidies fcr shippin ccmpanies
1he MariLime and PorL AuLhoriLy ol Sinqapore {MPA) has seL up a MariLime ClusLer Fund {MCF) Lo laciliLaLe
the growth of Singapores maritime sector by supporting the industrys manpower and business development
efforts. Various schemes and programs are available, including subsidies for approved marine-related courses
and seminars, and the co-funding of eligible expenses incurred in the initial development of new maritime
companies, or existing maritime companies and organizations expanding into new lines of maritime businesses.
The government is committed to attracting international shipping companies, international ship management
companies, and ship agencies to establish and expand their operations in Singapore by offering generous
shipping tax incentives.
1here is no specilc Lax incenLive lor Lhe shipbuildinq indusLry.
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ln 2011, Lhe qovernmenL launched Lhe MariLime Sinqapore Creen lniLiaLive Lo promoLe environmenLally
lriendly shippinq. 1he Creen Ship Proqram, one ol Lhe proqrams under Lhe MariLime Sinqapore Creen
lniLiaLive, is LarqeLed aL Sinqapore ships and is available lor lve years lrom 1 July 2011 Lo 30 June 2016. lL
provides incenLives Lo ship owners who adopL enerqyellcienL ship desiqns LhaL reduce luel consumpLion and
carbon dioxide emissions. Singapore ships registered on or after 1 July 2011 that exceed the requirements
ol Lhe lMO's Lnerqy LllcienL Desiqn lndex {LLDl) will en|oy a 507 reducLion on Lhe iniLial reqisLraLion lees
under both the normal registration and the Block Transfer Scheme during the registration of the ship. There
will also be a 207 rebaLe on annual Lonnaqe Lax unLil Lhe ship ceases Lo exceed Lhe lMO's LLDl, based on Lhe
phased-in time period.
LxisLinq ships already uLilizinq enerqyellcienL ship desiqns or have underqone ma|or modilcaLions LhaL meeL
Lhe requiremenLs under Lhe Creen Ship Proqram may also en|oy Lhe 207 rebaLe on annual Lonnaqe Lax unLil
Lhe ship ceases Lo exceed Lhe requiremenLs ol lMO's LLDl relerence lines.
4.4 !ssues with Byin the Sinapcre Ba
Only Singapore citizens, permanent residents and Singapore incorporated companies may be registered as
owners of Singapore ships. For a company that is substantially owned by non-Singapore citizens, it must have
a minimum paidup capiLal ol SCS50,000 {t28,510) Lo be reqisLered as owner ol Sinqapore ships. Under
the Block Transfer Scheme, this minimum paid-up capital requirement may be waived.
Sinqapore ships are sub|ecL Lo rules and requlaLions. Sinqapore is a parLy Lo all Lhe ma|or lMO convenLions
on ship saleLy and marine polluLion prevenLion. 1he Sinqapore ReqisLry is on Lhe WhiLe LisL ol key porL sLaLe
conLrol reqimes, wiLh a dedicaLed laq sLaLe conLrol uniL LhaL acLively moniLors, idenLiles and carries ouL
enforcement actions on Singapore ships.
5.1 Infrastructure
5.1.1 Major ports
The port of Singapore has been the worlds busiest port (by shipping tonnage) since 1986, receiving an
average of 140,000 vessel calls annually. It is a world-leading hub for container transshipment, handling
31.6 million 20looL equivalenL uniLs {1LU) in 2012 across lour Lerminals. lL is also one ol Lhe world's Lop
bunkering ports, with more than 40 million tons of bunkers being lifted in Singapore each year.
The port facilities include the container terminals, berths, cranes, storage facilities, port information systems,
an approach channel and an intermodal transport system.
1he PorL ol Sinqapore includes Lerminals locaLed aL 1an|onq Paqar, Keppel, Brani, Pasir Pan|anq, Sembawanq
and Jurong. These terminals can accommodate all types of vessels, including container ships, bulk carries,
rollon/rolloll ships, carqo lreiqhLers, coasLers and liqhLers.
The anchorages of the Port of Singapore are divided into three sectors: the Eastern Sector, the Jurong Sector
and the Western Sector. Each anchorage has its designated purpose.
Sinqapore is Lhe lrsL porL in Lhe world Lo oller wireless mobile broadband connecLiviLy, enablinq Lhe indusLry
Lo improve operaLional ellciencies, enhance communicaLions and qeneraLe new business opporLuniLies.
Singapores container and multipurpose terminals are within 50km of Singapore Changi International
Airport, which is rated as one of the worlds best airports, and are connected by modern transportation
infrastructures.
Ship lnancinq
Ship manaqemenL
Ship brokinq
MariLime leqal and arbiLraLion services
Marine insurance services
Ship buildinq and repair
1he MPA in parLnership wiLh businesses, LerLiary insLiLuLions and oLher mariLime orqanizaLions ollers a
wide ranqe ol mariLime and shippinq courses and execuLive proqrams, includinq mariLime deqree/diploma
programs. This is to promote manpower development and expertise in the shipping industry.
The Integrated Simulation Centre in Singapore has a range of advanced simulators to provide realistic training
lor ship ollcers and crew.
All ship owners and companies undertaking international voyages with passenger ships and tankers of
500 qross Lons and above are required Lo comply wiLh Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code.
Similarly, all self-propelled cargo ships and mobile offshore drilling units of 500 gross tons and above are also
required Lo comply wiLh Lhe lSM Code. 1he oriqinal or cerLiled Lrue copy ol Lhe compliance documenLs musL
be submitted to gain electronic port clearance into Singapore or be allowed to leave Singapore.
Sinqapore has relaLively sLricL saleLy rules reqardinq manninq. 1he MPA has auLhorized inLernaLionally
recoqnized classilcaLion socieLies Lo conducL audiL and cerLilcaLion ol Sinqapore vessels and manaqinq
companies for compliance with the code.
Sinqapore is a parLy Lo all ma|or lMO convenLions on ship saleLy and marine polluLion prevenLion. 1hese
include Lhe 197^ SaleLy ol Lile aL Sea ConvenLion {SOLAS), Lhe 1978 S1CW ConvenLion, Lhe 1966 Load
Lines ConvenLion, Lhe 1973/1978 MARPOL ConvenLion, and Lhe 1969 ConvenLion ol 1onnaqe MeasuremenL
of Ships.
Singapore maintains a high level of vigilance over its port and waterways. The security measures that have
been implemented include restricted access to waters surrounding port installations, targeted screening
of containers, enhanced security at sea entry checkpoints, increased presence of patrol craft, and selected
escorL ol sensiLive vessels by securiLy aqencies. Sinqapore was Lhe lrsL porL ouLside ol NorLh America Lo siqn
Lhe US ConLainer SecuriLy lniLiaLive.
5.3 Registration
1he reqisLraLion ol ships is qoverned by Lhe MerchanL Shippinq AcL. Only ciLizens or permanenL residenLs ol
Singapore and companies incorporated in Singapore may be registered as owners of Singapore ships. A ship
may be registered under a company incorporated in Singapore with more than 50% of the equity owned by
nonciLizens ol Sinqapore, provided Lhe company has a minimum paidup capiLal ol SCS50,000 {t28,510)
and the ship is at least 1,600 gross tonnage and self-propelled. Exemption from the latter requirement may
be given on a case-by-case basis if the ship is operated from or based in Singapore.
Various types of vessels can be registered as Singapore ships. They include semi-submersible rigs, jack-up
rigs, accommodation rigs and tender rigs used for oil exploration, as well as barges, dredges and other
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vessels that are used for offshore oil and gas activities.
A locally owned company may register a tug or barge provided it has a paid-up capital pegged to 10% of the
value ol Lhe lrsL Luq or barqe under iLs ownership or SCS50,000 {t28,510), whichever is Lhe lesser, sub|ecL
Lo a minimum paidup capiLal ol SCS10,000 {t5,702). lLs holdinq company, il any, musL also have Lhe same
amount of paid-up capital.
5.3.2 Ship registration procedures
Application has to be submitted to the Singapore Registry of Ships (SRS) for an ordinary registration.
1he applicanL musL seek approval lor a ship's name or Lo reserve a ship's name, and an ollcial and call siqn
numbers would be issued upon successful reservation of the ships name. The application form together with
relevanL documenLs such as parLiculars ol Lhe owners, evidence ol ownership, value ol Lhe ship, Lonnaqe
cerLilcaLe, class cerLilcaLe and oLhers musL be submiLLed.
The initial registration fee and annual tonnage tax for the ordinary registration are as follows:
Fees lor ordinary reqisLraLion: lniLial reqisLraLion lee is SCS2.50 {t1.^3) per neL Lon {N1), sub|ecL Lo a
minimum ol SCS1,250 {t713) {500 N1) and a maximum ol SCS50,000 {t28,510) {20,000 N1).
Annual Lonnaqe Lax: Annual Lonnaqe Lax musL be paid aL Lhe Lime ol iniLial reqisLraLion or rereqisLraLion
and thereafter every year on or before the anniversary date that the ship was initially registered or
re-registered, as the case may be. No refund of tax will be made if, during the year for which the tax was
paid, Lhe reqisLry ol Lhe ship was closed lor any reason. 1he annual Lonnaqe Lax is SCS0.20 {t0.11)
per N1, sub|ecL Lo a minimum ol SCS100 {t57) {500 N1) and a maximum ol SCS10,000 {t5,702)
(50,000 NT).
Fees under Lhe Block 1ransler Scheme: SCS0.50 {t0.285) per N1, sub|ecL Lo a minimum ol SCS1,250
{t713) {2,500 N1) and a maximum ol SCS20,000 {t11,^0^) {^0,000 N1) per ship. Ships LhaL are
registered within a reasonable period of time and meet the following criteria are eligible for the Block
Transfer Scheme:
1wo ships wiLh aqqreqaLe Lonnaqe ol ^0,000 N1
1hree ships wiLh aqqreqaLe Lonnaqe ol 30,000 N1
Four ships wiLh aqqreqaLe Lonnaqe ol 20,000 N1
Five ships ol any aqqreqaLe Lonnaqe
ApplicaLion lor Lhe Block 1ransler Scheme has Lo be submiLLed prior Lo reqisLerinq Lhe lrsL ship.
This scheme has been enhanced from 1 January 2009 to allow a single ship of 40,000 NT or more to qualify
for the scheme.
A Singapore ship may be bareboat chartered out and registered outside Singapore in the name of the
bareboat charterer. The Singapore registry must be suspended during the charter period. Bareboat charter
means the hiring of the ship for a stipulated period, giving the charterer possession and control of the ship,
including the right to appoint the master and crew.
There is no restriction on the nationality of the crew on board Singapore ships. However, all crew must meet
Lhe sLandards laid down in Lhe lnLernaLional ConvenLion on Lhe S1CW 1978 as amended. Foreiqn ollcers and
enqineers in possession ol valid loreiqn cerLilcaLes ol compeLency are allowed Lo serve on Sinqapore ships
as lonq as Lheir cerLilcaLes are appropriaLe Lo Lhe capaciLy in which Lhey are employed. No prior approval
is required, buL owners ol ships musL apply lor a cerLilcaLe ol endorsemenL {COL) Lo allow holders ol Lhe
loreiqn cerLilcaLes Lo serve on Sinqapore ships. 1he COL is valid lor lve years or unLil Lhe expiry daLe ol Lhe
cerLilcaLe ol compeLency, whichever is earlier.
Ships have Lo comply wiLh Lhe relevanL requiremenLs laid down in Lhe ma|or lMO convenLions, which
Sinqapore is a parLy Lo {e.q., SOLAS 7^, 1978 S1CW ConvenLion, 1966 Load Lines ConvenLion, 1M69 and
MARPOL 73/78). DispensaLions may be qranLed Lo ships ol novel desiqn or consLrucLion or under special
operating circumstances. Equipment and arrangements approved by other maritime administrations that
comply wiLh Lhe lMO convenLion are qenerally accepLed.
5.3. SpeciaI requirements/ruIes with reard tc reistraticn
Every name to be used for a Singapore ship must be approved, even if there is no change in name from its
previous reqisLry. A copy ol Lhe ship's classilcaLion cerLilcaLe issued by an auLhorized classilcaLion socieLy
may be accepted as evidence of seaworthiness.
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South Africa
1. Tax
A company is liable for taxation independently; group taxation is not available in South Africa (although in
certain circumstances a shipping subsidiary company may elect to be taxed as one taxpayer together with its
holdinq company). Normal company Lax is calculaLed aL a laL raLe ol 287 ol a company's Laxable income.
Special depreciation allowance
A ship LhaL was brouqhL inLo use on or alLer 1 April 1995 lor Lhe lrsL Lime, by a Laxpayer lor Lhe purposes ol Lrade,
can be wriLLen oll on a sLraiqhLline basis over lve years. 1his allowance is noL proraLed lor a parLial year's use.
Ships brouqhL inLo use belore 1 April 1995 were qranLed a ^07 allowance in Lhe lrsL year, and a sLraiqhLline
wear and tear of 10% in subsequent years, based on the adjustable cost of the ship.
An allowance may be claimed in respect of scheduled major repairs to any ship to be incurred within the
lollowinq lveyear period. 1he allowance is calculaLed on a scaled percenLaqe ol Lhe anLicipaLed cosL ol
repairs over Lhe ensuinq lve years.
Zero rating for value added tax (VAT) purposes
In general, services provided by a shipping company engaged in international shipping are zero-rated.
However, complex VAT rules apply and it is advisable to obtain professional advice.
Coods and services supplied Lo a shippinq company enqaqed in inLernaLional shippinq will qenerally be zero
rated. However, complex VAT rules apply and it is advisable to obtain professional advice.
Shippinq companies makinq reqular and/or conLinuous supplies ol qoods and/or services in SouLh Alrica
(including ship leases) will become liable to register for VAT if the value of these supplies exceeds (or is
expecLed Lo exceed) R1 million in a 12monLh period. Failure Lo reqisLer is an ollence punishable wiLh a lne
or imprisonment.
Residence basis of taxation
South African residents (individuals and business entities) are taxed on their worldwide income, which in
the absence of double tax relief may lead to double taxation and the need to claim foreign tax credit relief in
South Africa. However, these general rules may be overridden by double tax agreements, which often make
relerence Lo shippinq companies and provide rules lor Lhe |urisdicLion in which prolLs should be Laxed {see
section 1.3).
There are complex rules regarding the determination of taxes payable in South Africa and professional advice
in this area should be sought.
Capital gains tax (CGT)
CC1 was inLroduced, ellecLive 1 OcLober 2001. CC1 is levied aL an ellecLive raLe ol 18.657 {lor all years ol
assessmenL commencinq on or alLer 1 March 2012) on qains made by a SouLh Alrican company, while an
individual will pay CC1 aL a maximum ellecLive raLe ol 13.327. CC1 is levied on Lhe disposal or deemed disposal ol
a residenL's worldwide asseLs. ln Lhe case ol nonresidenL companies, CC1 is levied on Lhe disposal ol lxed properLy
situated in the country, as well as on assets of any permanent establishment it may have in the country.
PaymenLs lor services rendered by SouLh Alrican residenLs, as ollcers or members ol Lhe crew ol such ships,
are Laxable in SouLh Alrica. However, remuneraLion received by an ollcer or crew member servinq on a ship
engaged in international transport of passengers or goods is exempt from tax if the person is outside the
Republic of South Africa for more than 183 days during the year of assessment.
In the event that the vessel concerned is not engaged in international trade (as in the case of offshore oil
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exploration and production activities), different rules may apply.
South Africa has concluded a large number of comprehensive agreements, most of which are based on the Organisation
for Economic Co-operation and Development (OECD) model treaty for the avoidance of double taxation.
Broadly, Lhe Lax LreaLies ensure LhaL prolLs arisinq lrom inLernaLional Lrallc will be Laxed in Lhe |urisdicLion
of the place in which the effective management of the entity concerned is situated. However, in certain
circumstances, the state in which the place of effective management is situated may not be the state in which
a ship-operating enterprise is domiciled. Therefore, some treaties confer the exclusive right to tax to the state
of residence.
1.4 Freight taxes
Freight taxes are levied at an effective rate of 2.8% (10% of the corporate income tax rate) on the South
African earnings of nonresidents. In most cases, freight taxes will be overridden where a tax treaty exists.
1here are no Lax benelLs oLher Lhan Lhose noLed in secLion 1.1.
A proposal was issued for comment in 2006 for the introduction of a tonnage tax system in South Africa.
The purpose of this tax is to incentivize shipping companies to register their ships in South Africa. There is no
ollcial daLe seL lor Lhe inLroducLion ol Lhe Lonnaqe Lax and Lhe proposal is sLill under consideraLion. lL would
Lax shippinq companies on a "noLional prolL" LhaL is deLermined wiLh relerence Lo Lhe size ol Lhe ship and
the number of days that it is operational during the accounting period. In other words, the actual accounting
prolL {and, accordinqly, poLenLial Lax prolL) would noL deLermine Lhe Lax liabiliLy ol Lhe shippinq company.
1his noLional prolL would Lhen be sub|ecL Lo Lhe corporaLe income Lax raLe.
2. Human capital
Lvery sealarer is required Lo have compleLed a period ol presea Lraininq, and musL be prolcienL in an ollcial
language of the Republic of South Africa in order to fully understand any important information given in the
performance of his or her duties.
SouLh Alrican laws relaLinq Lo Lhe employmenL and service ol masLers, ollcers and crew on board ships are a
mixture of private rights and obligations, statutory controls and supervision.
Many aspecLs ol sealarers' waqes are requlaLed by sLaLuLe in SouLh Alrica, Lhouqh primarily in relaLion Lo
SouLh Alrican ships. Service condiLions on board loreiqn ships are conLrolled by Lhe law ol Lheir laqs, or by
the law chosen by the parties in their employment contract.
All South African ships of more than 100 tons are required to have on board a written agreement with the
crew, binding each seafarer to a contract of employment. The contract should contain all the terms and
condiLions ol employmenL. Any maLLer noL specilcally dealL wiLh in Lhe conLracL ol employmenL will be
sub|ecL Lo eiLher Lhe company's policies or procedures or Lo Lhe provisions ol Lhe Labour RelaLions AcL.
Should loreiqn workers be employed, a work permiL musL lrsL be obLained.
1ne areement to com|y w|tn tne |nternat|ona| Convent|on of Stancarcs of 1ra|n|n, Cert|hcat|on anc
Watchkeeping for Seafarers (STCW)
This agreement includes the duration of the intended voyage, a description of the crew, working hours, the
capacity of the seafarer, wages to be paid and scale of provisions.
1he Labour RelaLions AcL no. 66 ol 1995 came inLo ellecL in November 1996. lLs sLaLed purposes include
giving effect to and regulating rights conferred by Section 27 of the South African Constitution, giving
ellecL Lo obliqaLions incurred by SouLh Alrica as a Member SLaLe ol Lhe lnLernaLional Labour OrqanizaLion
{lLO) and providinq a lramework lor collecLive barqaininq, employee parLicipaLion in decisionmakinq in Lhe
workplace, and the effective resolution of labor disputes.
SouLh Alrica has a commiLmenL under UNCLOS {UniLed NaLions ConvenLion on Lhe Law ol Lhe Sea) ArLicle
9^ Lo "assume |urisdicLion under iLs inLernal law over each ship lyinq iLs laq, and iLs masLer, ollcers and
crew, in respecL ol social maLLers concerninq Lhe ship." 1he Labour RelaLions AcL no. 66 ol 1995 does
|usL LhaL, and iL should be seen as complemenLinq Lhe employmenL and waqe sLipulaLions ol Lhe MerchanL
Shipping Act.
Where a shipowner has terminated a seafarers employment because of operational requirements, the
shipowner must pay at least one weeks remuneration for each completed year of continuous service with
that shipowner.
1here are prescribed limiLs ol compensaLion lor occupaLional in|ury sullered in Lhe workplace in Lhe case ol
ships and sealarers, on board or ashore in Lhe execuLion ol employmenL duLies.
Social securiLy conLribuLions are qoverned by Lhe AdmiralLy JurisdicLion RequlaLion AcL, which specilcally
includes conLribuLions Lo any pension lund, medical aid lund or benelL lund.
2. Mannin issues with Byin the Scuth African Ba
WheLher a vessel is SouLh Alricanlaqqed or noL is immaLerial Lo Lhe Lax LreaLmenL ol Lhe crew members.
3.1 Most commonly used legal structures for the operation of shipping activities
MosL companies operaLe eiLher as a closely held company {privaLe company) or a widely held company {lisLed
or unlisted public company). The liability of the shareholders is limited to their interest in the share capital of the
company. 1he company is liable lor LaxaLion independenLly. Normal company Lax is calculaLed aL a laL raLe ol
28% of the companys taxable income for all years of assessment ending on or after 1 April 2008.
3.2 Tax cn prcht distributicn
In addition to normal tax, Dividends tax is payable at a rate of 15% of the dividends declared. Dividends Tax
replaced Secondary 1ax on Companies on 1 April 2012. lL is a Lax on Lhe benelcial owners ol dividends
(normally the shareholder) on the amount of any dividend received from a company and is applicable to
any dividend declared on or after 1 April 2012 (If a dividend was declared before 1 April 2012 it will still be
subject to Secondary Tax on Companies at a rate of 10% of the dividends declared). Dividends tax must be
withheld by either the company distributing the dividend or regulated intermediaries and paid by the end of
the month following the month in which the dividend was paid or became payable.
There are currently no grants or incentives.
OLher Lhan depreciaLion ol Lhe ship over lve years, Lhere are no incenLives.
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4.4 !ssues with Byin the Scuth African Ba
1here are no subsidies lor lyinq Lhe SouLh Alrican laq.
No changes are expected other than the proposed tonnage tax discussed in 1.6.
5.1 Infrastructure
1ransneL NaLional PorLs AuLhoriLy is a division ol 1ransneL LimiLed and is mandaLed Lo conLrol and manaqe all
seven commercial ports on the 2,954km South African coastline. Situated at the tip of the African Continent,
the South African ports are well situated to serve both the eastern and western seaboards.
Transnet National Ports Authority is the national port authority in southern Africa and is responsible for
conLrollinq Lhe commercial porLs in SouLh Alrica. 1hese porLs are Cape 1own, Durban, LasL London, Mossel
Bay, Ngqura, Port Elizabeth, Richards Bay and Saldanha.
Lach SouLh Alrican porL has a naLural hinLerland wiLh a delned markeL LhaL larqely deLermines Lhe naLure
and Lypes ol carqo handled aL LhaL porL. PorLs, mainly Durban, also serve CauLenq, which is Lhe economic
center of South Africa and is located approximately 600km from the coast. Ports are serviced by extensive
road and rail transport facilities. High-volume rail corridors support containers and resource exports,
including iron ore, coal and manganese.
The terminals are operated by both a state-owned enterprise (Transnet Port Terminals) and private terminal
operators.
5.1.1 Major ports
The major ports and terminal types are:
Cape 1own:
MulLipurpose Lerminals and a conLainer Lerminal
Durban:
ConLainer Lerminals, mulLipurpose Lerminals, a car Lerminal, a coal Lerminal and a bulk liquid Lerminal
Richards Bay:
A dry bulk Lerminal, a mulLipurpose Lerminal and a coal Lerminal
Saldanha Bay:
MulLipurpose and bulk Lerminals
Other ports
Nqqura:
An indusLrial developmenL zone {lDZ), known as Lhe Coeqa lDZ, has been developed over Lhe
12,000ha site and will serve as a primary location for new industrial growth for export-driven industries.
1he porL is ol a deep waLer consLrucLion desiqned Lo supporL Lhe inLernaLional Lrend Loward larqer
vessels. lL is capable ol servinq posLPanamax vessels in excess ol 8,000 1LUs. OperaLion ol Lhe porL
commenced with container operations in October 2009.
LasL London:
A mulLipurpose Lerminal, a bulk Lerminal and a car Lerminal
Mossel Bay:
CaLers mainly Lo Lhe lshinq and oil indusLry and oil riqs LhaL operaLe oll Mossel Bay
PorL LlizabeLh:
A conLainer Lerminal, a car Lerminal, a mulLipurpose Lerminal and a bulk manqanese Lerminal
The following facilities and services are available at most ports:
SLevedorinq
SLoraqe
Bunkerinq
Ship chandler lrms
1uqboaLs
HelicopLers
Cranes
Dockinq
Shipyards and repairs
1ruckinq
Rail connecLions
Many ol Lhese laciliLies and services are provided by boLh conLracLors and Lhe porL iLsell. lL is imporLanL Lo
contact the port to verify the facilities and services currently available.
5.1.3 Tariffs
The port authority levies the following types of applicable charges on vessels calling at the port:
LiqhL dues
PiloLaqe services
Marine services
Carqo dues
Please reler Lo hLLp://www.LransneLnaLionalporLsauLhoriLy.neL lor Lhe Larill book.
Terminal operators levy terminal handling charges for handling of cargo on and off vessels.
Any vessel that is present in South Africa for a period longer than six months will be treated as an import with
the consequential VAT, customs and duty implications.
The following airports are close to the major ports:
Cape 1own lnLernaLional AirporL {Cape 1own, Saldanha)
Durban lnLernaLional AirporL {Durban, Richards Bay)
LasL London AirporL {LasL London)
PorL LlizabeLh AirporL {PorL LlizabeLh)
5.1.5 Support facilities for the shipping industry
The following services are available:
Shipowners and operaLors
Ship aqenLs
Clearinq and lorwardinq aqenLs
lnsurance brokers
Students in the last three years of their secondary education can obtain an education in maritime subjects,
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which is offered at some educational institutes.
MariLime sLudies are ollered by hiqher educaLion insLiLuLions in SouLh Alrica, namely Durban UniversiLy ol
1echnoloqy and Cape Peninsula UniversiLy ol 1echnoloqy {CPU1, in Cape 1own). Formal educaLion in marine
navigation and marine engineering, and non-formal training in offshore safety and survival, are also offered.
1he MariLime SLudies DeparLmenL aL CPU1 boasLs Lhe only ollshore survival cenLer in Alrica and Lrains 2,500
students from Africa and beyond.
1here are a number ol insLiLuLions in Lhe counLry LhaL provide Lraininq courses lor merchanL marine ollcers.
MariLime deqrees are ollered aL Lhree universiLies, namely Lhe UniversiLy ol Cape 1own, Lhe UniversiLy ol
KwaZuluNaLal and Lhe UniversiLy ol SLellenbosch. Some ol Lhe courses ollered are mariLime law, mariLime
economics, shipping economics, port economics, maritime policy, ship management and intermodal
transport and logistics.
SaleLy ol ships and lile aL sea is dealL wiLh in Lhe MerchanL Shippinq AcL 57 ol 1951. Under Lhe MerchanL
Shipping Act, the minister of transport can publish regulations further governing the operation of ships and
bringing into effect international safety conventions and their amendments.
1he MerchanL Shippinq AcL requlaLes:
ConsLrucLion ol ships, provision ol lilesavinq appliances and insLallaLion ol radios
SaleLy convenLion cerLilcaLion
Load lines
SaleLy ol naviqaLion
Collisions, accidenLs aL sea and limiLaLion ol liabiliLy
Conventions that have so far been incorporated are:
lnLernaLional ConvenLion on Load Lines, 1966
lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships, 1973 wiLh 1978 ProLocol
{MARPOL)
lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea, 197^ wiLh 1978 ProLocol {SOLAS)
lnLernaLional SaleLy ManaqemenL {lSM) Code, 1997
Compliance with international safety conventions and domestic safety requirements is monitored by the
SouLh Alrican MariLime SaleLy AuLhoriLy {SAMSA). 1his auLhoriLy was esLablished as a |urisLic person under
Act 5 of 1998. Its objectives are:
1o ensure saleLy ol lile and properLy aL sea
1o prevenL and combaL polluLion ol Lhe marine environmenL by ships
1o promoLe Lhe republic's mariLime inLeresLs
Please reler Lo SAMSA lor leqislaLive requiremenLs and lurLher deLails.
1he lSM Code came inLo lorce on 1 July 1998 lor all passenqer ships, oil Lankers, chemical Lankers, qas
carriers, bulk carriers and cargo high-speed craft of 500 gross tons or more. All other cargo ships and mobile
ollshore drillinq uniLs ol more Lhan 500 qross Lons became sub|ecL Lo Lhe lSM Code wiLh ellecL lrom 1 July
2002.
ln SouLh Alrica, Lhe lSM Code was ellecLed Lhrouqh Lhe publicaLion ol Lhe MerchanL Shippinq {lSM Code)
Regulations, 1998.
1he requlaLions consLiLuLe SAMSA as Lhe cerLilyinq auLhoriLy, which is empowered Lo issue a documenL ol
compliance and saleLy manaqemenL cerLilcaLe Lo a company LhaL complies wiLh Lhe requiremenLs ol Lhe
lSM Code.
405 Shipping Industry Almanac 2013
1he lSM Code has creaLed new mariLime saleLy sLandards lor shipowners and operaLors. lL envisaqes a
safety management system on board every ship, which will outline the safety and environmental protection
policy, instructions and procedures to implement such a policy. Such a safety management system should be
sub|ecLed Lo lormal cerLilcaLion by a compeLenL sLaLe auLhoriLy, such as SAMSA.
5.2.4 International Ship and Port Facility Security (ISPS) code maritime security
Far-reaching maritime security measures have been introduced worldwide due to the events of 11 September
2001. SOLAS ChapLer 11 has been amended Lo provide lor Lhe inclusion ol an inLernaLional code lor Lhe
security of ships and port facilities, known as the ISPS code. All commercial ports are ISPS compliant.
In addition to the ISPS, a further security initiative, the Container Security Initiative (CSI), has been
inLroduced by Lhe UniLed SLaLes ol America: Lhe PorL ol Durban parLicipaLes in Lhis proqram.
5.2.5 Cargo-related risk
The advanced manifest system implemented has been implemented at the Durban port.
ln June 2003, six monLhs prior Lo commencemenL ol Lhe securiLy iniLiaLive, Lhe US Bureau ol CusLoms and
Border Protection (CBP) and the South African Revenue Service (SARS) signed a Declaration of Principles
to participate in the CSI.
The CSI requires that containerized cargo be declared 24 hours in advance as per the vessel cargo
declaraLions. FurLhermore, Lhe proqram also requires LhaL Lhe US deploy a Leam ol CBP ollcers Lo Lhe PorL
of Durban to work with the South African Customs and Excise personnel to target high-risk cargo containers
desLined lor Lhe UniLed SLaLes.
Ollcials ol SARS are responsible lor screeninq any conLainer idenLiled |oinLly wiLh CBP ollcers as a poLenLial
terrorist risk.
5.3 Registration
A South African-owned ship is one that is owned by:
SouLh Alrican ciLizens or ciLizens ol a LreaLy counLry
A body corporaLe esLablished under Lhe laws ol Lhe Republic ol SouLh Alrica, wiLh a place ol business in
the Republic of South Africa or a treaty country
1he qovernmenL ol Lhe Republic ol SouLh Alrica
The following documents are required to register a ship:
DeclaraLion ol ownership
CerLilcaLe provided by Lhe builder, includinq size, dimensions and Lonnaqe ol Lhe ship and Lime and place
where it was built
Deed ol sale ol Lhe ship {il Lhere was a sale)
ln Lhe case ol a ship LhaL was lorleiLed, noLice ol lorleiLure ol a ship reqisLered elsewhere, and prool LhaL
the ship is no longer so registered
Ships that are entitled to be registered are:
SouLh Alricanowned ships
Small vessels wholly owned by SouLh Alrican residenLs, or SouLh Alrican residenLs and SouLh Alrican
nationals, or operated solely by South African residents or South African nationals or both
Ships on bareboaL charLer Lo SouLh Alrican naLionals
A ship is required to be marked in the prescribed manner with marks as directed by the registrar.
A registered ship may not be described by any name other than the name by which the ship is currently
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registered.
On compleLion ol Lhe reqisLraLion ol a ship, Lhe reqisLrar musL issue a reqisLraLion cerLilcaLe in respecL ol Lhe
ship in the prescribed form.
A ship that is to be registered must be surveyed by a surveyor.
The registrar may not register a ship if it is registered under the law of another state unless:
ln Lhe case ol a SouLh Alricanowned ship, iL was acquired pursuanL Lo an order ol courL
ln Lhe case ol a ship on bareboaL charLer Lo a SouLh Alrican naLional, Lhe evidence has been lodqed wiLh
the registrar
If the ship has been registered at any time under the law of another state, and an application is made for
registration, evidence is required to establish:
1haL Lhe ship is no lonqer reqisLered under Lhe law ol anoLher sLaLe and all reasonable sLeps Lo secure Lhe
termination of the ships registration have been taken
1haL sLeps have been Laken Lo LerminaLe Lhe reqisLraLion under Lhe law ol anoLher sLaLe and Lhe owner
gives his or her consent
The master may enter into an agreement with the crew which will detail particulars of the voyage, working
times, the capacity in which a crew member is to serve, wages and provisions to be received and regulations,
details of crew, particulars of deck line and load line.
1he MerchanL Shippinq AcL incorporaLes S1CW.
A South African ship may be mortgaged as security for a loan and registered in the deeds registry. If
any further mortgages are raised, they rank as from the date and time the mortgage is recorded on the
cerLilcaLe.
Maritime Transport and Services Industry Sub-Sector Code for Broad Based Black Economic Empowerment
(BBEEE)
The broad aim of the maritime charter, which was gazetted in 2009, is to develop South Africa as one of the
world's Lop 35 mariLime naLions by 201^. 1o achieve Lhis, Lhe indusLry needs Lo siqnilcanLly increase Lhe
participation of its people of all racial backgrounds in ownership, management and employment throughout
the industry.
6. References
For further information, please refer to the following websites:
SouLh Alrican Marine SaleLy AuLhoriLy {SAMSA): www.samsa.orq.za
South Africa Association of Ship Operators and Agents: www.saasoa.com
Transnet Port Terminals, Transnet National Port Authority, Transnet Pipelines: www.transnet.net
South African Association of Freight Forwarders: www.saaff.org.za
MariLime Services DirecLory lisLinq: www.porLs.co.za
Black Lconomic LmpowermenL CharLer and DeparLmenL ol 1rade and lndusLry: www.LhedLi.qov.za/bee/
beecharters.htm
Spain
1. Tax
The following tax facilities are available to shipping companies:
1ax lease sysLem
1onnaqe Lax
Canary lslands allowances
1ax crediLs lor invesLmenLs in saleLy and environmenLal issues relaLed Lo ships
Tax lease
The Spanish Corporate Income Tax (CIT) Act provides a special depreciation regime for certain assets
(including ships) acquired under special leasing agreements.
The former regime
Article 115 of the CIT Act established a special tax regime for certain leasing agreements. According to such
arLicle, Lhe lnance lease insLallmenLs would be LreaLed as LaxdeducLible lor Cl1 purposes so lonq as Lhey
do not exceed twice the maximum straight-line depreciation rates of the leased asset (the excess over such
limit would be tax deductible in the following years, always respecting the limit). The CIT Act also allows the
accelerated depreciation to start earlier, before the vessel enters into operation, under certain conditions.
This regime is currently under an in-depth investigation from the European Commission (see case
SA.21233) in order Lo deLermine wheLher Lhe Spanish Lax lease sysLem is compaLible wiLh LU sLaLe aids. 1he
main issue of the former tax lease system (for state aid purposes) was the possibility of its joint application
with the tonnage system, which meant that the temporary tax advantages obtained under the tax lease
sysLem Lurned inLo a delniLive advanLaqe when enLerinq inLo Lhe Lonnaqe Lax sysLem, and Lhe capiLal qain
derived in the tonnage tax was only subject to a reduced rate. In addition, the application of the regime was
noL open buL sub|ecL Lo Lhe prior wriLLen auLhorizaLion by Lhe MinisLry ol Lconomy and Finance.
As a consequence of this investigation, and even though it is not over yet, Spain has decided to introduce
chanqes Lo Lhe provisions ol Lhe Cl1 requlaLinq Lhe Lax lease, Lhrouqh Law 16/2012 as ol 27 December
2012. This new tax lease regime has been approved by the European Commission, which has announced that
iL does noL consLiLuLe sLaLe aid under Lhe LU rules.
The new regime
1he new Lax sysLem approved by Law 16/2012 sLill provides lor Lhe early and acceleraLed depreciaLion ol
cerLain asseLs {noL only vessels) acquired under lnance lease aqreemenLs, whose consLrucLion period is aL
leasL 12 monLhs and meeLs Lhe clienL's Lechnical specilcaLions, specilcally excludinq asseLs LhaL are serially
manufactured. For those assets not complying with the particular conditions, accelerated depreciation up to
twice the maximum straight-line depreciation rate is available but only after delivery.
In addition, prior authorization will no longer be required, since the application of this system will be
auLomaLic, only sub|ecL Lo Lhe prior noLilcaLion Lo Lhe MinisLry ol Finance.
Finally, the possibility to tax the capital gain derived in the tonnage tax at a reduced rate has been eliminated.
From now on, after applying the tax lease, ships may opt for the application of the tonnage regime but the
capital gain obtained at their disposal will be taxable at the general regime (30%).
Law 16/2012 inLroduces a LransiLional provision under which asseLs LhaL had obLained an auLhorizaLion Lo
apply the regime before 1 January 2012 will be governed by the previous legislation.
Tonnage tax
Under Lhe Spanish corporaLe income Lax provisions, shippinq companies are enLiLled Lo apply lor Lhe Lonnaqe
Lax reqime so LhaL Lheir prolLs lrom shippinq acLiviLies can be deLermined aL lxed raLes accordinq Lo Lhe
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tonnage of their ships, rather than by variable business results.
Tonnage tax only applies to shipping companies registered with those registries (per article 251 and
addiLional provision 16 ol Lhe Royal LeqislaLive Decree 2/2011) LhaL carry ouL Lhe whole Lechnical and crew
management of the qualifying ships (see below).
Tonnage tax applies to qualifying ships, i.e., ships that meet all of the following conditions:
1hey musL be sLraLeqically and commercially manaqed lrom Spain or lrom anoLher Luropean Union {LU)
Member SLaLe.
1hey musL be suiLable lor naviqaLion in hiqh seas and used exclusively lor one or more ol Lhe lollowinq
services: carriage of passengers, carriage of cargo, and rescue, towage, dredging or other services
provided in high seas.
As ol 31 March 2006, lor ships providinq Lowaqe services, in order Lo qualily lor Lhe applicaLion ol Lhe
tonnage tax, at least 50% of the income of the ship must proceed from activities carried out in the ports. For
ships providing dredging services, at least 50% of their income must proceed from the transport and deposit
in the deep sea of sea materials.
1onnaqe Lax does noL apply Lo ships used lor sporLs, lshinq or enLerLainmenL acLiviLies nor is iL applicable il
all ol Lhe company's ships are reqisLered in a counLry oLher Lhan Spain or any oLher LU Member SLaLe.
ProlLs lrom nonshippinq acLiviLies will be compuLed by relerence Lo normal rules whereas Lonnaqe Lax prolL
will be computed as follows.
Taxable base
For ships applying the special tonnage tax regime, the taxable base is determined by following the rules of the
objective estimation scheme, which means that the calculation of the taxable base is obtained by applying
lxed modules Lo Lhe reqisLered Lonnaqe scales.
For the computation above, only days on which the vessels are available for navigation must be taken into
account. Accordingly, days on which ships are being repaired must be disregarded.
The above computation includes income from services rendered to the vessels included in the tonnage
tax regime (piloting, towage and mooring), as well as income from services related to the vessels cargo
(loading and trimming).
Capital gains derived from the transfer of vessels
In order to calculate the taxable base of capital gains and losses arising from the disposal of a vessel used in a
tonnage tax, the timing of the application of the special regime must be taken into account:
Vessel sub|ecL Lo Lhe Lonnaqe Lax aL Lhe Lime ol acquisiLion. 1he capiLal qains/losses derived lrom Lhe
transfer of the vessel should be included in the taxable basis calculated in accordance with the above-
mentioned method. Therefore, in practice they are tax exempt. This rule does not apply if the vessel is
already being used at the time of acquisition.
As previously sLaLed, Law 16/2007 has also inLroduced chanqes reqardinq Lhe Lonnaqe Lax, which allecL
the transition from one system to another. It has repealed the provision that, upon entering the tonnage
system, vessels that were acquired by exercising the purchase option under a lease agreement will not be
reqarded as used vessels, Lherelore eliminaLinq Lhe possibiliLy Lo benelL lrom Lhe early and acceleraLed
depreciation and the tonnage tax for the gain derived in a future sale.
Tonnage Taxable income per day per 100 tons ()
01,000 0.90
1,00110,000 0.70
10,00125,000 0.40
Over 25,000 0.20
Vessel sub|ecL Lo Lhe Lonnaqe Lax alLer acquisiLion. ln Lhis case, capiLal qains derived lrom Lhe Lransler
of the vessel should be included in the taxpayer corporate income tax base and would be taxable at the
general tax rate of 30%. The following special rules must be observed:
1he company musL eiLher provide lunds lor a nondisLribuLable reserve equivalenL Lo Lhe posiLive
difference between the market value and the net book value corresponding to the relevant ship, or include
a special mention of such difference in the explanatory notes to the annual accounts.
Upon disposal ol Lhe ship, Lhe value ol Lhe nondisLribuLable reserve plus Lhe dillerence beLween Lhe book
and Lax depreciaLion will be added Lo Lonnaqe prolL.
Taxable income will be subject to a 30% corporate income tax.
Tonnage tax is an optional scheme. The application, however, will be conditional upon an express
authorization. Companies electing it will do so for a 10-year period, and the election may be renewed for an
additional period of 10 years.
Canary Islands allowances
CapiLal Lransler and documenL Lax: exempLion lor Lhe acLs and conLracLs made on Lhe ships
registered in the Special Registry of Ships and Shipping Companies of the Canary Islands (Special
Registry)
Personal income Lax/nonresidenLs income Lax {crew members): allowance ol 507 ol Lhe LoLal income
derived from the work on ships in the Special Registry. In case of ships involved in the carriage of
passenqers beLween LU porLs, Lhis allowance only applies Lo crew members who are ciLizens ol an LU or
Luropean Lconomic Area {LLA) Member SLaLe
CorporaLe income Lax: Lax crediL ol 907 ol Lhe Laxable Lurnover arisinq lrom Lhe exploiLaLion ol ships
registered with the Special Registry
For more information on tax credits for investments in environmental issues, see section 4.3.
For crew members on ships registered in the Special Registry, an allowance has been established of 90% of
the employers contribution to national insurance. If those ships are involved in the carriage of passengers
beLween LU porLs, Lhe allowance relerred Lo above only applies Lo crew members who are ciLizens ol an LU/
LLA Member SLaLe.
Conversely, the Spanish personal income tax law establishes several allowances for the amount paid by
the shipping company to compensate for living and transport expenses. These facilities only apply to crew
members who are ciLizens ol an LU/LLA Member SLaLe on ships carryinq passenqers.
MosL inLernaLional LreaLies neqoLiaLed by Spain lollow Lhe OrqanisaLion lor Lconomic CooperaLion and
Development (OECD) model treaty and include an article on international transport. In particular, Spain has
concluded tax treaties with the following countries:
Albania, Algeria, Argentina, Armenia, Australia, Austria, Barbados, Belgium, Bolivia, Bosnia and
Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Croatia, Cuba, Czech Republic,
Ecuador, Egypt, El Salvador, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong SAR,
Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea (South),
Latvia, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Moldavia, Morocco, Netherlands, New
Zealand, Norway, Pakistan, Panama, Philippines, Poland, Portugal, Romania, Russian Federation, Saudi
Arabia, Serbia, Singapore, Slovenia, South Africa, Sweden, Switzerland, Thailand, Trinidad and Tobago,
Tunisia, Turkey, United Arab Emirates, United Kingdom, United States, U.S.S.R. (former), Uruguay,
Venezuela, Vietnam.
1.4 Freight taxes
Freight taxes do not apply in Spain.
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The registration of the vessel in the Special Registry of the Canary Islands is not subject to the special tax on
certain means of transport.
The possible changes to the law anticipated in the near future depend on the result of the investigation from
Lhe Luropean Commission {case SA.21233) which is currenLly Lakinq place. However, since Law 16/2012
has introduced changes in the tax lease and tonnage tax regimes that have been accepted by the European
Commission, no major changes are foreseen in the near future.
1.7 Other tax considerations
As a temporary measure, for years 2013 and 2014, the maximum authorized tax deductible depreciation for
large companies is limited to 70% of the total tax deductible depreciation. The difference may be recovered in
10 years counting from 2015.
2. Human capital
The following documents are requested in order to sign the shipping employment contract:
MariLime reqisLraLion noLebook
Prolessional qualilcaLion or compeLence cerLilcaLe
Medical cerLilcaLe
In the case of a ship registered in Spain, Spanish labor law applies to crew members.
1here are no siqnilcanL requlaLions Lo Lake inLo accounL when hirinq personnel in Spain.
2.4. Collective labor agreements
There is no national collective agreement, but there are several collective company agreements governing
the general employment conditions. In the absence of a collective company agreement, common labor law
qoverns Lhe employmenL condiLions. Royal Decree 1561/1995 {modiled by Royal Decree 285/2002)
provides specilc requlaLion reqardinq Lhe workinq days on Lhe ships reqisLered in Spain.
LU RequlaLions and bilaLeral aqreemenLs apply Lo Lhese employees. Please noLe LhaL Lhere is a special social
security system for the shipping industry that is slightly different from the general provisions.
2. Mannin advantaes/disadvantaes cf Byin the Spanish Ba
Flyinq Lhe Spanish laq involves Lhe applicaLion ol Lhe Spanish labor law.
3.1 Most commonly used legal structure(s)
1he mosL common leqal sLrucLures are Lhe Sociedad de Responsabilidad LimiLada {SL) or Sociedad Annima {SA).
1axaLion on disLribuLion ol prolLs derived by SpanishresidenL shippinq companies depends on Lhe recipienL's
Lax residence so LhaL Lhe disLribuLion may be eiLher Lax exempL under Lhe LU ParenLSubsidiary DirecLive or
benelL lrom reduced wiLhholdinq Lax raLes under double LaxaLion aqreemenLs.
Where no tax exemption or reduced tax rates can be applied, 19% (21% for years 2012 and 2013)
withholding tax shall be charged.
No subsidies or subsLanLial qranLs lor Lhe shippinq indusLry can be idenLiled besides Lhe Lax advanLaqes
applicable to shipping companies (see section 1.1) and the incentives referred to in section 4.2.
1he Spanish qovernmenL provides lnancial supporL Lo Spanish shipbuildinq companies who comply wiLh
cerLain requiremenLs in accordance wiLh Spanish Royal Decree ^^2/199^.
A Spanish-resident company may obtain a State guarantee in the acquisition or renovation of vessels
accordinq Lo each year's NaLional BudqeL Law. 1he quaranLeed amounL cannoL be qreaLer Lhan 357 ol Lhe
lnanced price.
The investments intended for the protection of the environment, which improve the minimum requirements
ol Lhe requlaLions, will benelL lrom an 87 deducLion il Lhey are invesLmenLs included in proqrams or
agreements approved by the Spanish environmental authorities, who will have to certify them.
4.4 Advantaes and disadvantaes cf Byin the Spanish Ba
Flyinq Lhe Spanish laq does noL have special advanLaqes oLher Lhan Lhe ones menLioned above relaLed Lo Lhe
special Canary lslands reqime. 1he Lonnaqe Lax is available lor any LU laq. ln addiLion, lyinq Lhe Spanish laq
means more administrative burdens.
Not applicable.
5.1 Infrastructure
5.1.1 Major ports
A Corua, Algeciras, Almera-Motril, Avils, Cdiz, Barcelona, Bilbao, Cartagena, Castelln, Ferrol-
San Ciprin, Gijn, Huelva, Las Palmas, Mlaga, Palma de Mallorca (Baleares), Pasajes, S.C. Tenerife,
Santander, Tarragona, Valencia, Vigo.
Dockinq
SLoraqe
Ports Airports
A Corua La Corua AirporL
Algeciras Mlaqa AirporL
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Spain
MariLime educaLion is provided in Spain by:
L.1.S.l. Navales {Madrid)
L.U.l.1. Naval {Cdiz)
Lscuela PoliLecnica Superior {Ferrol, La Corua)
CenLro Superior de NuLica y LsLudios del Mar {La Laquna, SanLa Cruz de 1enerile)
Lscuela Superior de Marina Civil {Oviedo, AsLurias)
Lscuela 1ecnica Superior de NuLica {Universidad de CanLabria)
Lscuela UniversiLaria PoliLecnica {Las Palmas de Cran Canaria)
FaculLad de NuLica {Barcelona)
Lscuela UniversiLaria de lnqeniera 1ecnica Naval {CarLaqena, Murcia)
Ports Airports
AlmeraMoLril Almera Airport
Avils Asturias Airport
B. Cdiz Jerez de la Frontera Airport
Barcelona Barcelona Airport
Bilbao Bilbao Airport
Cartagena MurciaSan Javier AirporL
CasLelln Valencia Airport
Ferrol San Ciprin La Corua AirporL
Ci|n Asturias Airport
Huelva Seville Airport
Las Palmas Cran Canaria AirporL
Mlaqa Mlaqa AirporL
Palma de Mallorca {Baleares) Palma de Mallorca AirporL
Pasajes Bilbao Airport
S.C. Tenerife Tenerife Airport
Santander Santander Airport
Tarragona Barcelona Airport (Barcelona)
Valencia Valencia Airport
Vigo Vigo Airport
Ships reqisLered under Lhe Spanish laq are required Lo comply wiLh Lhe lnLernaLional SaleLy ManaqemenL
{lSM) Code. All Spanish shippinq companies currenLly comply wiLh SaleLy ol Lile aL Sea {SOLAS)
requiremenLs reqardinq Lhe lSM Code.
The safety rules regarding manning can be characterized as strict. There is a wide range of regulations
coverinq saleLy issues in order Lo meeL new inLernaLional and LU sLandards.
Spain has raLiled Lhe main inLernaLional LreaLies reqardinq marine polluLion and saleLy, such as Lhe
lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships {MARPOL) and SOLAS.
After the sinking of the Prestige vessel, the Spanish government made the commitment to reinforce safety
and environmenLal policies. ln Lhis respecL, Royal Decrees 90/2003 and 91/2003 esLablished very sLricL
procedures to prevent pollution in the maritime environment from oil or other hazardous substances from
ships. Durinq 2005, Lwo oLher Royal Decrees were adopLed: RD 119/2005, which esLablishes means ol
conLrol ol Lhe risks linked Lo accidenLs wiLh hazardous subsLances, and RD 276/2005, relaLed direcLly Lo Lhe
sinking of the Prestige.
5.3 Registration
Registration can be applied for either at the Registry of Ships and Shipping Companies or at the Special
Registry. The latter ensures social and tax conditions equal to or better than those provided by registration
wiLh Lhe lormer {see secLion 5.3.3 below). BoLh reqisLries are manaqed by Lhe MercanLile MariLime
Authorities.
ln addiLion, vessels lyinq Lhe Spanish laq musL reqisLer wiLh Lhe ReqisLry ol Movable AsseLs {ReqisLro de
Bienes Muebles). Any circumsLances allecLinq Lhe leqal sLaLus ol Lhe vessels musL be communicaLed Lo
this Registry. In particular, the mortgages on vessels shall not be effective unless they are duly registered.
Sections 5.3.1, 5.3.2 and 5.3.3 refer to the Spanish Ships Registry.
Ceneral requiremenLs
BoLh SpanishresidenL individuals and leqal enLiLies domiciled eiLher in Spain or in an LU Member SLaLe are
enLiLled Lo reqisLer Lo ly Lhe Spanish laq.
CorporaLions domiciled in an LU Member SLaLe LhaL may apply lor reqisLraLion in Spain are required Lo
appoint a representative in Spain.
When a vessel is reqisLered under anoLher laq, a deleLion cerLilcaLe lrom Lhe oLher reqisLry musL be
produced belore lnal reqisLry in Spain.
Special Registry
Notwithstanding the above, application for the Special Registry must comply with the following requirements:
Shippinq companies may reqisLer wiLh Lhe Special ReqisLry provided LhaL Lheir ellecLive place ol business
is situated in the Canary Islands or that they otherwise have a permanent representative there in order to
comply with all statutory obligations.
Shippinq companies may apply lor Lhe reqisLraLion ol Lheir ships provided LhaL Lhey have a LiLle ol
ownership or otherwise are entitled to exploit them by virtue of a bareboat charter agreement or any
other title.
The application form must be accompanied by several documents relating to the ship details, including:
For ships consLrucLed in Spain: cerLiled buildinq pro|ecL and LiLle ol ownership
For imporLed ships: evidence ol Lhe imporL, deleLion cerLilcaLe lrom Lhe previous reqisLry, LiLle ol
ownership or bareboat charter as applicable
In addition, any liens, passage of title or mortgages on the Spanish-registered vessels must be communicated
to the registry.
Spain
Parallel registration is only possible in the Special Registry.
Bareboat charter registration can be applied for by shipping companies provided that they meet the
requiremenLs menLioned in secLion 5.3.1 and LhaL Lhe owner approves ol lyinq Lhe Spanish laq.
However, parallel registration cannot be extended for a period of time exceeding six months unless the
relevanL charLer aqreemenL exceeds such period and a provisional deleLion cerLilcaLe lrom Lhe previous
registry is duly submitted. Subsequent extensions can be applied for provided that evidence of the relevant
provisional deleLion cerLilcaLe can be produced durinq Lhe same period ol Lime.
Crew on SpanishreqisLered vessels musL qeL a compeLence cerLilcaLe lrom Lhe MercanLile Marine
Authorities.
Spain has raLiled mosL ma|or inLernaLional mariLime convenLions, such as Lhe UniLed NaLions ConvenLion on
Lhe Law ol Lhe Sea ol 1982 and |oined Lhe lnLernaLional MariLime OrqanizaLion in 1962.
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Sri Lanka
1. Tax
Corporate tax
The tax laws generally apply to shipping companies as they do to any other company, and the general rate of
corporate income tax is 28%.
Where a nonresident person carries on the business of shipowner or charterer and any ship owned or
charLered by said person calls aL a porL in Sri Lanka, an amounL ol 67 ol Lhe sums receivable on accounL ol
Lhe carryinq ol passenqers, mail, livesLock and qoods shipped inLo Sri Lanka {oLher Lhan qoods brouqhL Lo Sri
Lanka solely lor LransshipmenL) is deemed prolL arisinq in Sri Lanka.
However, if a ship calls on a one-off basis and further calls by that ship are unlikely, the above provision does
not apply.
1he deemed prolL is Laxed as per Lhe normal income Lax raLe ol 287. Reliel lor double LaxaLion is available
for certain countries, depending on the corresponding agreements.
Tax incentives:
Ships acquired are eliqible lor a capiLal allowance raLe ol 33.337.
RemuneraLion received by any residenL individual employed on a Sri Lankan ship is exempL lrom income Lax.
A reduced raLe ol corporaLe Lax ol 157 is applicable Lo shippinq aqenLs on Lheir aqency lees, received in
foreign currency, attributable to transshipment. (As per the bill to amend Inland Revenue Act presented
Lo parliamenL on 8 March 2012, Lhe 157 raLe is reduced Lo 127 wiLh ellecL lrom 1 April 2013.)
1he prolLs lrom Lhe perlormance ol any service ol ship repair, ship breakinq repair and relurbishmenL ol
marine cargo containers for payment in foreign currency is liable to income tax at a concessionary income
tax rate of 12%.
1he prolLs lrom Lhe lollowinq acLiviLies are exempL lrom income Lax as ol 1 April 2011:
OperaLion ol any porL Lerminal in Sri Lanka
Any service provided in Lhe course ol any business carried on wiLhin such porL
ConsLrucLion ol any porL in Sri Lanka
1he prolLs lrom Lhe supply ol any qoods manulacLured in Sri Lanka or Lhe provision ol services Lo any
loreiqn ship where paymenL received in loreiqn currency deemed Lo be prolL lrom exporL and Laxable
at the rate of 12% reduced rate performance of any service of ship repair, ship breaking repair and
refurbishment of marine cargo containers for payment in foreign currency is liable to income tax at a
concessionary income tax rate of 12%.
Economic service charge
An economic service charge (ESC) is chargeable on the aggregate turnover (relevant turnover) of every
Lrade, business, prolession or vocaLion carried on in Sri Lanka. 1he qeneral raLe is 0.257 ol Lurnover. LSC is
similar to an advance payment of income tax.
However, ESC is not chargeable to any person carrying on business as an owner or charterer of an aircraft or ship.
Nation-building tax
The nation-building tax (NBT) came into operation as of 1 February 2009 and is chargeable at 2% from 1
January 2011.
The following actions are chargeable for NBT on liable turnover:
lmporL ol any arLicle inLo Sri Lanka {oLher Lhan personal baqqaqe and excepLed arLicles)
Business ol manulacLure ol any arLicle {oLher Lhan excepLed arLicles)
Business ol providinq a service {oLher Lhan excepLed services)
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Business ol wholesale or reLail sale ol any arLicle oLher Lhan such sale by Lhe manulacLurer ol LhaL arLicle
1he imporLaLion ol aircralL or ship is exempL lrom NB1 {lor cerLain speciled Harmonized SysLem [HS|
codes). Certain services and goods, including the following, are excluded from NBT liability:
Services LransporL ol qoods or passenqers
Services ol a licensed shippinq aqenL lor Lhe exporL ol any arLicle lrom Sri Lanka
Any service rendered in or ouLside Sri Lanka Lo a person ouLside Sri Lanka lor paymenL in a loreiqn
currency (if remitted through a bank)
Any spare parLs imporLed by any shippinq company Lo be used lor Lhe mainLenance ol any ship
Services provided Lo Lhe porL or airline in relaLion Lo inLernaLional LransporLaLion
Services provided in relaLion Lo shipbuildinq lor Lhe inLernaLional markeL lor paymenLs made in loreiqn
currency
Value added tax
International transportation of goods and passengers, the repair of any foreign ship or any merchant ship
reqisLered in Sri Lanka or Lhe relurbishmenL ol marine carqo conLainers is zeroraLed, and domesLic supplies
are taxable at 12%.
The value added tax (VAT) is exempted on certain goods and services, including the following:
1he imporLaLion ol any ship
lncome lrom charLerinq vessels
Duty
lmporLed vessels wiLh cerLain speciled HS codes are exempL lrom imporL poinL Laxes, includinq CusLoms duLy
and PorL and AirporL Levy)
Importation of any ship for the purpose of goods or passenger transportation that will be registered under
Lhe Sri Lankan laq is exempL lrom PAL and duLies.
Further, no duty is due for vessels purchased under a Board of Investment-approved scheme.
The general tax incentives available to any individual employee, such as deductions for social security
contributions and life insurance, are also available to seafarers.
Sri Lanka has concluded LreaLies wiLh ^0 counLries on Lhe avoidance ol double LaxaLion. 1ax is levied based
on the place of effective management.
1.4 Freight taxes
Where a nonresident person carries on the business of shipowner or charterer and any ship owned or
charLered by said person calls aL a porL in Sri Lanka, an amounL ol 67 ol Lhe sums receivable on accounL ol
Lhe carryinq ol passenqers, mail, livesLock and qoods shipped inLo Sri Lanka {oLher Lhan qoods brouqhL Lo Sri
Lanka solely lor LransshipmenL) is deemed prolL arisinq in Sri Lanka.
However, if a ship calls on a one-off basis and further calls by that ship are unlikely, the above provision does
not apply.
No special Lax benelLs are available lor ships reqisLered in Sri Lanka.
2. Human capital
Lmployees {crew members) should be under ^5 years ol aqe and should be qualiled lor Lheir employmenL.
Under Lhe conLracL ol employmenL wiLh Lhe shippinq company, Lhe naLional labor laws, includinq Lhose
pertaining to social welfare and workers compensation, apply during the course of employment. (The above-
menLioned provision applies Lo ollce employees and crew and is qoverned by Sri Lankan crew aqreemenLs
specifying compensation, among other things.)
1here are no specilc requlaLions or imporLanL cusLoms wiLh respecL Lo Lhe employmenL ol personnel.
Collective labor agreements contain a limited term of contract. No information is available relating to, for
example, minimum wage, free days and working hours.
The employer has to contribute to the Employees Provident Fund (12%) and to the Employers Trust Fund (3%).
2. Mannin issues with Byin the Sri Lankan Ba
FilLy percenL ol Lhe crew should be Sri Lankan. {1his is noL sLricLly enlorced, and Lhe ReqisLrar ol Ships may
waive this requirement on a case-by-case basis.)
No special or specilc leqal sLrucLure is available.
The prevailing corporate tax rate for general business is 28%.
The dividends distributed to shareholders by any resident company are taxed at 10%.
A residenL company will be sub|ecL Lo a deemed dividend Lax {157 on Lhe dillerence beLween 33 1/37 ol
disLribuLable prolLs and Lhe LoLal dividend disLribuLed) il Lhe dividend disLribuLed is less Lhan 107 ol Lhe
company's disLribuLable prolL.
No qeneral or specilc subsidies or specilc invesLmenL/environmenLal incenLives are available Lo Lhe shippinq
industry. A change in this policy is not expected in the near future.
5.1 Infrastructure
5.1.1 Major ports
PorL ol Colombo
Calle Reqional PorL
KankesanLhurai {KKS) Harbour
PorL ol PoinL Pedro
1rincomalee Harbour
HambanLoLa Maqampora PorL
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Oluvil Harbour
Dockinq
Bonded warehousinq
LlecLronic daLa inLerchanqe services
Special laciliLies {bunkerinq polluLion and oil spill conLrol, marine surveyors)
The Bandaranayake International Airport at Colombo is within 20km of the Port of Colombo.
1he HambanLoLa lnLernaLional AirporL will be luncLioninq lrom 18 ol March 2013
Repair and mainLenance services
Bunker supply services in Colombo, Calle, 1rincomalee and HambanLoLa
Surveyors ol all ma|or classilcaLion socieLies in Colombo
Salvaqe services
Shippinq aqencies
1he UniversiLy ol MoraLuwa ollers a deqree proqram in naviqaLion and enqineerinq.
Sri Lanka is on Lhe whiLe lisL ol Lhe lnLernaLional MariLime OrqanizaLion {lMO).
A number ol public and privaLe insLiLuLions provide Lraininq lor raLinqs and ollcers ol all ranks.
(and International Ship and Port Facility Security Code) on board vessels
Accordinq Lo Lhe DirecLor ol MerchanL Shippinq who is responsible lor Lhe saleLy ol ships in Sri Lanka, all Sri
LankanreqisLered ships LhaL were required under Lhe SaleLy ol Lile aL Sea requiremenLs {SOLAS, chapLer ix)
Lo comply wiLh Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code by 1 July 1998 achieved cerLilcaLion by
that date.
AbouL 807 ol Lhe shippinq companies have implemenLed Lhe lSM Code. {1his is compulsory and lull
compliance is required.)
Sri Lanka is reqarded by Lhe indusLry as havinq sLricL saleLy rules reqardinq manninq.
Laws have been enacLed Lo prevenL sea polluLion and Lo deal wiLh oLher environmenLal concerns.
5.3 Registration
FilLy percenL ol Lhe crew members should be Sri Lankan naLionals. {Waivers are possible.)
Ownership can be registered with the Registrar of Ships, accompanied by the following documents:
Oriqinal bill ol sale
Class mainLenance cerLilcaLe
ConlrmaLion ol number ol shares held in Lhe ship
ParLiculars ol morLqaqes
CerLilcaLe in evidence ol lree and unencumbered ownership
CerLilcaLe ol qood sLandinq ol Lhe buyinq company
Board resoluLion lor Lhe purchase ol Lhe ship
Powers ol aLLorney ol Lhe persons siqninq lor Lhe purchase and Lhe sale
DereqisLraLion or cancelaLion leLLer ol Lhe reqisLraLion in anoLher counLry
Parallel reqisLraLion is possible. For reqisLraLion under an ollshore company wiLh 507 Sri Lankan crew, waqes
are exempL lrom Lax, buL no business can be conducLed in Sri Lanka. {lL will be LreaLed like any oLher loreiqn
shipowner.)
Ollcers and crew should hold a cerLilcaLe issued in accordance wiLh Lhe lnLernaLional ConvenLion on
SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq lor Sealarers {S1CW) {also, see secLion 5.3.1).
No information on this subject is available.
1he principal leqislaLion qoverninq ship reqisLraLion is Lhe MerchanL Shippinq AcL No. 52 ol 1971.
Registration of foreign vessels was allowed under the Companies Act 17 of 1982 (setting up an offshore
company in Sri Lanka) based on inLernaLional laws.
International conventions
Sri Lanka is a member ol Lhe lMO and lnLernaLional Labour OrqanizaLion {lLO) and has raLiled mosL ol Lheir
important conventions. Some of them are listed below.
lMO convenLions:
COLRLC 1972
SOLAS 197^
MARPOL 1973/78
S1CW 1978/95
lNMARSA1, CLS 1969
FUND 1971
LL 1966
l1C 1969
S1P 197
lLO convenLions:
No. 7, Minimum Aqe {Sea), 1920
No. 8, UnemploymenL lndemniLy {Ship Wreck), 1920
No.16, Medical LxaminaLion {Sea), 1921
No. 98, RiqhL Lo Orqanize and CollecLive Barqaininq, 19^9
No. 135, Workers' RepresenLaLives, 1971
No.108, Sealarers' ldenLiLy DocumenLs, 1958
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See section 5.3.2.
Sweden
1. Tax
Shippinq companies are qenerally Laxed in Lhe same way as oLher companies. For lnancial years beqinninq
on 1 January 2013 or laLer, Lhe corporaLe income Lax raLe is 227. For lnancial years beqinninq prior Lo 1
January 2013, Lhe corporaLe income Lax raLe is 26.37. Under cerLain circumsLances, Swedish reqisLered
shipping companies can be granted a subsidy for corporate income taxes and employers contributions
paid on salaries to the seafarers (sjfartsstd). Among other requirements, to qualify for the subsidy, the
shipping company must make training employment positions available according to the directions issued by
Lhe Swedish MariLime AdminisLraLion, and Lhe vessel and iLs operaLions musL be sullcienLly insured.
1.2.1 Resident seafarers
As a main rule, resident seafarers who are employed on Swedish vessels are taxed as Swedish residents.
However, resident seafarers on board Swedish and European Economic Area (EEA) registered vessels are
also entitled to special deductions in their personal income tax returns depending on the vessels route.
Swec|sn anc ff/ re|sterec vesse|s |n |oca| trafhc
1he special income deducLion is SLK35,000 {approx. t3,900) per annum. ln addiLion Lo Lhis deducLion,
Lhere is a special Lax reducLion amounLinq Lo SLK9,000 {approx. t1,000) per annum.
Swec|sn anc ff/ re|sterec vesse|s |n fore|n trafhc
1he special income deducLion is SLK36,000 {approx. t^,000) per annum. ln addiLion Lo Lhis deducLion,
Lhere is a special Lax reducLion amounLinq Lo SLK1^,000 {approx. t1,600) per annum.
Resident seafarers on foreign vessels
Resident seafarers are not liable for tax in Sweden if the seafarers stay abroad for a period of at least 183
days during a 12-month period and the employer is situated within the EEA.
1.2.2 Nonresident seafarers
Sealarers noL residenL in Sweden are Laxed aL a laL raLe ol 157 on Lheir salaries and benelLs derived lrom
work on:
A Swedish merchanL vessel {as delned in Lhe Swedish Sea AcL) excepL when Lhe vessel is renLed ouL
mainly unmanned to a foreign shipowner and the seafarer is not employed by the owner of the vessel or
an employer engaged by the owner
A loreiqn merchanL vessel renLed mainly unmanned by a Swedish shipowner, il Lhe sealarer is employed
by the shipowner or an employer engaged by the shipowner
No deductions are allowed in the personal income tax return when a nonresident seafarer is taxed at the 15%
laL raLe.
It is, however, possible for nonresident seafarers to apply for the same treatment as resident seafarers on
income derived from employment on vessels registered within the EEA. By doing so, they become entitled to
the special income deduction, as well as the special tax reduction (see section 1.2.1).
Sweden has an extensive treaty network with other countries and currently has income tax treaties in force
with more than 80 countries. In general, Swedens tax treaties are based on the Organisation for Economic Co-
operation and Development (OECD) model tax convention on income and capital (OECD model tax treaty).
1
EEA includes the countries of the European Union and Norway, Iceland and Liechtenstein.
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Sweden has concluded tax treaties with the following countries:
Albania, Argentina, Australia, Austria, Bangladesh, Barbados, Belarus, Belgium, Bolivia, Bosnia-
Herzegovina*, Botswana, Brazil, Bulgaria, Canada, Chile , China, Croatia*, Cyprus, Czech Republic**,
Denmark, Egypt, Estonia, Faeroe Islands, Finland, France, Gambia, Germany, Greece, Hungary, Iceland,
India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kenya, Latvia, Lithuania, Luxembourg,
Macedonia, Malaysia, Malta, Mauritius, Mexico, Montenegro*, Namibia, Netherlands, New Zealand,
Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russian Federation, Serbia*, Singapore, Slovak
Republic**, Slovenia*, South Africa, South Korea (ROK), Spain, Sri Lanka, Switzerland, Taiwan (ROC),
Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom, United States of
America, Venezuela, Vietnam, Zambia, Zimbabwe.
*Sweden applies the treaty with former Yugoslavia to Bosnia-Herzegovina, Croatia, Montenegro, Serbia and Slovenia.
**Sweden applies the treaty with former Czechoslovakia to the Czech Republic and the Slovak Republic.
Moreover, Sweden has also concluded specilc Lax LreaLies wiLh Lhe lollowinq counLries reqardinq shippinq
acLiviLies Lo specilcally avoid double LaxaLion ol companies usinq ships in inLernaLional Lrallc: Cuernsey, lsle
ol Man and Jersey.
According to domestic Swedish rules, a company is considered resident in Sweden if it is registered
(incorporated) in Sweden according to Swedish law. A foreign limited liability company is not considered
resident in Sweden simply based on the fact that it has a place of effective management in Sweden, but a
foreign company with management and control in Sweden is considered to have a permanent establishment
in Sweden.
However, most of the Swedish tax treaties are based on the OECD model tax treaty, which means that Article
8 is used Lo deLermine Lhe Lax LreaLmenL ol shippinq companies. ArLicle 8 sLaLes LhaL Lhe prolLs ol a shippinq
company shall be taxable only in one state, i.e., either where the shipping company is domiciled or in the state
in which the place of effective management of the shipping company is situated.
1.4 Freight taxes
There are no freight taxes in Sweden.
1.5 Value added tax
Supply, repairs, modilcaLion, mainLenance, charLerinq and leasinq are zeroraLed lor valueadded Lax {VA1)
purposes (exempt with recovery rights) if related to:
Commercial seaqoinq vessels
Vessels used lor deepsea lshinq acLiviLies
Vessels used lor prolessional lshinq acLiviLies
Vessels used lor piloLaqe and rescue aL sea
The supply of equipment and other parts to be used on board or incorporated in the vessel is in some cases
zero-rated (exempt with recovery rights). The exemption is applicable when goods are supplied or rented to
the owner of the vessel or to the person with the usufruct of the vessel according to contract with the owner
of the vessel. Services (for example, repairs and maintenance) connected to the equipment and other parts
incorporated in the vessel are exempt from VAT with no restrictions.
1.6 Tonnage tax
Currently, there are no rules regarding tonnage tax in Sweden. However, when the Swedish government
presented the budget bill for 2013, the government also suggested that a tonnage tax system should be
inLroduced in Sweden. 1he Swedish qovernmenL relerred Lo an ollcial reporL lrom February 2007, which
suggested that a tonnage tax system should be introduced by which derived income is calculated based on
the net tonnage of ships operated. It is stated in the bill that further investigations regarding the introduction
of tonnage tax system should be made during 2013.
Thus, the question of whether to introduce a tonnage tax system in Sweden is still under discussion.
ReqisLraLion ol vessels in Sweden does noL resulL in any special Lax benelLs lor Lhe shipowner.
By direction of the Swedish government, a committee has been appointed to investigate the Swedish
corporaLe income Lax sysLem. 1he commiLLee is expecLed Lo presenL an ollcial reporL lrom Lhe invesLiqaLion
in March 201^.
2. Human capital
Swedish shipping companies can, under certain circumstances, be granted a subsidy from the Swedish
Transport Administration (1rahkverket) on Swedish employers contributions paid on salaries to the
seafarers (sjfartsstd). This subsidy leads to lower manning costs for Swedish shipping companies.
One of the conditions to qualify for this subsidy is that the shipping company is registered in Sweden.
This also means that local rules and regulations will have to be enforced for vessels, as well as
personnel.
The most commonly used legal structure is the limited liability company (AB). As from 1 January 2013, the
standard corporate income tax rate is 22%.
Dividends paid to foreign recipients are, according to the main rule, subject to withholding tax at a rate of
30%. However, under Swedish domestic law, no dividend withholding tax will be levied on dividends paid by
a Swedish company to a foreign company that is equivalent to a Swedish company. A foreign company is
always considered equivalent to a Swedish company if the company is resident and liable for income tax in a
country with which Sweden has entered into a tax treaty, provided taxation is not limited to certain income
and Lhe enLiLy is covered by Lhe provisions under Lhe Lax LreaLy. Moreover, accordinq Lo Lhe ParenLSubsidiary
DirecLive, dividends beLween companies wiLhin Lhe LU are exempL lrom LaxaLion il Lhe parenL company holds
at least 10% of the share capital in the subsidiary.
3.3 Controlled foreign company
A Swedish company that holds or controls, directly or indirectly, at least 25% of the capital or the voting rights
in a foreign low-taxed entity, also known as a controlled foreign company (CFC) is liable to Swedish tax on its
share ol Lhe loreiqn enLiLy's worldwide neL prolL under cerLain condiLions. Foreiqn enLiLies are considered Lo
be low-taxed if their net income is taxed at a rate of less than 12.1% (55% of the Swedish corporate income
Lax raLe ol 227). 1here is, under cerLain condiLions, an excepLion lrom Lhe CFC rules reqardinq prolLs derived
from an international shipping business.
3.4 Debt-to-equity rules
No thin-capitalization rules exist in Sweden. However, the Companies Act requires the compulsory liquidation
of a company if more than 50% of the share capital is lost without replacement of new capital.
In January 2009, Sweden introduced interest deduction limitation rules on interest expense on intra-group
loans which has been used for intra-group acquisitions of shares and other share-based instruments.
However, as from 1 January 2013, extended interest deduction limitation rules are applicable on all loans
between related parties.
The main rule is that interest expense on loans between related parties is not deductible.
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There are, however, two exemptions from the main rule.
1.) Deductions for interest payments shall be allowed if the corresponding interest income would,
hypoLheLically, be Laxed aL a raLe ol aL leasL 107 in Lhe hands ol Lhe benelcial owner, had Lhe inLeresL
been Lhe only income ol Lhe recipienL/benelcial owner.
A further requirement is that the taxpayer can show that the debt relationship has not been created
predominantly (more than 75 %) to provide the group with a substantial tax advantage.
2.) Deductions for interest payments shall also be allowed if the debt relationship related to the interest in
quesLion is predominanLly {more Lhan 757) moLivaLed by business reasons, provided LhaL Lhe benelcial
owner of the income corresponding to the expense is resident in a state within the EEA or, under certain
conditions, in a state with which Sweden has a tax treaty.
4.1 Infrastructure
4.1.1 Major ports
CLeborq {locaLed on Lhe wesL coasL ol Sweden) is Lhe larqesL harbor in Scandinavia. 1he Malm harbor
merqed wiLh Lhe Copenhaqen harbor in 2001. As a resulL, Lhe new CopenhaqenMalm PorL Company has
harbors on both sides of the resund.
Brol|orden, Preemrall
Cavle
CLeborq
Helsinqborq
Karlshamn
Lulea
Malm
Oxelsund
SLockholm
1relleborq
Dockinq
SLoraqe
Arlanda {SLockholm)
Kallax {Lulea)
LandveLLer {CLeborq)
SLurup and KasLrup {Malm)
There are several universities and colleges that provide education in logistics in Sweden. Furthermore,
Lhere are several nonacademic educaLion proqrams called KY {qualiled prolessional educaLion) all around
Sweden, specializing in the maritime industry.
1he NaLional Marine AdminisLraLion is an aqency under Lhe MinisLry ol lndusLry, LmploymenL and
CommunicaLion. 1he Lasks ol Lhe NaLional Marine AdminisLraLion are shown in Lhe aqency's direcLives.
The agencys main responsibilities lie within the area of safety and environmental issues. These
responsibilities are:
1o promoLe sale, environmenLally compaLible and ellcienL shippinq wiLhin Lhe lramework ol secLor
responsibility
1o be responsible lor Lhe needs ol shippinq lor inlrasLrucLure in Lhe lorm ol sea rouLes, piloLaqe, ice
breaking, nautical information, communication and services
1o be responsible lor Swedish mariLime and sea rescue operaLions
1o sLrive lor saleLy on board Swedish vessels independenL ol lairways
1o moniLor compeLiLion in Lhe Swedish shippinq indusLry
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Taiwan
1. Tax
There are no special tax facilities for shipping companies.
The income of seafarers that is earned within the territory of Taiwan is subject to personal income tax for a
certain percentage, but there is no wage cost deduction for seafarers wages.
1.3 Tax treaties
As of 25 December 2012, there are 25 comprehensive income tax treaties and 14 international
transportation income tax agreements, which have been signed and brought into force. All tax treaties are
listed below.
Comprehensive income Lax LreaLies LhaL cover all income lows have been concluded wiLh Lhe lollowinq counLries:
{1) Asia: lndia, lndonesia, lsrael, Malaysia, Sinqapore, 1hailand, VieLnam
{2) Oceania: AusLralia, New Zealand
{3) Lurope: Belqium, Denmark, France, Cermany, Hunqary, Macedonia, Lhe NeLherlands
Slovakia, Sweden, SwiLzerland, UniLed Kinqdom
{^) Alrica: Cambia, Seneqal, SouLh Alrica, Swaziland
{5) America: Paraquay
lnLernaLional LransporLaLion income Lax aqreemenLs have been concluded wiLh: Canada, Lhe Luropean Union,
Cermany, lsrael, Japan, Korea, Luxembourq, Macau, Lhe NeLherlands {shippinq, air LransporL), Norway,
Sweden, 1hailand and Lhe UniLed SLaLes.
1.4 Tax exemption on cross-strait sea and air transport
Accordinq Lo Lhe ArLicle 291 ol Lhe AcL Coverninq Lhe RelaLions beLween Lhe People ol Lhe 1aiwan Area and
Lhe Mainland China Area {Lhe AcL), marine and air LransporLaLion service providers in Lhe 1aiwan Area and
Lhe Mainland Area receivinq incomes lrom sources in Lhe oLher parLy lor Lheir parLicipaLion in crosssLraiL
shippinq and/or air LransporLaLion may, in accordance wiLh Lhe aqreemenL beLween Lhe 1aiwan Area and Lhe
Mainland Area esLablished under ArLicle ^2 ol Lhe AcL, qranL muLual privileqes by reducinq or exempLinq
business tax and income tax based on the principle of reciprocity.
1.5 Freight taxes
Freight taxes will be levied in accordance with provisions under the Income Tax Act. According to Article 4 of
the Income Tax Act, business income obtained from the operation inside the territory of Taiwan by a foreign
enterprise engaged in international transportation, provided that reciprocal treatment is accorded by the
foreign country for an international transport enterprise of Taiwan operating in its territory, will be exempted.
1. SpeciaI vesseI reistraticn tax benehts fcr the shipcwner
1here are no Lax benelLs lor vessels reqisLered in 1aiwan.
No siqnilcanL chanqes Lo Lax law are anLicipaLed in Lhe near luLure.
2. Human capital
According to Article 12 of the Seafarer Act, when employing a seafarer, the employer must sign a written
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employment contract with the seafarer. The seafarer employed must not work on board a ship until the
contract is sent to the competent authority for future reference. The same applies for when the contract
is terminated. An employer hiring a seafarer who is a non-resident of Taiwan must apply to the competent
authority for permission.
The Seafarer Act applies to seafarers on ships. However, the Seafarer Act does not apply to seafarers serving
on the following ships, provided that those are not involved with navigation safety and dealing of maritime
casualties:
MiliLary vessels and boaLs
Fishinq ships
In addition, the Seafarer Act does not apply to the seafarers serving on a ship exclusively for governmental
services, excepL in Lhe lollowinq maLLers: qualilcaLions, pracLice, culLivaLion and Lraininq and when dealinq
with navigation safety and maritime casualties.
All sealarers musL be aqe 16 or over. All masLers musL be naLionals ol 1aiwan. 1he qualilcaLion ol sealarers
must be in conformity with the provision of the International Convention on Standards of Training,
CerLilcaLion and WaLchkeepinq lor Sealarers {S1CW), 1978, and any amendmenLs hereLo. Sealarers musL
also pass Lhe Sealarer LxaminaLion or have verilcaLion ol obLaininq Sealarer 1raininq. Any person who
possesses Lhe above qualilcaLions is permiLLed Lo Lake up employmenL as a sealarer only alLer Lhe issuinq
ol a compeLence cerLilcaLe lrom Lhe MinisLry ol 1ransporLaLion and CommunicaLion {MO1C). Sealarers are
enLiLled Lo serve aboard a ship alLer passinq a medical lLness examinaLion and on Lhe condiLion LhaL Lhey
possess a seafarers service book in accordance with relevant regulations.
1he NaLional Chinese Seamen's Union {NCSU) is crediLed lor promoLinq Lhe siqninq ol Lhe lnLernaLional
1ransporL Workers' FederaLionNaLional Chinese Seamen's Union LoLal crew cosL {l1FNCSU 1CC) collecLive
agreement with shipping companies. The collective labor agreement contains the following conditions:
1. A contract term is nine (plus or minus one) months.
2. Free days: apart from national holidays, seafarers will take at least one day off every seven days except if
they are required to take turns in watchkeeping during navigation.
3. Essentials of the discharge law: retirement, completed contract or a document stating that the seafarer is
"unlL Lo work on board" or due Lo an accidenLal in|ury as documenLed by a docLor
4. Regular working hours: a normal total working week for seafarers consists of 44 hours, except if they are
required to take turns in watchkeeping because of navigation needs.
5. NaLional healLh insurance is only available lor sealarers ol 1aiwaneselaqqed vessels; in addiLion, Lhe
employer and seafarers will contribute to the retirement fund on a monthly basis, which contribution shall
be deposiLed in a specilc accounL.
6. The minimum standards, varied for different ranks of crew members, of seafarer wages, onshore pay
and overLime charqes will be provided by Lhe MO1C; Lhe minimum waqe will noL be less Lhan Lhe waqes
provided by Lhe basic work criLeria ol Lhe Labor SLandard Law.
Social securiLy lor sealarers is included in Lhe l1FNCSU 1CC collecLive aqreemenL and Lhe SLandard Fixed
1erm LmploymenL ConLracL lor Sealarers drawn up by Lhe MO1C.
2. Mannin issues with Byin the Taiwanese Ba
One manninq issue reqardinq lyinq Lhe 1aiwanese laq is LhaL Lhe lnLernaLional MariLime OrqanizaLion
{lMO) whiLe lisL does noL yeL conLain 1aiwan. However, 1aiwan obLained Lhe S1CW SLaLemenL ol Compliance,
Independent Evaluation of Taiwan, on 12 February 2004, after passing the evaluation of STCW Competent
Persons recoqnized by Lhe lMO. 1his means LhaL 1aiwanese cerLilcaLes will en|oy Lhe same LreaLmenL as
those issued by other white list territories.
The most commonly used legal structure is the company limited by shares. In general, the taxable income
of the shipping companies using this structure is subject to corporate income tax (CIT) at a rate of 17% and
value added tax (VAT) at a rate of 5%. However, under the tonnage tax system, taxes will be levied according
Lo Lhe neL Lonnaqe ol iLs 1aiwanese laqqed ship. ln addiLion, wiLh preapproval lrom Lhe Lax auLhoriLies, a
company whose head ollce is ouLside ol 1aiwan buL provides shippinq services wiLhin Lhe LerriLory ol 1aiwan
can calculate its taxable income by computing 10% of the revenues derived from Taiwan according to Article
25 of the Income Tax Act.
3.2 Tonnage tax (Article 24-4 under Income Tax Act)
The Taiwanese government has approved a provision within the income tax law that would allow shipping
companies engaged in international maritime transportation to change the basis of their taxation. The new
Lax provision enLered inLo lorce on 10 January 2011. 1he provision allows Lhe prolLseekinq enLerprises
headquartered in Taiwan (Taiwanese companies), with the permission of the competent authority, to re-base
the taxation of their marine transport income from the current applicable corporate income tax to a lump
sum Lax calculaLed on Lhe Lonnaqe ol Lheir leeL. 1he Lonnaqe Lax was divided inLo lour brackeLs as lollows:
1. For ships wiLh a neL Lonnaqe ol 1,000 Lons or less, assumed prolL is lxed aL 1WD67 per 100 Lons up Lo
1,000 tons per day
2. For ships wiLh a neL Lonnaqe ol 1,001 Lo 10,000 Lons, daily assumed prolL per 100 Lons beLween 1,000
and 10,000 tons is TWD49.
3. For ships ol 10,000 Lo 25,000 Lons, daily assumed prolL per 100 Lons beLween 10,000 and 25,000 Lons
is TWD32.
^. For ships over 25,000 Lons, daily assumed prolL per 100 Lons above 25,000 Lons is 1WD1^.
Shipping companies that qualify for the tonnage tax may choose between the regular corporate income
tax approach and the tonnage tax approach. Once the choice is made, however, it is binding for 10 years.
ln addiLion, shippinq lrms LhaL choose Lo enLer Lhe Lonnaqe Lax reqime are noL eliqible Lo apply ollseLLinq
beLween prolLs and losses or oLher Lax incenLives.
ProlL disLribuLions {dividends) lrom shippinq companies are sub|ecL Lo wiLhholdinq Lax aL Lhe qeneral raLe ol
20%, which can be reduced to a special rate depending on the treaty country.
Subsidies may be qranLed Lo qualiled LransporLaLion companies enqaqed in air LransporLaLion beLween
Taiwan and offshore islands in the territory of Taiwan.
There are no special investment incentives for shipping companies and the shipbuilding industry.
4.3 !ssues with Byin the Taiwanese Ba {ArticIe 5 cf The Law cf Ships)
Accordinq Lo Lhe Law ol Lhe Ships, a ship may apply lor reqisLerinq as a 1aiwaneselaqqed ship under any one
of the following conditions:
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1. The ship is owned by the Taiwanese government.
2. The ship is owned by a Taiwanese national.
3. The ship is owned by any of the following companies, which are established under Taiwanese
laws, wiLh principal ollces siLuaLed wiLhin 1aiwanese LerriLory:
-An unlimited company, of which all shareholders are Taiwanese nationals
-A limited company, of which at least half of the capital is owned by Taiwanese nationals, and
the director authorized to represent such company is a Taiwanese national
-A joint company, of which all shareholders with unlimited liabilities are Taiwanese nationals
-A company limited by shares, of which the chairman of the board and at least half of the
directors are Taiwanese nationals, and at least half of the capital is owned by Taiwanese
nationals
4. The ship is owned by a juridical corporate, which is established under the Taiwanese laws, with
iLs main ollce siLuaLed wiLhin Lhe 1aiwanese LerriLory and aL leasL LwoLhirds ol Lhe members
and the statutory representative being Taiwanese nationals
Any loreiqnlaqqed ship will noL ly a naLional laq ol 1aiwan, excepL oLherwise sLipulaLed in laws or under any
one of the following circumstances:
On Lhe NaLional Day or any memorial day ol 1aiwan
When celebraLion or saluLe is needed
No major changes are anticipated in the near future.
5.1 Infrastructure
5.1.1 Major ports
Anpinq
Hualien
Kaohsiunq
Keelunq
Suao
1aichunq
1aipei
Dockinq
SLoraqe
PiloLaqe and Lowaqe
NaviqaLion aids, such as liqhLs and buoys
Moorinqs and anchoraqes
Shipbuildinq
MoniLorinq ol mariLime acLiviLies and Lrallc service lor ocean cruisers
lnspecLion service
The airports close to the major ports are:
Hualian AirporL {Hualien, Suao)
Kaohsiunq lnLernaLional AirporL {Kaohsiunq)
1aichunq AirporL {1aichunq)
1ainan AirporL {Anpinq)
1aiwan 1aoyuan lnLernaLional AirporL {Keelunq)
5.1.5 Marine education
Two types of maritime education exist in Taiwan: higher maritime education and vocational maritime
education.
Higher maritime education is provided by three major institutions:
1aipei Colleqe ol MariLime 1echnoloqy {1aipei)
NaLional Kaohsiunq Marine UniversiLy {Kaohsiunq)
NaLional 1aiwan Ocean UniversiLy {Keelunq)
Vocational maritime education is mainly provided at the high school level by the following schools:
China Commercial MariLime VocaLional Senior Hiqh School {1aipei)
NaLional Keelunq MariLime VocaLional Hiqh School {Keelunq)
NaLional Penqhu Marine and Fishery VocaLional Hiqh School {Penqhu)
NaLional Suao Marine & Fisheries VocaLional Hiqh School {Suao)
NaLional 1ainan Senior Marine Fishery VocaLional School {1ainan)
NaLional 1unq Kanq MariLime and Fishery VocaLional Hiqh School {PinqLunq)
All inLernaLional ships LhaL have implemenLed Lhe lnLernaLional SaleLy ManaqemenL Code, obLained Lhe
saleLy manaqemenL cerLilcaLe {SMC) and documenL ol compliance {DOC) musL lollow Lhose requlaLions
accordingly.
1he lMO Code, S1CW 95, Lhe lnLernaLional Labour OrqanizaLion {lLO) requiremenLs, l1F requiremenLs and
crew employmenL conLracLs will be sLricLly veriled. ln addiLion, a Minimal Sale Manninq CerLilcaLe should be
obLained, which can be issued under Lhe provisions ol requlaLion V/1^.2 ol Lhe lnLernaLional ConvenLion lor
Lhe SaleLy ol Lile AL Sea, 197^, as amended.
1o ensure saleLy ol ship and naviqaLion, Lhe employer will man Lhe ship wiLh sullcienL, qualiled sealarers in
accordance with relevant provisions before and at the beginning of the voyage. The minimum standards for
Lhe sale manninq ol a ship accordinq Lo a ship's Lradinq area{s), Lype and size will be provided by Lhe MO1C.
5.2.3 Safety rules regarding security
1he MO1C has adopLed Lhe lnLernaLional Ship and PorL FaciliLy SecuriLy {lSPS) code, requirinq Lhe inspecLion
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and approval of the China Corporation Register of Shipping on ship security and port facility.
The Regulations for the Administration of the Pollution of the Sea have been set up based on the
lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships {MARPOL 73/78) and iLs amendmenL,
MLPC.117 {52).
The International Convention on the Control of Harmful Anti-Fouling Systems on Ships (AFS convention)
prohibits the use of harmful organotin compounds in anti-fouling paints used on ships and establishes a
mechanism to prevent the potential future use of other harmful substances in anti-fouling systems.
5.3 Registration (The Shipping Registration Law)
The Shipping Administration Authority of the port of registry shall undertake to administrate the registration
of a ship; however, the Shipping Administration Authority at the port of construction is the competent
authority in charge of the registration of mortgage of the ship during construction.
For any registration application, the following documents are required:
1. Application form
2. Documents evidencing the cause of registration
3. ReqisLraLion ol cerLilcaLe ol lormer reqisLraLion, il any
4. Documentary proof, if the cause of registration involves any third person, and
5. Documentary proof of registration as to the right of the obligor.
1he documenLs lisLed in iLems lour and lve above may be exempLed il Lhe causes ol reqisLraLion appearinq in
such documents are court decisions with the power of enforcement.
The following information shall be enumerated in the application form, and the form must be signed by the
applicant:
1. Type, name and tonnage of ship
2. Port of registry
3. Cause and date of registration
4. Purpose of registration
5. The number of documents certifying the causes of registration
6. Amount of registration fees
7. The authority to which the registration is made
8. Date of application
9. Name, domicile of origin, address, residence and occupation of the applicant; or, in case of a juridical
person as Lhe applicanL, Lhe name and ollce ol such person
10. Name, domicile of origin, address and residence of the ship managing person, if any; and
11. Name, domicile of origin, address, residence and occupation of the proxy making the application, if any
When more than one person is entitled to a registration as the obligee, which part belongs to which person
must be noted in the application form.
The registration must be made jointly by the obligee and obligor entitled to the registration or whose proxy or
proxies through an application to the competent authority. Any proxy making an application must present the
letter of authorization signed personally by the person delegating the authorization. If a number of ships are
registered at the same time with the same cause and purpose, the application may be made on one single form.
1he compeLenL auLhoriLy will issue cerLilcaLes Lo applicanLs upon compleLinq reqisLraLions. 1he lollowinq
enLries and Lhe words markinq Lhe compleLion ol reqisLraLion musL be recorded in Lhe ReqisLraLion CerLilcaLe,
Lo which Lhe ollcial seal ol Lhe compeLenL auLhoriLy will be allxed:
1. Name, address and residence of applicant
2. Registration number
3. Date and number of receipt of application
^. SpecilcaLions ol Lhe ship
5. Port of registry
6. Cause of registration and the date of occurrence thereof
7. Purpose of registration
8. The number of the column of order of rights
9. Date of registration
If an application is made by the obligee only, the competent authority must notify the obligor in this regard
with the Notice of Registration.
1here are some more deLailed rules lor specilc circumsLances reqardinq ship reqisLraLion. More inlormaLion
can be lound in Lhe Shippinq ReqisLraLion Law.
5.4 Consulted resources
AcL Coverninq RelaLions beLween Lhe People ol Lhe 1aiwan Area and Lhe Mainland Area, hLLp://law.mo|.qov.
Lw/Lnq/LawClass/LawAll.aspx?PCode=O0010001, accessed 20 February 2013
lncome 1ax AcL, hLLp://law.mo|.qov.Lw/Lnq/LawClass/LawAll.aspx?PCode=C03^0003, accessed 22 February
2013
1he Law ol Ships, hLLp://law.mo|.qov.Lw/Lnq/LawClass/LawAll.aspx?PCode=K007000^, accessed 21
February 2013
NaLional Chinese Seamen's Union websiLe, www.ncsu.orq.Lw/, accessed 21 February 2013
1he Sealarer AcL, hLLp://law.mo|.qov.Lw/Lnq/LawClass/LawAll.aspx?PCode=K00700^2, accessed 20
February 2013
1he Ship ReqisLraLion Law, hLLp://law.mo|.qov.Lw/Lnq/LawClass/LawConLenL.aspx?PCODL=K0070021,
accessed 22 February 2013
1axaLion AdminisLraLion, MinisLry ol Finance, 1aiwan websiLe, hLLp://www.doL.qov.Lw/en/, accessed 23
February 2013
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Thailand
1. Tax
A foreign company or partnership carrying on international maritime transportation is subject to corporate
income Lax aL a raLe ol 37 ol Lhe lreiqhL, lees and any oLher benelLs collecLible, wheLher in 1hailand or
elsewhere, in respect of the transport of goods from Thailand, before deduction of any expenses. Thai
companies are sub|ecL Lo corporaLe income Lax aL a raLe ol 207 on neL prolL lor Lwo accounLinq periods
commencing on or after 1 January 2013, but not later than 31 December 2014 according to the new tax
policy.
Withholding tax
The inbound freight paid to a Thai shipping company is subject to 1% withholding tax while the payment made
to an overseas shipping company is tax-exempt.
The outbound freight is subject to 1% withholding tax.
There are no special tax facilities for seafarers apart from the fact that income in the form of salary or wages
received by seafarers for the discharge of their duties on board a Thai ship, under the law governing the
merchant navy in the international carriage of goods, is exempt from Thai personal income tax.
Thailand has concluded agreements for the avoidance of double taxation with 54 countries, which reduce the
transportation tax rate for international shipping income to 1.5%.
Armenia, Australia, Austria, Bahrain, Bangladesh, Belgium, Bulgaria, Canada, Chile, China, Chinese Taipei,
Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Hungary, India, Indonesia,
Israel, Italy, Japan, Kuwait, Laos, Luxembourg, Malaysia, Mauritius, Myanmar, Nepal, Netherlands, New
Zealand, Norway, Oman, Pakistan, Philippines, Romania, Russian Federation, Seychelles, Singapore,
Slovenia, South Africa, South Korea (ROK), Spain, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine,
United Arab Emirates, United States of America, Uzbekistan, Vietnam.
1hailand has also concluded LreaLies wiLh Poland and Lhe UniLed Kinqdom buL Lhey exclude shippinq income.
1.4 Freight taxes
1here are no specilc lreiqhL Laxes in 1hailand. For relevanL Laxes applicable in 1hailand, please reler Lo
section 1.1.
Thai company income from international maritime transportation may be exempt from Thai corporate
income tax if the vessel used for business is registered as a Thai vessel and at least 50% of the crew are Thai
nationals.
2. Human capital
Under 1hai labor laws, hirinq personnel in 1hailand is done by muLual aqreemenL beLween employer and
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employee in the form of either a written or oral agreement.
In Thailand, there are rules and requirements relating to the use of labor in the scope of employment
conditions and working conditions, e.g., wages, working hours, days off and a safe working environment.
They are applicable to crew members, who are protected under Thai labor laws irrespective of whether they
have a written or verbal employment contract.
An employer with 10 or more employees must provide a copy of the work rules in Thai and must announce
the date of their enforcement within 15 days after hiring these 10 or more employees.
1he mosL siqnilcanL labor laws are Lhe lollowinq:
Labor ProLecLion AcL {No. 3) B.L. 2551 {2008)
Labor RelaLionship AcL B.L. 2518 {1975)
Under Lhe Labor ProLecLion AcL {No. 3) B.L. 2551 {2008), employmenL is qenerally requlaLed as lollows:
Minimum waqes; currenLly, Lhe raLe is 1HB300 {t7.7) per day lor Lhe employees workinq in all provinces
throughout Thailand.
Normal workinq hours may noL exceed 8 hours a day and ^8 hours a week.
OverLime paymenL may noL be less Lhan 1.5 Limes Lhe normal hourly raLe on weekdays and 3.0 Limes Lhe
hourly rate on holidays.
Minimum annual leave is 6 days vacaLion leave and 30 days sick leave.
1radiLional holidays, includinq NaLional Labor Day, musL noL number less Lhan 13 days per year, includinq
annual ollcial holidays, reliqious holidays and local LradiLional holidays.
Under Lhe Social SecuriLy Fund AcL B.L. 2533 {1990):
1he Social SecuriLy Fund compensaLes lor in|ury, sickness, disabiliLy, deaLh, childbirLh, child wellare and
old age.
ConLribuLions are due lrom Lhree parLies employer, employee and qovernmenL aL Lhe same raLe on a
monthly basis.
1he conLribuLion raLe is ^7 ol Lhe basic salary per monLh, wiLh a maximum salary base ol 1HB15,000
{t385). 1he raLe is reduced in order Lo minimize Lhe burden ol employers as a resulL ol a minimum
wage rate increase. The rate of 4% is applied for the year 2013; thereafter, the normal rate of 5% will be
reapplied.
Under Lhe Workmen's CompensaLion AcL B.L. 2537 {199^):
1he Workmen's CompensaLion Fund compensaLes lor in|ury, sickness, disabiliLy and deaLh in Lhe line ol
duty.
ConLribuLions are due lrom Lhe employer on an annual basis.
1he conLribuLion raLe varies lrom 0.27 Lo 17 ol waqes based on Lhe risk raLinq ol Lhe esLablishmenL Lype
as seL by indusLrial classilcaLion. 1he currenL raLe applies Lo Lhe employees in Lhe shippinq indusLry and
sLands aL 17 ol Lhe basic salary per monLh, wiLh a maximum salary base ol 1HB20,000 {t513).
Under Lhe Skill DevelopmenL AcL B.L. 25^5 {2002):
As ol 2005, businesses prescribed by law, includinq shippinq businesses which operaLe wiLh 100
employees or more, have been required to make contributions to the fund, except for when they provide
skill development programs to their employees in compliance with the law.
ConLribuLions are due lrom Lhe employer on an annual basis.
1he conLribuLion raLe is 17 ol waqes per employee per monLh, wiLh a maximum salary base ol 1HB6,660
{t171).
The collective labor agreements include the following:
An unlimiLed Lerm ol conLracL
Minimum waqes as announced by Lhe MinisLry ol Labor varyinq per area, severance pay on LerminaLion ol
employment ranging from 30 to 300 days, based on the period of service
Leave, aL leasL 6 days a year, wiLh 13 ollcial public holidays
1he 1hai Labor AcL seLs ouL a number ol ollences, wiLh lnes ol 1HB5,000 {t128) Lo 1HB200,000
{t5,128) and a Lerm ol imprisonmenL ol one monLh Lo one year
Normal workinq hours may noL exceed 8 hours a day, and Lhe LoLal hours worked in 1 week may noL
exceed 48 hours
There are no treaties in place, but Thailand is a member of the International Social Security Association (ISSA).
2. Mannin issues with Byin the Thai Ba
1o ly Lhe 1hai laq, a shipowner has Lo comply wiLh Lhe requlaLions ol Lhe 1hai Social SecuriLy and Workmen's
Compensation Funds to protect his or her employees.
In Thailand, a branch of a foreign company is the most commonly used legal structure for the shipping
business. The reason is that a branch of a foreign company is subject to corporate income tax at 3% on gross
revenue, while a company incorporated in Thailand is subject to corporate income tax at the rate of 20% on
neL prolL, wiLh a lurLher 107 wiLhholdinq Lax on dividends disLribuLed Lo shareholders. 1he raLe ol 207 on neL
prolL lor Lwo accounLinq periods commencinq on or alLer 1 January 2013, buL noL laLer Lhan 31 December
2014, has been applied according to the new tax policy.
Thai individuals and Thai companies are exempt from the 10% withholding tax, provided that such dividends
are paid by a Thai company that carries on an international maritime transportation business by using Thai
ships on which at least 50% of the crew members are Thai nationals (see section 5.3.1).
No wiLhholdinq Lax applies Lo prolLs disLribuLed by a 1hai branch Lo a head ollce overseas, since loreiqn
shippinq companies do noL pay income Lax on neL prolL.
There are no subsidies available to shipping companies in Thailand.
MariLime LransporL services are eliqible lor invesLmenL incenLives lrom Lhe Board ol lnvesLmenL ol 1hailand,
including exemption from import duty on machinery, and corporate income tax for eight years, provided that
Lhe vessel is reqisLered wiLh and classiled by any recoqnized vessel classilcaLion socieLy.
Building or repairing ships of not less than 500 tons gross, and ships of less than 500 tons gross that are not
made of wood or steel, are eligible for investment incentives as a priority activity that has special importance
and benelL Lo Lhe counLry. 1he invesLmenL incenLives include an exempLion lrom imporL duLy on machinery
and an exemption from corporate income tax for eight years without cap.
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4.4 !ssues with Byin the Thai Ba
1he incenLives provided by Lhe Board ol lnvesLmenL ol 1hailand are an issue reqardinq lyinq Lhe 1hai laq.
The Board of Investment of Thailand recently proposed a new investment promotion policy to be effective by
2014. In the future, industry-based investments rather than zone-based investments will be used as criteria
for determining which incentives will be granted.
According to the proposed investment promotion policy, building or repairing ships of not less than 500
Lons qross, and ships ol less Lhan 500 Lons qross LhaL are made ol meLal or lberqlass, will be eliqible lor an
exemption from corporate income tax for eight years with a cap.
5.1 Infrastructure
5.1.1 Major ports
Laem Chabanq {Chonburi, www.laemchabanqporL.com)
MapLaphuL {Rayonq, www.mapLaphuLporL.com)
PhukeL
PorL ol Banqkok {www.paL.or.Lh)
Sonqkhla
Sriracha {Chonburi, www.srirachaporL.com)
The following facilities are generally available at the ports:
Dockinq
SLoraqe
Loadinq
Ceneral, bulk and coal carqos
Radio praLique and saniLary inspecLion
WaLer supply and bunker
1ankers berLhinq
Ship chandlers
The following airports are located close to major ports:
Hadyai lnLernaLional AirporL locaLed in Sonqkhla and close Lo Sonqkhla PorL
PhukeL lnLernaLional AirporL locaLed in PhukeL and close Lo PhukeL PorL
Suvarnabhumi lnLernaLional AirporL locaLed in SamuLprakarn and close Lo Laem Chabanq PorL, PorL ol
Bangkok and Sriracha Port
ULapao lnLernaLional AirporL locaLed in Chonburi and close Lo MapLaphuL PorL
ConsulLinq lrms in shippinq {Ollce ol MariLime ConsulLanLs Co., LLd)
MariLime law services {1illeke & Cibbins lnLernaLional LLd, Paiboon Law Ollce LLd, SiLLhichoke Law Ollce,
ChaliL & MariLime AssociaLes Law Ollce, Pramuanchai Law Ollce Co., LLd, PBS Law LLd, WaLson, Farley &
Williams {1hailand) LLd)
lnsurance brokers {lndependenL ConsulLanLs Co. LLd, AssociaLed Brokers and ConsulLanLs LLd, 1ransporL
and Claim ConsulLanLs Co., LLd)
In Thailand, there are schools and institutions offering maritime educational programs, including:
BarLer lnLernaLional MariLime SLudies, locaLed in Banqkok {www.bimsmariLime.com)
lnLernaLional MariLime Colleqe, KaseLsarL UniversiLy, Sriracha Campus {www.imc.src.ku.ac.Lh)
1ransporLaLion lnsLiLuLion ol Chulonqkorn UniversiLy, locaLed in Banqkok {www.Lri.chula.ac.Lh)
MerchanL Marine 1raininq CenLer, locaLed in SamuLprakarn {www.mmLc.ac.Lh)
Ra|a MariLime School, locaLed in Chonburi {www.ra|amariLime.ac.Lh)
1hai Marine School, locaLed in Banqkok {www.Lhaimarineschool.ac.Lh)
1he lnLernaLional SaleLy ManaqemenL Code has been implemenLed on all vessels ol 500 qross Lons and more
since 1 July 2002.
Thailand has adopted the International Ship and Port Facility and Security code (ISPS code) and the
Declaration of Security (DOS).
1hailand adheres Lo Lhe lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea 197^, which is incorporaLed in
Thai ship navigation law.
5.3 Registration
For the purpose of trading in Thai territorial waters, the owners of registered Thai vessels must be Thai
nationals or juristic persons established under Thai law. In addition, such juristic persons have to meet the
following criteria:
ll iL is an ordinary parLnership, all parLners musL be 1hai naLionals.
ll iL is a limiLed parLnership, all parLners whose liabiliLy is unlimiLed musL be 1hai naLionals, and noL less
than 70% of the capital of the partnership must belong to Thai nationals.
ll iL is a limiLed company, Lhe ma|oriLy ol Lhe direcLors musL be 1hai naLionals, and noL less Lhan 707 ol
the capital must belong to Thai nationals.
For a registered Thai vessel used only to operate international marine transport and not to conduct business
in Thai territorial waters, the owner must be a limited company or public limited company under Thai law with
iLs head ollce in 1hailand. 1he ma|oriLy ol Lhe direcLors musL be 1hai naLionals and noL less Lhan 517 ol Lhe
capital must belong to Thai nationals. The ratio of Thai crew on Thai vessels must not be less than 50% as
prescribed by ministerial regulation.
The application should be accompanied by the title deed of the vessel, i.e., the shipbuilding agreement,
Lhe sale aqreemenL and relaLed supporLinq documenLs, and submiLLed Lo Lhe Marine DeparLmenL.
1he vessel/ship lor which an applicaLion has been submiLLed musL be surveyed by Lhe ollcer ol Lhe Marine
DeparLmenL lor cerLilcaLion.
A ship cerLilcaLe will be issued by Lhe Marine DeparLmenL.
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For bareboat charter use in Thai territory, approval from the Thai authorities is required.
1he ollcers and crew workinq on 1hai ships ol aL leasL 60 qross Lons musL be reqisLered in Lhe ship reqisLer
by Lhe employer and reporL Lo Lhe Marine DeparLmenL on an annual basis. Non1hai ships are noL required by
law Lo reqisLer ollcers and crew wiLh Lhe Marine DeparLmenL.
No conventions regarding registration have been adopted.
Ship mortgages
1he morLqaqe ol 1hai ships musL be reqisLered wiLh Lhe Marine DeparLmenL lor a lee noL exceedinq
1HB20,000 {t500).
Survey
1hai ships are required Lo be surveyed once a year by Lhe Ship ReqisLraLion Division ol Lhe Marine
Department.
Turkey
1. Tax
Shipping companies are basically taxed according to the same general principles that apply to other Turkish
companies operating in different sectors. However, the taxation may vary with the type of shipping registry.
In Turkey, there are two shipping registries: the National Shipping Registry (NSR) and the Turkish
International Shipping Registry (TISR, also called the second registry). All commercial vessels of 18 gross
tons or more must be registered in the NSR in order to operate in Turkish territory. However, the TISR, which
is optional, provides various advantages to shipping companies. For example, a shipping company registered
in the TISR is not subject to the standard corporate income tax of 20%.
1.1.1 Shipping companies not registered in the TISR standard corporate income
tax legislation
Accordinq Lo Lhe CorporaLion 1ax Law, Lhere are Lwo sorLs ol corporaLe Lax liabiliLy: lull and limiLed.
Fully liable taxpayer (resident taxpayer)
Leqal enLiLies whose leqal or business headquarLers are locaLed in 1urkey, or whose operaLions are cenLered
and managed in Turkey, are subject to corporate tax on their worldwide income. Turkish tax legislation
describes these companies as fully liable taxpayers.
Limited liability taxpayer (nonresident taxpayer)
LimiLed liabiliLy Laxpayers include branch ollces whose leqal head ollce or leqal cenLer is locaLed abroad.
These are subject to corporate tax on their income generated within Turkey only. In other words, worldwide
income is taxed in Turkey if the legal or business center is in Turkey. If both the legal and business centers are
noL in 1urkey, Lhe company is qualiled as nonresidenL and is Laxed only on Lhe income qeneraLed in 1urkey.
Corporate tax rate
The corporate income tax rate is 20%.
Withholding tax rate
The local dividend withholding tax rate is 15%. However, the rate may be reduced by available bilateral tax
treaty provisions. In order to apply the lower withholding tax rate stipulated by the treaty, dividends should
be disLribuLed eiLher acLually or on an accounL basis. 1he benelL provided by Lhe Lax LreaLy will vary based
on Lhe raLio ol Lhe loreiqn shareholdinq, Lhe maximum wiLhholdinq Lax raLe speciled by Lhe LreaLy and Lhe
amount of dividend distributed.
Special taxation of non-resident foreign transportation companies
Accordinq Lo CorporaLion 1ax Law No. 5520, loreiqn LransporLaLion companies are Laxed under Lhe scope
of limited taxation liability. The earnings of foreign transportation companies constituting the tax basis are
calculated by applying the average equivalent ratios, which is 15% for marine transportation, on the revenue.
These companies will be taxed at a rate of 20% on 15% of their revenues.
The revenues of foreign transportation companies consist of all amounts received as passenger, freight
and luggage fees, including payments for expenses that they charge along with the ticket price, in marine
transportation, from the loading ports in Turkey to the destination ports in foreign countries or to the foreign
ports where transfers are to be made.
1.1.2 Shipping companies registered in the TISR
The TISR legislation was introduced in December 1999 and an accompanying directive was enacted in
June 2000.
1he main ob|ecLive ol Lhe 1lSR, which is requlaLed accordinq Lo 1urkish lnLernaLional MariLime Law, is Lo
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accelerate the development of the Turkish maritime industry and to increase its contribution to the economy
by facilitating the management of the ships registered in the TISR.
1he scope ol Lhe law encompasses all Lypes ol carqo, passenqer and open sea lshinq vessels operaLinq
for commercial purposes and commercial yachts, which are registered with tourism companies and those
number ol yachLs does noL exceed 36. 1hose vessels LhaL are reqisLered in Lhe 1lSR benelL lrom Lhe riqhL Lo
ly Lhe 1urkish laq.
Accordinq Lo ArLicle 12 ol Lhe 1lSR law, ships and yachLs shall benelL lrom Lhe lollowinq Lax advanLaqes by
being registered in TISR:
Revenues obLained lrom Lhe operaLion and Lhe Lransler ol ships and yachLs {excludinq privaLe yachLs)
are exempt from income tax and corporate tax
1he purchase, sale, morLqaqe, reqisLraLion, loan and lreiqhL conLracLs lor ships and yachLs are noL sub|ecL
to stamp duty, charges and banking transactions tax
Waqes paid Lo Lhe sLall employed on ships and yachLs {excludinq privaLe yachLs) are exempL lrom income
tax
Ships and yachts may be insured abroad as well.
Leasinq ol Lhe ships
1he scope ol Lhe corporaLe Lax exempLion is deLermined by Lhe CorporaLion 1ax Law Ceneral Communique
No. 1. According to this communiqu, the revenues derived from the lease of a ship registered in the TISR are
not within the scope of ship operation. These revenues are therefore not exempt from corporate tax.
1.1.3 Value added tax
According to value added tax (VAT) law, the following transactions are exempt from VAT and the taxpayer
has the right to claim a credit or refund for the VAT incurred to render the following services:
Supply ol vessels, loaLinq planLs and cralLs manulacLured lor leasinq or operaLinq purposes, deliveries
and services provided in relation to the manufacturing and construction of such means and services
related to maintenance and repair of such vessels to taxpayers whose activities partly or entirely consist
of leasing or operating these various types of vessels
Services supplied in harbors lor vessels, includinq loadinq, unloadinq and similar services rendered lor
loads and passengers
Services rendered Lo Laxpayers who eiLher acLually perlorm or purchase services reqardinq consLrucLion,
renovation and enlargement of harbors, delivery of goods and contracted business done, therefore, in
relation to such operations
1.1.4 Special consumption tax
Accordinq Lo Lhe Special ConsumpLion 1ax Ceneral Communique No. 6, provided LhaL Lhe quanLiLy ol luel is
determined according to the ships technical properties and entered in the logbook of the ship that will use
the fuel, the rate of the consumption tax on the fuel used for any kind of load, including passengers or service
{such as LowboaLs, scienLilc research ships and salvaqe ships), and open sea lshinq vessels and commercial
yachts registered in the TISR and NSR and restricted to cabotage, will be reduced to zero.
Thus, the fuel supplied to vessels operating in cabotage and satisfying the conditions mentioned in the
general communiqu is exempt from special consumption tax.
1.1.5 Motor vehicle tax
The subject of the tax is the motor vehicle. Taxpayers are real and legal persons who have motor vehicles
reqisLered Lo Lheir own names in Lhe Lrallc, municipaliLy and docks reqisLer.
WiLh Lhe amendmenL inLroduced under Lhe Code no. 5897, which has been published in Lhe Ollcial CazeLLe
daLed 16 May 2009, yachLs, cruisers and all kinds ol privaLe moLor boaLs in Lhe Larill no.3 included in ArLicle
6 ol Lhe MoLor Vehicles 1ax Code are excluded lrom Lhe scope ol moLor vehicle Lax as ol 30 June 2009.
The wages of seafarers working on ships and yachts registered in the TISR are exempt from income tax and
lunds accordinq Lo ArLicle 12 ol Lhe 1lSR Law. 1he crew ol privaLe yachLs and Lhe employees and execuLives
workinq in Lhe ollces ol shippinq companies are noL wiLhin Lhe scope ol Lhis exempLion. 1hey are sub|ecL Lo
income tax.
Accordinq Lo ArLicle 10 ol Lhe 1lSR Law, Lhe sealarers workinq on ships and yachLs reqisLered in Lhe 1lSR
are subject to the Turkish social security system. However, foreign seafarers can be exempt from disability,
old age and death insurance upon their application, provided that they prove to be insured in their own
counLry or in anoLher counLry. While crew members are sub|ecL Lo Sea Labor Law, oLher personnel workinq in
shippinq companies are sub|ecL Lo Labor Law.
1.3 Tax treaties
Turkey has signed double taxation agreements with 80 countries and thus, an extensive network of tax
treaties that in many cases effectively reduces the rates enacted in domestic legislation. The list below
contains those countries that have concluded double tax treaties (DTT) with Turkey:
Albania, Algeria, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Belgium, Bosnia and Herzegovina,
Brazil, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Ethiopia, Finland,
France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan,
Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malaysia, Moldova,
Mongolia, Montenegro, Morocco, Netherlands, New Zealand, Norway, Oman, Pakistan, Poland, Portugal,
Qatar, Romania, Russian Federation, Saudi Arabia, Serbia, Singapore, Slovak Republic, Slovenia, South
Africa, South Korea (ROK), Spain, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Tunisia,
Turkish Republic of Northern Cyprus, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom,
United States of America, Uzbekistan, Yemen.
Almost all of the treaties mentioned above have a special provision for shipping. In most of the tax treaties,
Lhe prolLs arisinq lrom inLernaLional LransporL will be Laxed in Lhe counLry ol residence. However, in oLhers,
exclusive taxation rights belong to the country where effective management, headquarters or commercial
centers are situated.
ln some LreaLies, such prolLs may also be Laxed in Lhe oLher counLry, buL in LhaL case Lhe Lax charqeable in
that other state should be reduced by 50%.
1.4 Freight taxes
No freight taxes are levied in Turkey.
2. Human capital
1he "seamen requlaLions," published in Lhe Ollcial CazeLLe daLed 31 July 2002, qovern Lhe adequacy,
educaLion, examinaLion, cerLilcaLion, hirinq and workinq and healLh condiLions ol Lhe sealarers workinq on
vessels LhaL ly Lhe 1urkish laq.
As 1urkey is a member ol Lhe lnLernaLional ConvenLion on SLandards ol 1raininq, CerLilcaLion and
Watchkeeping for Seafarers (STCW), the formalities for hiring are regulated by the STCW as well.
The following conditions apply to crew members:
1hey should be ciLizens ol Lhe 1urkish Republic or Lhe 1urkish Republic ol NorLhern Cyprus {1RNC) or ol
Turkish nationality.
1hey should comply wiLh Lhe condiLions concerninq aqe, educaLional level, service Lime and oLher
conditions as stated in the seamen regulations.
1hey should be able Lo produce documenLs in evidence ol compliance wiLh Lhe necessary healLh
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conditions as stated in the seamen regulation.
1hey musL noL have been lound quilLy ol any crime menLioned in Lhe seamen requlaLions.
1hey musL noL have been lound quilLy ol any crime commiLLed aqainsL Lhe sLaLe.
1hey musL noL have been lound quilLy ol any crime relaLed Lo criminal orqanizaLions.
In general, the activities and employment relationships regarding sea transport are not subject to national
labor law, except for:
Ship loadinq and unloadinq operaLions in porLs and on landinq sLaqes
OperaLions relaLed Lo sealood producers whose acLiviLies are noL covered by Lhe Sea Labor Law and noL
deemed to be agricultural work
1urkey has a separaLe law called Lhe Sea Labor Law {20 April 1967/85^), requlaLinq Lhe workinq condiLions
of crew members.
2.3 Regulations on hiring personnel
In ships and yachts that are registered in the TISR, regardless of the nationality of the owners of ships and
yachts, the captain is required to be a Turkish citizen. If the shipowner is a Turkish citizen or a company falling
under the scope of Article 940 of the Turkish Commercial Code, at least 51% of the personnel, excluding the
cabotage line, must be Turkish citizens. However, there is no restriction in terms of the nationality of crew
members, apart from the captain, if the shipowner is not a Turkish citizen.
1here is a collecLive labor aqreemenL beLween Lhe UndersecreLariaL lor MariLime Allairs and Lhe Seamen
Union ol 1urkey.
Although ship loading and unloading operations in ports and on landing stages are subject to Turkish National
Labor Law, oLher marine operaLions are sub|ecL Lo 1urkish Sea Labor Law.
1urkish Sea Labor Law sLipulaLes Lhe basic requiremenLs concerninq labor aqreemenLs, includinq Lhe lorm
and layout of agreements, the number of copies and who will get those copies, the term of the agreements,
wages, holidays and so on.
The seafarers employed on vessels and yachts registered in the TISR are subject to the legislation on Turkish
social security and individual and collective labor law.
However, foreign crew members working on vessels registered in the TISR are not covered by disability,
old age and death insurances, unless such coverage is incorporated into the provisions of international or
bilateral social security contracts and they are not covered by compulsory insurance in their country or
special insurance in any other country.
1o provide reliel lrom double social securiLy premiums and Lo assure benelL coveraqe, 1urkey has enLered
into bilateral totalization agreements with the following countries:
Albania, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Canada , Croatia, Czech Republic,
Denmark, France, Georgia , Germany, Libya, Luxembourg, Macedonia, Netherlands, Norway, Quebec **,
Romania, Sweden, Switzerland, Turkish Republic of Northern Cyprus*, United Kingdom.
* Turkey is the only nation that recognizes the Turkish Republic of Northern Cyprus as an independent nation.
** Though not a country, Turkey has concluded an agreement with the Canadian province Quebec, in addition
to Canada itself.
2. !ssues with Byin the Turkish Ba with reard tc hirin perscnneI
The wages of crew members working on vessels registered in the TISR are exempt from income tax.
3.1 Most common legal structures for shipping activities
There is no special legal structure for the formation of companies engaged in shipping activities. However,
mosL ol Lhe shippinq companies operaLinq in 1urkey are esLablished as a |oinL sLock company {A..) or
a limiLed liabiliLy company {LLd). 1he |oinL sLock company limiLs iLs shareholders' liabiliLy Lo Lhe share
capital. On the other hand, since one of the requirements of the TISR is that the owning company must be
established in Turkey, the limited liability company provides establishment conveniences.
ln accordance wiLh ArLicle 9^/6b ol Lhe lncome 1ax Code, il Lhe earninqs derived lrom Lhe operaLion ol
Lhe vessels by Lhe lully liable Laxpayer enLiLies are disLribuLed Lo Lhe lollowinq enLiLies and real persons
{i) residenL real Laxpayers and {ii) nonresidenL real Laxpayers and enLiLies Lhey are sub|ecL Lo a 157
withholding tax. However, if there is a DTT between Turkey and the country of which the nonresident real
taxpayer or entity is resident, the provisions of that agreement are effective. In the event that the agreement
stipulates a lower withholding tax ratio, the lower ratio applies.
The withholding tax on dividends will be levied at the time of distribution regardless of whether the company
earnings are subject to exemption.
Nevertheless, dividends distributed to the following entities by the resident taxpayer entities are exempt from
withholding tax:
ResidenL Laxpayer enLiLies
NonresidenL Laxpayer enLiLies LhaL qain dividends by a business ollce or permanenL represenLaLive
ln Lhis conLexL, accordinq Lo Lhe CorporaLion 1ax Law Ceneral Communique No. 1, in Lhe case ol disLribuLion
of the earnings to be acquired from the operation and transfer of the vessels, dividends distributed to the
residenL real Laxpayers are sub|ecL Lo wiLhholdinq Lax in accordance wiLh ArLicle 9^/6b ol Lhe lncome 1ax
Code regardless of whether the company earnings are derived from the operation of the vessels completely
or partially.
There are no subsidies available to shipping companies in Turkey other than the tax incentives mentioned in
sections 1.1 and 1.2.
1here are no specilc invesLmenL incenLives lor Lhe shipbuildinq indusLry in 1urkey excepL social securiLy
premium supporL lor a cerLain period. On Lhe oLher hand, invesLmenLs relaLed Lo carqo and/or passenqer sea
transportation utilize incentives, including tax deduction, customs duty and VAT exemption, social security
premium support and interest support and allocation of investment location under certain conditions.
Additionally, the importation boat shells are exempted from custom duty for ships and yachts that are longer
than 50 meters.
There are no special incentives for environmental awareness regarding shipping companies and the
shipbuildinq indusLry. However, Lhe incenLive packaqe published in Lhe Ollcial CazeLLe daLed 19 June
2012 delnes Lhe environmenLal invesLmenLs as Lhose noL direcLly relaLed Lo Lhe producLion ol commercial
goods and which aim at the disposal or clearance of waste materials of an existing facility or facility under
construction. The environmental investments incentives include the VAT incentive, the custom duty incentive
and interest support, as well as income tax withholding support and social security premium support if the
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investment is realized in the less developed regions.
4.4 !ssues with Byin the Turkish Ba
lL is compulsory Lo ly Lhe 1urkish laq in order Lo operaLe wiLhin 1urkish caboLaqe lines. However, alLhouqh all
Lhe ships and yachLs LhaL are reqisLered in 1lSR are enLiLled Lo ly Lhe 1urkish laq, Lhey do noL benelL lrom
cabotage rights unless they are in compliance with Article 940 of the Turkish Commercial Code (section 5.1).
As 1urkey is in a neqoLiaLion process wiLh Lhe Luropean Union {LU) on Lhe Lerms ol lull membership, Lhe
currenL shippinq leqislaLion will mosL probably be revised in accordance wiLh LU DirecLives.
5.1 Shipping regulations
Accordinq Lo CaboLaqe Law No. 815, ellecLive since 1926, providinq all kinds ol harbor services, perlorminq
trailer and pilotage activities by the coasts, between and inside the harbors, and transporting passengers and
loads Lo and lrom 1urkish coasLs are reserved exclusively Lo vessels lyinq Lhe 1urkish laq.
Accordinq Lo ArLicle 9^0 ol Lhe 1urkish Commercial Code, all 1urkish ships are required Lo ly Lhe 1urkish laq.
Any legal entity established with at least 51% Turkish nationality shareholding and with a Turkish majority on
Lhe board ol direcLors is considered Lo be a 1urkish ship and enLiLled Lo benelL lrom Lhe 1urkish caboLaqe line,
regardless of whether the vessel in question is registered in the national or international registry.
Accordinq Lo 1lSR Law, Lhe ships and yachLs reqisLered in Lhe 1lSR are enLiLled Lo ly Lhe 1urkish laq and
benelL lrom Lhe privileqes qiven by naLional leqislaLion, wiLh Lhe excepLion ol Lhe caboLaqe line. ln oLher
words, the ships and yachts that do not qualify under Article 940 of the Turkish Commercial Code are not
able Lo benelL lrom caboLaqe riqhLs even Lhouqh Lhey are reqisLered in Lhe 1lSR.
5.2 Infrastructure
5.2.1 Major ports
Aliaqa {lzmir, Aeqean reqion)
Alsancak {lzmir, Aeqean reqion)
Ambarli {lsLanbul, Marmara reqion)
AnLalya {AnLalya, MediLerranean reqion)
BoLas {Mersin, MediLerranean reqion)
Cemlik {Bursa, Marmara reqion)
Haydarpaa {lsLanbul, Marmara reqion)
lsdemir {lskenderun, MediLerranean reqion)
lskenderun 1CDD {lskenderun, MediLerranean reqion)
lzmiL {lzmiL, Marmara reqion)
Mersin {Mersin, MediLerranean reqion)
1rabzon {1rabzon, Black Sea reqion)
1uzla {lsLanbul, Marmara reqion)
Ol Lhe lisL above, Ambarli, Haydarpaa, Alsancak and Mersin are Lhe leadinq porLs lor conLainer carriaqe.
The following facilities are available in most of the ports:
PiloLaqe
1owinq and Luqqinq
Provisioninq, luelinq, waLerinq
Carbaqe collecLion, ballasL wasLe disposal
PorL capLain's services
NaviqaLion aids
Shorebased operaLional services essenLial Lo ship operaLions, includinq communicaLions, waLer, elecLrical
supplies
Lmerqency repair laciliLies
Anchoraqe, berLh, berLhinq services
ConLainer handlinq, sLoraqe and warehousinq, lreiqhL LransporL
The following airports are near the major ports listed above:
Adana AirporL {ADA) {Adana, MediLerranean reqion)
Adnan Menderes lnLernaLional AirporL {ADB) {lzmir, Aeqean reqion)
AnLalya lnLernaLional AirporL {AY1) {AnLalya, MediLerranean reqion)
ALaLurk lnLernaLional AirporL {lS1) {lsLanbul, Marmara reqion)
Lsenboqa lnLernaLional AirporL {LSB) {Ankara, Black Sea reqion)
Sabiha Cokcen lnLernaLional AirporL {SAW) {lsLanbul, Marmara reqion)
1rabzon lnLernaLional AirporL {1ZX) {1rabzon, Black Sea reqion)
MariLime aqency
MariLime lreiqhL lorwardinq
CusLom clearance
MariLime law
MariLime educaLion is available in 1urkey boLh aL Lhe hiqh school level and universiLy level. For mosL ol Lhe
colleges and faculties listed below, English is a mandatory course. For the high schools listed below, a special
education system is implemented in English.
University departments and vocational colleges:
Black Sea 1echnical UniversiLy FaculLy ol MariLime Sciences {1rabzon)
anakkale Onsekiz MarL UniversiLy {anakkale)
Dokuz Lylul UniversiLy FaculLy ol MariLime Business and ManaqemenL {lzmir)
Celibolu Piri Reis VocaLional Hiqh School {Celibolu)
l1U FaculLy ol MariLime Business and ManaqemenL {lsLanbul)
l1U VocaLional Colleqe ol MariLime LducaLion {lsLanbul)
Karamursel VocaLional Colleqe ol MariLime LducaLion {Karamrsel)
Kocaeli UniversiLy {Kocaeli)
Mersin VocaLional Colleqe ol MariLime LducaLion {Mersin)
Piri Reis UniversiLy VocaLional Colleqe ol MariLime LducaLion {lsLanbul)
Rize UniversiLy VocaLional Colleqe ol MariLime LducaLion {Rize)
1UDLV MariLime LducaLion CenLer {1uzla)
Uludaq UniversiLy VocaLional Colleqe ol MariLime LducaLion {Bursa)
Yildiz 1eknik UniversiLy FaculLy ol Ship Buildinq and MariLime {lsLanbul)
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Vocational high schools (providing education in English):
Bulancak VocaLional Hiqh School ol MariLime LducaLion
FaLsa ALaLurk VocaLional Hiqh School ol MariLime LducaLion
HaLice Lrdem VocaLional Hiqh School ol MariLime LducaLion
lsLanbul VocaLional Hiqh School ol MariLime and WaLer ProducLs
lzmir VocaLional Hiqh School ol MariLime Lnqineerinq
Mersin VocaLional Hiqh School ol MariLime Lnqineerinq
Pendik VocaLional Hiqh School ol MariLime LducaLion
Ziya Kalkavan VocaLional Hiqh School ol MariLime LducaLion
1he rules ol Lhe lnLernaLional ConvenLion lor Lhe SaleLy ol Lile aL Sea {SOLAS) apply Lo 1urkish vessels
reqisLered in Lhe counLry, and Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code is compulsory lor Lhese
vessels {ChapLer 9 ol SOLAS).
The existing safety rules for manning can be characterized as strict. High standards exist for education,
qualilcaLions and Lraininq ol sealarers. ln addiLion, 1urkey is in compliance wiLh Lhe S1CW.
1urkey has raLiled a larqe number ol inLernaLional LreaLies reqardinq marine polluLion and saleLy ol lives
aL sea, includinq Lhe lnLernaLional ConvenLion lor Lhe PrevenLion ol PolluLion lrom Ships {MARPOL)
and SOLAS. ln addiLion, 1urkey is in lull compliance wiLh Lhe lnLernaLional MariLime OrqanizaLion {lMO)
regulations.
In adapting to the acquis communautaire, 1urkey has adopLed many lMO rules and requlaLions and
correspondingly harmonized its local legislation. The Turkish Undersecretariat lor MariLime Allairs conLinues
Lo Lailor iLs acLiviLies and sLudies lor inLeqraLion inLo Lhe Luropean Union.
1he MariLime 1rallc RequlaLions lor Lhe 1urkish SLraiLs AcL No. 98/11860 daLed 8 OcLober 1998 qoverns
safety of navigation and safety of life, property and marine environment by aiming to improve the safety of
vessel Lrallc in Lhe sLraiLs. 1hese requlaLions apply Lo all vessels enLerinq or naviqaLinq wiLhin Lhe limiLs ol Lhe
Turkish straits.
Turkey has also entered into a number of regional conventions to achieve progress in the protection of the marine
environmenL ol Lhe Black Sea and MediLerranean Sea and in Lhe conservaLion ol iLs livinq resources, includinq:
ConvenLion on Lhe ProLecLion ol Lhe Black Sea AqainsL PolluLion
ConvenLion lor Lhe ProLecLion ol Lhe MediLerranean Sea AqainsL PolluLion
ProLocol Concerninq CooperaLion in CombaLinq PolluLion ol Lhe MediLerranean Sea by Oil and OLher
Harmful Substances in Cases of Emergency
1he 1urkish Marine LnvironmenL ProLecLion AssociaLion {1URMLPA), which was esLablished by well
known sealarers and businessmen ol 1urkey, is Lhe lrsL orqanizaLion conducLinq sLudies on Lhe Aeqean,
MediLerranean and Black Sea and aims Lo be an ellecLive power in proLecLinq Lhese seas and coasLs lrom
pollution by ensuring that the national and international laws and agreements on this subject are enforced.
Moreover, Lhis nonqovernmenLal orqanizaLion has imporLanL qoals, such as proLecLinq endanqered sea
environmenLs and ensurinq LhaL 1urkey saLisles Lhe requiremenLs lor inLernaLional environmenLal laws and
LU membership.
5.4 Registration
In Turkey, there are two types of shipping registries: the NSR and the TISR.
All commercial vessels weighing 18 gross tons or more must be registered in the NSR in order to operate in
1urkish LerriLory. However, Lhe opLional 1lSR, also called Lhe "second reqisLry," provides siqnilcanL laciliLies
for shipping companies.
AddiLionally, Law No.5897, reqardinq Lhe AmendmenL ol Lhe Decree Law on Lhe OrqanizaLion and Lhe DuLies
ol Lhe UndersecreLariaL ol MariLime Allairs published in Lhe Ollcial CazeLLe daLed 16 May 2009, is ellecLive
as ol 30 June 2009. Under Lhis law, Lhe owners or operaLors ol ships, sea and inland vessels lor commercial
or private use, other than those registered to the TISR and those which are obliged to register to the NSR, are
obliqed Lo reqisLer such vessels Lo Lhe reqisLry lle.
5.4.1.1 National Shipping Registry
The following ships and yachts can be registered in the NSR:
ln accordance wiLh ArLicle 9^0 ol Lhe 1urkish Commercial Code, commercial vessels LhaL have Lhe riqhL Lo
ly Lhe 1urkish laq
YachLs and vessels consiqned lor Lhe purpose ol Lravel, sporL, educaLion and science
Vessels builL in 1urkey on accounL ol a loreiqn counLry or iLs ciLizens
5.4.1.2 Turkish International Shipping Registry
Pursuant to Turkish legislation, ships and yachts owned by Turkish and foreign people resident in Turkey
and companies incorporated in Turkey may elect to be registered in the TISR. Furthermore, real people and
corporations who are not resident in Turkey can register their ships in the TISR through a Turkish company
holding stocks.
Also, accordinq Lo 1urkish lnLernaLional MariLime Law No. ^^90, Lhe lollowinq may elecL Lo be reqisLered in Lhe 1lSR:
Shippinq companies reqisLered in Lhe NSR aL Lhe Lime LhaL Lhe law is ellecLive
Ships and yachLs builL in 1urkey reqardless ol any Lonnaqe limiL
Any kind ol load and open sea lshinq vessels above 3,000 DW1 {deadweiqhL Lons) Lo be imporLed lor
commercial purposes, and passenger crafts and specially built vessels above 300 gross tons
Bareboat chartered vessels and yachts may not be registered in the TISR.
5.4.1.3 Reistry hIe
Law No. 5897 inLroduced an obliqaLion Lo be reqisLered in Lhe reqisLry lle lor Lhe owners or operaLors ol ships, sea
and inland vessels for commercial or private use, other than those registered to the TISR and those obliged to register
Lo Lhe NSR. 1he relevanL reqisLry lles are Lo be kepL by porL auLhoriLies or by municipaliLies in inland waLers.
An agreement for transfer of title of a vessel, marine vehicle, or inland water vehicle registered in the registry
lle will noL be deemed ellecLive unless iL is made belore Lhe relevanL porL auLhoriLy or Lhe relevanL ollce ol
the mayor. Non-commercial vessels, marine vehicles, or inland water vehicles belonging to foreign real persons
can be reqisLered in Lhe reqisLry lle upon applicaLion and approval by Lhe UndersecreLariaL ol MariLime Allairs.
1hese vessels, marine vehicles, or inland waLer vehicles will ly Lhe 1urkish laq, noLwiLhsLandinq Lhe provisions
ol ArLicle 9^0 ol Lhe 1urkish Commercial Code. However, Lhe provisions ol Lhe CaboLaqe Law are reserved.
Lach vessel, marine vehicle, or inland waLer vehicle reqisLered in Lhe reqisLry lle will be qranLed a license. A
license will be prepared lor each ship, sea and inland vessel reqisLered in Lhe reqisLry lle and will be endorsed
every year by Lhe porL auLhoriLy or municipaliLy in which Lhe lle is kepL. 1he visa will remain valid lor one
year. The visas for the licenses granted to non-commercial vessels, marine vehicles or inland water vehicles
can be endorsed lor up Lo lve years. ReqisLered and duly licensed vessels, marine vehicles or inland waLer
vehicles are exempt from all kinds of vessel health and beaconage fees.
The owner and operator of the vessels, marine vehicles or inland water vehicles without licenses or visas will
be lned Lwice Lhe amounL ol Lhe unpaid license and visa charqes. Moreover, Lhose vessels, marine vehicles
or inland waLer vehicles will noL be qranLed Lhe documenLs necessary under Lhe MariLime Law and will noL be
allowed to sail even within the port or inland waters.
Licenses and Lheir visas shall be sub|ecL Lo Lhe lee deLermined under Lhe Fees AcL {Larill no. 8, secLion Xlll),
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according to the length of ship, sea and inland vessel. The fee amounts to be paid are provided below:
On Lhose lrom 5 meLers up Lo 9 meLers {1RY313,25)
On Lhose lrom 9 meLers up Lo 12 meLers {1RY626,55)
On Lhose lrom 12 meLers up Lo 20 meLers {1RY1.253,30)
On Lhose lrom 20 meLers up Lo 30 meLers {1RY2.506,75)
On Lhose larqer Lhan 30 meLers {1RY5.013,55)
5.4.2 Registration fees
The owners of the ships registered in the TISR are charged the registration fee and annual tonnage fee
accordinq Lo ArLicle 12/a ol 1lSR law.
Registration fee
ln addiLion Lo Lhe 1urkish Lira equivalenL ol USS10,000, Lhe 1urkish Lira equivalenL ol USS1 is charqed lor
every neL Lon. For yachLs, Lhe reqisLraLion lee is USS5,000.
Annual tonnage fee
For every neL Lon, Lhe 1urkish Lira equivalenL ol USS1 is charqed Lo Lhe ships lor each calendar year LhaL Lhey
are registered in the TISR.
The role of Turkish Lloyd in TISR
1urkish Lloyd is an independenL, specialized, naLional insLiLuLion LhaL renders audiL and cerLilcaLion services,
aiming to safeguard life, property and the environment. The objectives of the organization include neutrality
and continual improvement of its expertise.
ll a ship or yachL is reqisLered in Lhe 1lSR, and is also reqisLered wiLh 1urkish Lloyd as a direcL or dual class, a
50% reduction is granted in the registration fee and annual tonnage fee.
Ownership can be reqisLered by llinq Lhe lollowinq documenLs:
1he peLiLion lor reqisLraLion
For real persons: a copy ol Lheir birLh cerLilcaLe and residence cerLilcaLe
For commercial companies: a copy ol Lhe announcemenL ol Lheir esLablishmenL in Lhe 1rade ReqisLry
CazeLLe and a lisL ol auLhorized siqnaLures
A Lonnaqe cerLilcaLe
1he invoice or consLrucLion cerLilcaLe ol Lhe vessel
1he Lax siqn/Lax idenLilcaLion number
1he sLaLemenL ol clearance ol Lhe bill ol sale or sales invoice lor vessels purchased abroad
A cerLilcaLe ol deleLion lrom Lhe reqisLry ol anoLher counLry, il applicable
An incenLive cerLilcaLe lor vessels LhaL are enLiLled Lo incenLives
There is no possibility of parallel registration in Turkey. According to Article 962 of the Turkish Commercial
Code, a vessel cannot be registered in a Turkish shipping registry as long as it is registered in a foreign
shipping registry.
See section 2.3.
No international conventions regarding registration have been adopted.
There are no special requirements regarding registration.
United Arab Emirates
1.1 Shipping companies taxation
UAE shipping companies
The tax laws generally apply to shipping companies as they would apply to any other company operating in
Lhe UniLed Arab LmiraLes {UAL). 1here is currenLly no lederal UAL LaxaLion. Lach ol Lhe individual LmiraLes
{Abu Dhabi, A|man, Dubai, Fu|airah, Ras Al Khaimah, Shar|ah and Umm Al Ouwain) has issued corporaLe Lax
decrees LhaL LheoreLically apply Lo all businesses esLablished in Lhe UAL. However, in pracLice, Lhese laws have
not been applied.
Taxes are currently enforced at the Emirates level only on the following:
Oil and qas producinq companies {oil and hydrocarbon companies wiLh acLual producLion in Lhe
LmiraLes), as per specilc qovernmenL concession aqreemenLs {which are conldenLial)
Branches ol loreiqn banks under specilc Lax decrees or requlaLions or lxed in aqreemenLs wiLh Lhe rulers
of the Emirates in which the branches operate
1his is merely how LaxaLion has evolved in Lhe UAL. 1here is no qeneral exempLion in Lhe law. Anyone
invesLinq in Lhe UAL should be aware ol Lhe risk LhaL Lhe law may be more qenerally applied in Lhe luLure and
of the remote risk that it may be applied retroactively.
Foreign shipping companies
As mentioned above, only oil and gas producing companies and branches of foreign banks should be subject
Lo Lax in Lhe UAL.
1.2 Capital gains
1here is currenLly no capiLal qains Lax imposed in Lhe UAL.
1.3 Withholding tax
1here is currenLly no wiLhholdinq Lax in Lhe UAL.
1.4 Taxation of individual income of a seafarer
1he UAL does noL currenLly impose personal income Lax.
1.5 Value added tax
1here is currenLly no value added Lax {VA1) imposed in Lhe UAL.
1.6 Duty
1he UAL is parL ol Lhe Cull CooperaLion Council {CCC) CusLoms Union, and as such, duLy is qenerally
payable aL 57 ol cosL, insurance and lreiqhL {ClF) {aparL lrom Lhose iLems on an exempLed lisL) aL Lhe lrsL
poinL ol enLry in Lhe UAL {il Lhese qoods are beinq imporLed lrom ouLside Lhe CCC).
Entities based in free zones are exempt from customs duty on imports. However, if the goods leave the free
zone lor a desLinaLion inLo eiLher Lhe UAL or any oLher CCC counLry, cusLoms duLy aL 57 is levied on Lhe
"exporL" aL Lhe exiL poinL lrom Lhe lree zone inLo eiLher Lhe UAL or any oLher CCC counLry. Coods beinq
shipped ouLside ol Lhe CCC should noL be sub|ecL Lo Lhe cusLoms duLy in Lhe UAL.
1.7 Freight taxes
No lreiqhL Laxes are levied in Lhe UAL aL presenL.
1. SpeciaI vesseI reistraticn tax benehts fcr ship cwners
As menLioned above, shippinq companies should noL be sub|ecL Lo corporaLe LaxaLion in Lhe UAL, and as
such, no vessel reqisLraLion Lax benelLs are available Lo shipowners in Lhe UAL.
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As ol January 2013, Lhe UAL has more Lhan 50 Lax LreaLies currenLly in lorce, includinq Lhose wiLh Lhe
following countries: Algeria, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina,
Bulqaria, Canada, China, Lhe Czech Republic, LqypL, LsLonia, Finland, France, Ceorqia, Cermany, lndia,
lndonesia, lreland, lLaly, Lebanon, Luxembourq, Malaysia, MalLa, MauriLius, Morocco, Mozambique,
Netherlands, New Zealand, Pakistan, Philippines, Poland, Portugal, Romania, Seychelles , Singapore, South
Korea, Spain, Sri Lanka, Sudan, SwiLzerland, Syria, 1a|ikisLan, 1hailand, 1unisia, 1urkey, 1urkmenisLan,
Ukraine, Venezuela, VieLnam and Yemen.
In addition, treaties with the following countries are in various stages of negotiation, renegotiation, signature,
raLilcaLion, LranslaLion or enLry inLo lorce: Banqladesh, Cyprus, Creece, Cuinea, Fi|i, Honq Konq, Japan,
Jordan, KazakhsLan, Kenya, Mexico, Monqolia, PalesLine, Panama, Serbia and UzbekisLan.
1.10 Miscellaneous matters
1.10.1 Anti-avoidance legislation
1here is no specilc anLiavoidance leqislaLion in Lhe UAL. However, Lhe UAL's Lax LreaLies are sLarLinq Lo
include specilc anLiabuse provisions. FirsL, some LreaLies exclude cerLain persons lrom Lheir scope {e.q.,
UAL Lax LreaLies wiLh Cermany, lreland). Second, some conLain qeneral rules Lo prevenL LreaLy shoppinq
{e.q., UAL Lax LreaLies wiLh Luxembourq, Belqium). 1hird, some deLer LreaLy shoppinq by includinq anLi
abuse provisions LhaL disallow LreaLy reliel in Lhe absence ol a bona lde business acLiviLy {e.q., UAL Lax
LreaLy wiLh lndia). FourLh, some require Lhe UAL person Lo be Lhe benelcial owner ol income in order Lo
qualily lor cerLain Lypes ol LreaLy reliel {Lhis is Lhe case lor mosL UAL Lax LreaLies).
1.10.2 Thin-capitalization rules
1here are currenLly no LhincapiLalizaLion rules in Lhe UAL.
1.10.3 Transfer pricing
1here are currenLly no Lransler pricinq requlaLions in Lhe UAL.
1.10.4 Bilateral agreements for investment and trade
As ol January 2013, Lhe UAL has siqned bilaLeral aqreemenLs lor invesLmenL and Lrade wiLh Alqeria,
Armenia, China, Lhe Czech Republic, LqypL, Finland, France, Cermany, lLaly, Lebanon, Malaysia, PakisLan,
Poland, Sweden, SwiLzerland, 1unisia, Ukraine and Lhe UniLed Kinqdom.
Bilateral investment protection treaties
1he UAL has enLered inLo a number ol bilaLeral invesLmenL proLecLion LreaLies. 1hese are:
1he ConvenLion lor MuLual ProLecLion and LncouraqemenL ol lnvesLmenLs beLween Lhe SLaLe LmiraLes
and Lhe HashemiLe Kinqdom ol Jordan {2009)
1he ConvenLion beLween Lhe UniLed Arab LmiraLes and Lhe Republic ol UzbekisLan lor LncouraqemenL
and Protection of Investments (2008)
1he ConvenLion lor MuLual ProLecLion and LncouraqemenL ol lnvesLmenLs beLween Lhe SLaLe LmiraLes
and Lhe Republic ol UzbekisLan {2007)
1he ConvenLion lor MuLual ProLecLion and LncouraqemenL ol lnvesLmenLs beLween Lhe SLaLe and Lhe
Republic of Turkey (2006)
1he ConvenLion lor MuLual ProLecLion and LncouraqemenL ol lnvesLmenLs beLween Lhe UniLed Arab
LmiraLes and Lhe Belqium Luxembourq Lconomic Union {2005)
1he ConvenLion lor Lhe LncouraqemenL and ProLecLion ol lnvesLmenLs beLween Lhe SLaLe LmiraLes and
Lhe Republic ol Korea and Lhe ProLocol annexed LhereLo {200^)
1he ConvenLion lor LncouraqemenL and ProLecLion ol lnvesLmenLs beLween Lhe UniLed Arab LmiraLes and
Lhe Republic ol Ukraine {200^)
1he ConvenLion lor Lhe LncouraqemenL and MuLual ProLecLion ol lnvesLmenLs beLween Lhe SLaLe LmiraLes
and the Republic of Sudan (2002)
and the Peoples Democratic Republic of Algeria (2002)
and the Republic of Austria (2002)
LmiraLes and Lhe Monqolian People's Republic {2002)
1he ConvenLion lor LncouraqemenL and ProLecLion ol lnvesLmenLs beLween Lhe UniLed Arab LmiraLes and
the Republic of Belarus and the Protocol annexed thereto (2001)
1he ConvenLion lor Lhe Lxchanqe and ProLecLion ol lnvesLmenLs beLween Lhe SLaLe LmiraLes and Lhe
Republic of Yemen (2001)
LmiraLes and Lhe Kinqdom ol Sweden {2000)
1he ConvenLion lor LncouraqemenL, ProLecLion and CuaranLee ol lnvesLmenL beLween Lhe UniLed Arab
Emirates and the Republic of Syria (1999)
1he ConvenLion lor Lhe LncouraqemenL and MuLual ProLecLion ol lnvesLmenL beLween Lhe SLaLe CounLry
and the Swiss Federal Council (1999)
1.11 Domestic law and international maritime conventions
1he UAL Federal Law No. 26 ol 1981 as amended in 1988 {known as Lhe UAL MariLime Law)
qoverns and requlaLes all shippinq pracLices in Lhe UAL. 1he law is applicable Lo all LmiraLes ol Lhe
UAL. 1he law is based on modern inLernaLional law and mariLime principles seL ouL in inLernaLional
convenLions. lL is also very similar Lo Lhe mariLime laws ol Lhe oLher Arabian CCC SLaLes {oLher Lhan
Saudi Arabia).
ln addiLion Lo Lhe UAL MariLime Law, Lhere are several relevanL MinisLerial Decrees or local laws requlaLinq
reqisLraLion ol vessels, crewinq, classilcaLion ol vessels, resLricLions wiLh reqards Lo acLiviLies underLaken
by loreiqn laq vessels and oLher acLiviLies in porL accordinq Lo Lhe relevanL porL ordinances applicable in Lhe
individual emirates.
We undersLand LhaL Lhe UAL has noL yeL siqned all Lhe ma|or inLernaLional mariLime convenLions. However, in
pracLice, Lhe UAL Lypically adheres Lo Lhe lollowinq inLernaLional LreaLies and convenLions:
lMO AmendmenLs 93
SOLAS ConvenLion 7^
SOLAS ProLocol 78
LL ConvenLion 66
1ONNACL ConvenLion 69
COLRLC ConvenLion 72
S1CW ConvenLion 78
SAR ConvenLion 79
lMMARSA1 ConvenLion 76
lMMARSA1 OA 76
LC ConvenLion 72
lN1LRVLN1lON ConvenLion 69
CLC ConvenLion 69
CLC ProLocol 76
CLC ProLocol 92
FUND ConvenLion 71
FUND ProLocol 92
1
For more information, go to www.uae-shipping.net/forums/united-arab-emirates-shipping-laws-f8/the-uae-maritime
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LLMC ConvenLion 76
SALVACL ConvenLion 69
2. Human capital
CurrenLly, Lhere are no special employmenL requlaLions lor crew members in Lhe UAL. Companies employinq
crew members in Lhe UAL musL lollow Lhe laws and requlaLions seL ouL in Lhe UAL Labour Law or Lhe relevanL
free zone labor laws where applicable.
2.2 UAE social security
Social securiLy conLribuLions lor pensions are applicable in Lhe case ol UAL and oLher CCC naLionals.
Payroll deducLions and employer conLribuLions musL be made Lo Lhe UAL Federal Pension Fund accordinq
to the following rates on a monthly basis (except those working in Abu Dhabi who are subject to
different rates):
57 ol Lhe employee's waqe menLioned in Lhe employmenL conLracL musL be deducLed Lowards Lhis lund.
12.57 ol Lhe employee's waqe menLioned in Lhe employmenL conLracL musL be conLribuLed by Lhe
employer.
2.57 ol Lhe employee's waqe menLioned in Lhe employmenL conLracL is conLribuLed by Lhe lederal
government.
Reqardinq oLher CCC naLionals, UAL social securiLy conLribuLions and paymenLs lor pensions musL also
conlorm Lo Lhe social securiLy requlaLions in Lhe CCC naLional employee's home counLry.
2.3 Wage protection system
The wage protection system (WPS) is an electronic salary transfer system that allows institutions to pay
workers' waqes Lhrouqh auLhorized banks, bureau de chanqe and lnancial insLiLuLions. 1he CenLral Bank ol
Lhe UAL will reqularly issue an updaLed lisL ol lnancial insLiLuLions LhaL are approved and auLhorized Lo oller
waqe paymenL serviced Lhrouqh WPS {aqenLs). WPS enables Lhe MinisLry ol Labor Lo creaLe and mainLain a
database of wage payments in the private sector.
Any individuals employed on an offshore basis are not required to follow the WPS rules. However, if an
individual is employed and obLains a UAL residency permiL Lhe WPS rules would apply.
2.4 End-cf-service benehts
All employees who complete a period of continuous service that is longer than one year are entitled to
gratuity computed as follows:
1wenLyone days' basic waqes lor every year ol Lhe lrsL lve years ol service
1hirLy days' basic waqes lor every year LherealLer, provided LhaL Lhe qraLuiLy does noL exceed Lwo years in
total
CraLuiLy is calculaLed accordinq Lo Lhe lasL basic waqe paid Lo Lhe employee and is payable on Lhe LerminaLion
or expiry of the contract of employment. The employee will be entitled to gratuity for any fraction of the year
of service provided he or she has completed at least one year of continuous service.
Rules may vary depending on the type of contract of the employee and the manner of termination of the
employment agreement.
2.5 Facilities for seafarers
1he provisions ol Lhe UAL Labour Law reqardinq rules and requlaLions beLween employer and employee
also apply Lo sealarers. 1he qeneral incenLives available Lo any employee in Lhe UAL {e.q., social securiLy
contributions, working hours, annual leave) are also available to seafarers.
Accordinq Lo Lhe DeparLmenL ol Lconomic DevelopmenL in Lhe UAL, Lhe mosL commonly used leqal sLrucLure
lor shippinq companies is a limiLed liabiliLy company {LLC). 1he sLandard loreiqn ownership resLricLion ol
^97 applies in such cases. ln limiLed liabiliLy companies, 517 ol Lhe capiLal should be owned by UAL naLionals
and Lhe manaqers should be UAL naLionals.
1he UAL does noL impose any wiLhholdinq Lax on dividends disLribuLed.
4.1 Specihc and eneraI subsidies avaiIabIe tc shippin ccmpanies
As described above, corporate tax is currently only levied against oil and gas producing companies and
branches ol loreiqn banks, and on Lhis basis, shippinq companies should noL be sub|ecL Lo Lax in Lhe UAL.
As such, Lhere are no specilc or qeneral subsidies available Lo shippinq companies in Lhe UAL lrom a Lax
perspective.
4.2 Maritime aids to navigation
ln February 2013, Lhe Dubai MariLime CiLy AuLhoriLy {DMCA) announced new rules and iniLiaLives
concerning the deployment of navigation aids as it focused attention on safety in navigation channels and
seeks to eliminate the risk of maritime accidents.
A noob|ecLion cerLilcaLe lrom Lhe DMCA will be required ol any enLiLy LhaL plans Lo deploy naviqaLion aids
in Lhe UAL. 1he DMCA will also seek a deLailed deploymenL plan and an annual mainLenance plan as well as
monthly updates.
4.3 Major changes in shipping legislation anticipated in the near future
As of January 2013, we have been advised that the relevant authorities are in discussions regarding draft
amendmenLs Lo Lhe UAL MariLime Law. We are noL aware ol any Lime lrame lor Lhese amendmenLs Lo be
lnalized.
1he UAL NaLional 1ransporL AuLhoriLy {N1A) was esLablished in accordance wiLh Lhe Federal Law No1 ol
2006. The NTA, in relation to maritime issues, is responsible for the following:
1o propose Lhe qeneral policies, bill laws and requlaLions on marine services, land LransporL in
coordination with the competent authorities and to supervise implementation of the same
1o ensure compliance ol Lhe overseas naviqaLion requlaLions wiLh Lhe inLernaLional sLandards applicable
by the Emirates in general and to take the necessary procedures to apply the same
1o develop Lhe rules requlaLinq naviqaLion in Lhe UAL porLs lor qood Lrallc and provision ol Lhe proper
marine facilities and to develop programs for maintenance the land roads inside the ports and promoting
their services, in agreement and coordination with the local competent authorities
1o issue all Lhe licenses, permiLs and cerLilcaLes on Lhe naviqaLion and Lhe inLernaLional sea and land
transport services between the Emirates and to specify the issuance conditions and collection of the
prescribed taxes, fees and rates
1o develop Lhe overseas naviqaLion rules parLicularly Lhe naLionaliLy condiLions, reqisLraLion rules and
laq lxinq and Lhe powers by Lhe UAL on Lhe ships carryinq iLs laq and rules lor Lhe qood naviqaLion
conditions and safety of people and to have the ship equipped with the necessary systems for avoiding
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accidents and to maintain its means of communication
1o draw Lhe plans necessary lor orqanizaLion and improvemenL ol Lhe land and sea LransporL beLween Lhe
Emirates for easy and developed transport
1o represenL Lhe UAL in Lhe inLernaLional and reqional conlerences relevanL Lo Lhe N1A's discipline
1o prepare pro|ecLs or propose |oininq Lhe inLernaLional LreaLies in connecLion Lo Lhe N1A's discipline
1o address any oLher disciplines assiqned Lo Lhe N1A under any law or resoluLions passed by Lhe CabineL
5.1 Infrastructure
5.1.1 Major ports
There are two main ports operated by the Dubai port authority. These are:
PorL Rashid
Jebel Ali PorL
1here are also several oLher porLs wiLhin Lhe UAL, which are:
Jebel Ali, Dubai
Mina Rashid, Dubai
Mina Zayed, Abu Dhabi
Mina Khalid, Shar|ah
Khor Fakkan, Shar|ah
Khalila PorL, Abu Dhabi
Free PorL, Abu Dhabi
1here are porL laciliLies wiLhin Lhe Ras Al Khaimah and A|man LmiraLes ol Lhe UAL.
Dockinq
SLoraqe
5.2 Implementation of the International Safety Management Code
Compliance wiLh Lhe requiremenLs ol Lhe lnLernaLional SaleLy ManaqemenL {lSM) Code by shippinq
companies is required in Lhe UAL.
5.3 Registration
5.3.1 Licensing of vessels
The licensing of vessels ensures:
1. The vessels are inspected and surveyed periodically (once a year) ensuring:
Vessels mainLain adequaLe saleLy ol vessels, crew and passenqers.
Vessels meeL inLernaLional sLandards ol ship consLrucLion.
Vessels are equipped Lo ensure Lhey are environmenLally sound and do noL cause any polluLion.
1he vessels are "lL lor purpose."
2. The vessels are built to recognized and approved international standards.
3. The vessel ownership is recorded in a database and transfer of ownership is well regulated.
^. UnauLhorized persons do noL operaLe Lhe vessels lor any illeqal acLiviLies.
5. Vessels are operated by licensed crew.
2
For more information, go to: www.uae-embassy.org/business-trade/trade-export/ports-airports
3
For more information, go to: www.dmca.ae/en/safety.aspx?GenericContent=safety.inspections
6. All vessels are insured for any accidents and damages.
7. The local coast guard or police authorities are able to identify the vessels at any time.
8. The vessel complements the safety and security of the coast of Dubai in conjunction with local and federal
authorities.
5.3.2 Vessel inspection
Vessels that wish to operate or conduct any maritime activities in the Dubai waters shall be subject to an
inspecLion by Lhe DMCA and Lhe N1A. An inspecLion shall be mandaLory lor Lhe applicaLion and renewal ol
a license lor a vessel Lo operaLe in Dubai waLers or il Lhere is a ma|or modilcaLion in Lhe vessel or chanqe ol
ownership of the vessel. A written report shall be furnished to the owner, charter or agent of the vessel upon
completion of the inspection.
5.3.3 Reistraticn cf vesseIs and seacin units under the UAE Ba
Lach vessel should carry a name, have a naLionaliLy and ly Lhe counLry's laq and Lhe name ol Lhe porL aL
which iL is reqisLered. As such, any vessel reqisLered in Lhe UAL should carry Lhe UAL laq.
Ships lyinq UAL laq
All ships LhaL acquire UAL naLionaliLy should ly Lhe UAL laq and shall noL be permiLLed Lo ly laqs ol oLher
states except in cases where maritime custom prevail.
Ship registration procedure
Lvery UAL residenL vessel is required Lo reqisLer in Lhe ollce ol mariLime auLhoriLy. 1he N1A shall also decide
Lhe ship's Lonnaqe, and a cerLilcaLe lor Lonnaqe is issued Lo Lhe owner ol Lhe vessel by a compeLenL marine
authority.
Application for registration is required to be submitted within 30 days from the date of building or ownership
of the vessel.
The owner should submit an application to the ships registration section at port, along with the following
documents:
MariLime 1ransporLaLion Vessel purchase invoice aLLesLed by Lhe compeLenL auLhoriLies
CerLilcaLe ol ManulacLure ol Lhe MariLime 1ransporLaLion Vessel cerLiled by Lhe compeLenL auLhoriLies
CerLilcaLe ol Balance lor Lhe MariLime 1ransporLaLion Vessel cerLiled by Lhe compeLenL auLhoriLies
CerLilcaLe ol Clearance lor Lhe MariLime 1ransporLaLion Vessel, il iL was imporLed lrom ouLside Lhe sLaLe
MariLime 1ransporLaLion Vessel Lechnical inspecLion documenLaLion
1here are separaLe requiremenLs lor lshinq vessels and pleasure boaLs.
1he naviqaLion license and saleLy cerLilcaLe are qranLed upon Lhe applicaLion submiLLed Lo Lhe mariLime
authority. The navigation license is valid for one year and is renewable
upon satisfaction of certain conditions.
Upon reqisLraLion, every vessel is required Lo carry ollcial documenLs, includinq Lhe cerLilcaLe ol reqisLraLion,
crew loq, naviqaLion license lor Lhe currenL year, healLh cerLilcaLe and declaraLion ol carqo while on Lhe
voyage.
5.3.4 Foreign vessels entering UAE territorial waters
Foreign vessels must carry documents as prescribed under the laws of their respective countries, in addition
Lo licenses and cerLilcaLes ol saleLy compliance under inLernaLional convenLions.
Foreiqn vessels reqisLered in Lhe UAL cannoL operaLe in UAL LerriLorial waLers unless Lhey carry a valid
navigation permit issued by the NTA. A permit can be obtained by submitting an application form to the NTA.
5.3.5 Navigational warnings
1he DMCA and Lhe relevanL porL auLhoriLy orqanize Lhe naviqaLion ol vessels inward and ouLward ol Lhe porLs
ol Lhe UAL and in Lhe LerriLorial waLers. 1his is carried ouL by issuinq mariLime naviqaLional warninqs delninq
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Lhe sale waLerways/sailinq prohibiLed areas and quidinq ships passinq over Lhe LerriLorial waLers.
United Kingdom
1. Tax
There are two alternative corporate income tax regimes for shipping companies.
Corporate tax based on tonnage
1he UniLed Kinqdom {UK) Lonnaqe Lax reqime was inLroduced in AuqusL 2000. lL lollows a model adopLed by
a number ol oLher Luropean counLries. 1he benelLs ol Lhe reqime are dependenL on lullllinq cerLain Lraininq
requirements and have been effective from 1 January 2000.
Election
A qualifying company or group must elect for the new regime to apply. An election generally has effect
for 10 years, unless a company or group ceases to qualify for the tonnage tax regime. Elections can only
be withdrawn in limited circumstances. Qualifying companies or groups must make the election within 12
months of the date on which they become qualifying or 12 months from the day of the merger that created
the new group.
Requirements
1o benelL lrom Lhe reqime, a company musL be sub|ecL Lo corporaLe income Lax and operaLe qualilyinq ships
which are sLraLeqically and commercially manaqed in Lhe UK. HM Revenue and CusLoms {HMRC) manuals
emphasize the importance of independent decision-making and a range of commercial management being
conducLed in Lhe UK wiLh Lhe emphasis on hiqh levels ol decisionmakinq.
A qroup qualiles il one or more members are qualilyinq companies. 1here are resLricLions on Lhe percenLaqe
of ships that may be chartered in and other anti-avoidance provisions have been introduced, for example, in
relation to ship-leasing structures.
Calculation of tonnage tax
A company or group in relation to which a tonnage tax regime election has effect is known as a tonnage tax
company {11C) or Lonnaqe Lax qroup {11C). For Lhe purposes ol corporaLe income Lax, a 11C's relevanL
shippinq prolLs {RSP) are replaced by iLs Lonnaqe Lax prolLs {11P). 11P is calculaLed by relerence Lo Lhe
qualifying daily net tonnage of each ship operated by a TTC according to the following table:
TTP is the aggregate of the calculations for each ship. The normal rate of corporate income tax is then
applied to TTP.
Pe|evant sn||n rohts
RSP is made up of four elements:
1. Income from tonnage tax activities
2. Dividends received lrom nonUK shippinq companies which would qualily lor Lonnaqe Lax il Lhey were UK
Lax residenL and sub|ecL Lo UK corporaLe income Lax. 1he dividends musL be paid ouL ol prolLs qeneraLed
in a period when Lhe payinq company would have qualiled {e.q., il UK residenL) lor Lonnaqe Lax.
Total net tonnage Proht per day per 100 tons E {6)
Up Lo 1,000 0.60
1,001 to 10,000 0.45
10,001 to 25,000 0.30
Over 25,000 0.15
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3. lnLeresL, loreiqn exchanqe qains/losses and prolLs on inLeresL raLe and currency conLracLs which are so
closely related to core tonnage tax activities that they are not treated as investment income
4. Chargeable gains arising on the disposal of assets used for the tonnage tax trade
1onnaqe Lax acLiviLies are broadly Lhe operaLion ol qualilyinq ships and speciled ancillary acLiviLies.
The tonnage tax activities of a company are treated as a separate trade distinct from all other activities and
no relief, deduction or set-off of any description is allowed against TTP. An accounting period ends when a
company enters or leaves tonnage tax and any pre-tonnage tax losses attributable to tonnage tax activity are
effectively suspended on entry. There are special provisions covering the suspension of capital allowances
which depend on Lhe lenqLh ol Lime Lhe company remains wiLhin Lhe Lonnaqe Lax reqime. Cains on asseL sales
accruing prior to entering the regime are reduced according to how long an election has been in force.
Minimum training obligation
Companies will be eliqible lor Lonnaqe Lax benelLs only il Lhey meeL Lhe minimum Lraininq obliqaLion.
Accordinq Lo Lhe size ol Lhe leeL and Lhe number ol ollcers employed, Lhe company will have Lo lnd, or lund,
places lor an aqreed number ol ollcer Lrainees, and consider measures Lo develop raLinqs. 1he DeparLmenL
of Transport (DFT) must approve a TTCs training plan before it can be admitted to the tonnage tax regime
by HMRC.
Taxpayers are required to submit training plans to the DFT annually. Training plans generally have to be
submitted, and subsequently updated, to the DFT by 31 August each year and apply from 1 October in the
same year.
Luropean Union laqqinq
Under Luropean Union {LU) law, Lonnaqe Lax is considered Lo be a lorm ol sLaLe aid and as such Lhe
European Commission (EC) issued guidelines on maritime state aid in 2004. These guidelines sought to
encouraqe counLries Lo have a qreaLer percenLaqe ol Lheir leeL laqqed wiLhin Lhe LU.
1he UK response has been Lo inLroduce leqislaLion requirinq a qreaLer percenLaqe ol a Lonnaqe Lax operaLor's
leeL Lo be LUlaqqed. 1his leqislaLion will come inLo lorce unless Lhe SecreLary ol SLaLe speciles LhaL iL will
noL have ellecL lor a parLicular lscal year. 1his will only happen il Lhe proporLion ol vessels in Lhe Lonnaqe Lax
reqime which are LUlaqqed has decreased on Lhe previous year. For Lhe lscal years 2005 Lo 2007, endinq
on 31 March 2008, Lhe SecreLary ol SLaLe speciled LhaL Lhe leqislaLion would noL apply.
However, lor lscal years 200812, Lhe SecreLary ol SLaLe announced LhaL Lhe leqislaLion would apply.
ConsequenLly, any new vessel added Lo a Lonnaqe Lax operaLor's leeL would need Lo be LUlaqqed in order Lo
be a qualifying ship, unless either of the following conditions is met:
1he company already has an averaqe ol aL leasL 607 ol iLs Lonnaqe laqqed in Lhe LU beqinninq wiLh Lhe
sLarL ol Lhe lnancial year and endinq on Lhe day Lhe company beqins Lo operaLe Lhe new vessel
Or
1he percenLaqe ol Lhe company's Lonnaqe which is LUlaqqed has noL decreased since Lhe laLer ol 17
January 2004 or the date the company or group entered tonnage tax
Cuidance Lo Lhe Lonnaqe Lax reqime may be lound in Lhe UK HMRC 1onnaqe 1ax Manual. 1his can be
accessed aL www.hmrc.qov.uk/manuals/LLmmanual/index.hLm.
CorporaLe Lax based on prolLs
1he UK Lax reqime provides lor capiLal allowances {Lax depreciaLion) Lo be qiven aqainsL Lhe cosL ol acquirinq
asseLs lor Lradinq purposes. NoLe LhaL "Lrade" lor UK Lax purposes is qenerally reqarded as a narrower
concepL Lhan "business." CapiLal allowances reduce Laxable prolLs or increase Lax losses. Ships qualily lor
capital allowances as plant and machinery and receive an annual 18% writing down allowance (WDA) on a
reducing balance basis.
In addition to the general rules, capital expenditure on ships attracts special treatment.
A special depreciation system exists for ships. As shipping companies are heavy investors in capital items,
Lhey are allowed Lo carry lorward unused allowances which may arise in periods ol low prolLabiliLy. Any
brought-forward allowance can be used in addition to the full WDA for the next year.
1here is lurLher lexibiliLy allowed in respecL ol any balancinq charqe {clawback ol Lax depreciaLion in excess
of true economic depreciation) arising on disposal of a qualifying ship, whereby the charge may be deferred
against expenditure on qualifying new ships incurred in the following six years.
For the special treatment to apply, ships must be seagoing and 100 gross registered tons or more, and not
used for sport or recreational purposes.
Ship expenditure may be subject to provisions which give reduced rates of allowances on assets with a long
economic life (at least 25 years). Expenditure on long-life assets is written down in a separate pool at a rate
of 8% a year on the reducing balance basis.
When a capital gain arises on the disposal of a ship, the gain may be rolled over into the tax base cost of a
new business asset if the proceeds received from the disposal of the ship are used to acquire the new asset.
The new asset must, in general, be acquired in the period beginning 12 months before and ending 3 years
after the disposal of the ship.
As indicaLed above, Lhe provisions are displaced/modiled il a Lonnaqe Lax elecLion is in lorce.
Leasing
Very deLailed rules apply Lo Lhe leasinq ol ships, boLh lrom Lhe poinL ol view ol obLaininq lease lnance and
from the point of view of companies that charter vessels. Detailed advice should be sought in this area.
Value added tax
Many supplies in connecLion wiLh shippinq are zeroraLed {exempL wiLh crediL) lor Value Added 1ax {VA1),
including:
1he supply ol qualilyinq ships {qross Lonnaqe >15 Lons and noL desiqned or adapLed lor recreaLion or
pleasure)
1he supply ol parLs and equipmenL ol a kind ordinarily insLalled or incorporaLed in a qualilyinq ship
1he supply ol saleLy equipmenL lor qualilyinq ships
1he repair or mainLenance ol qualilyinq ships
1he modilcaLion and conversion ol a qualilyinq ship, provided LhaL when modiled or converLed, iL will
remain a qualifying ship
1he supply ol services under charLer ol a qualilyinq ship {unless services are wholly perlormed in Lhe UK
and consist wholly of any one or more of: transport of passengers, accommodation, entertainment or
education)
LeLLinq on hire ol qualilyinq ships
Handlinq services provided lor qualilyinq ships sub|ecL Lo condiLions and excludinq Lhe leLLinq on hire ol
goods
Surveys and classilcaLion services provided in connecLion wiLh a qualilyinq ship
Salvaqe and Lowaqe services, whaLever Lhe Lype ol ship
PiloLaqe services, whaLever Lhe Lype ol ship
Provision of passenger transport is normally zero-rated (including where this is provided in any vehicle
desiqned or adapLed Lo carry noL more Lhan 10 passenqers; or by Lhe PosL Ollce; or lrom a place wiLhin
Lhe UK Lo ouLside Lhe UK). 1here are some excepLions: lreiqhL and ancillary services are usually sLandard
rated for VAT but may be zero-rated or outside the scope in certain circumstances (such as for business to
business LransacLions where Lhe cusLomer belonqs in a dillerenL LU counLry or a nonLU counLry). FreiqhL
LransporL services Lakinq place wholly ouLside Lhe LU are ouLside Lhe scope ol UK VA1 when perlormed lor
UK businesses and chariLies.
Rates of corporate income tax
UK companies are charqed corporaLe income Lax on Lheir Laxable prolLs aL Lhe lollowinq raLes:
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2^7 lull raLe unLil 31 March 2013, reducinq Lo 237 as ol 1 April 2013, above 300,000 {marqinal reliel
lor companies wiLh prolLs ol up Lo 1.5 million )
207 small companies raLe Lo companies wiLh Laxable prolLs beLween 0 and 300,000
BeLween each ol Lhese prolL levels Lhere is a marqinal raLe ol Lax. ll a UK company is a member ol a UK or
overseas qroup, Lhe limiLs above are divided by Lhe LoLal number ol allliaLed companies in Lhe enLire qroup.
Wage costs deduction
As with any other wage expense incurred wholly and exclusively for the purposes of a trade of a company in
Lhe UK, Lhe waqe cosLs ol sealarers are deducLible when calculaLinq Laxable prolLs.
Seafarers earnings deduction
Sealarers are sLill enLiLled Lo a special Lax reliel LhaL can reduce or eliminaLe Lhe UK Lax payable on Lheir
employmenL income, even il Lhey remain a residenL ol Lhe UK lor Lax purposes. A loreiqn earninqs deducLion
exists for seafarers who are able to meet the following conditions:
1he sealarer was lor Lax years up Lo and includinq 2010/11 Lax residenL and ordinarily Lax residenL in Lhe
UK and
1he sealarer is sub|ecL Lo UK income Lax in respecL ol whaL is known as qeneral earninqs.
1he duLies ol Lhe employmenL are perlormed wholly or parLly ouLside Lhe UK. For Lhis Lo be Lhe case Lhe
employee musL carry ouL duLies on aL leasL one |ourney which beqins or ends aL a non UK porL.
Any ol Lhose duLies are perlormed in Lhe course ol an eliqible period lallinq wholly or parLly in Lhe Lax
year.
1he deducLion is available where, lor any parL ol a Lax year, a sealarer works wholly or parLly ouLside Lhe UK
as parL ol a qualilyinq period ol workinq ouLside Lhe UK which lasLs lor aL leasL 365 days. Special rules, which
allow lor reLurn Lrips Lo Lhe UK, apply lor deLermininq a qualilyinq period.
1he sealarer's income lrom employmenL relaLinq Lo Lhe period ol workinq ouLside Lhe UK is excluded lrom
income tax. The allowable deduction is equal to the amount of the earnings attributable to the eligible period.
Please note that prior to applying the foreign earnings deduction to the relevant income, the following
deducLions should lrsL be Laken inLo consideraLion:
Pension conLribuLions
Allowable expenses
CapiLal allowances
From 6 April 2011, entitlement to seafarers earnings deduction was extended to seafarers who are resident
lor Lax purposes in a Luropean Lconomic Area {LLA) or Luropean Union {LU) SLaLe, provided Lhe above
condiLions are meL and provided LhaL Lhe qualilyinq period beqins on or alLer 6 April 2011. As nonUK
residenLs, LLA/LU residenL sealarers are Laxable in Lhe UK on earninqs lor sealarinq duLies perlormed in UK
waters. Seafarers earnings deduction may be claimed only against these earnings.
1.3 Tax treaties
1he UK has one ol Lhe mosL exLensive neLworks ol Lax LreaLies. ln addiLion, iL has limiLed aqreemenLs
specilcally relaLinq Lo Laxes on income lrom inLernaLional LransporL, includinq shippinq. MosL UK LreaLies
follow the Organisation for Economic Co-operation and Development (OECD) model treaty and include an
article on international transport.
1he UK has concluded Lax LreaLies wiLh Lhe lollowinq counLries:
Antigua and Barbuda, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahrain, Bangladesh ,
Barbados , Belarus , Belgium, Belize, Bolivia, Bosnia and Herzegovina, Botswana, British Virgin Islands,
Brunei, Bulgaria, Canada, Cayman Islands, Chile, China, Croatia, Cyprus, Czech Republic, Denmark,
Egypt, Estonia, Falkland Islands, Faroe Islands, Fiji, Finland, France, Gambia, Georgia, Germany, Ghana,
Greece, Grenada, Guernsey, Guyana, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man,
Israel, Italy, Ivory Coast, Jamaica, Japan, Jersey, Jordan, Kazakhstan, Kenya, Kiribati, Korea (ROK),
Kuwait, Latvia, Lesotho, Libya, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malawi, Malaysia,
Malta, Mauritius, Mexico, Moldova, Mongolia, Montserrat, Morocco, Myanmar, Namibia, Netherlands,
New Zealand, Nigeria, Norway, Oman, Pakistan, Papua New Guinea, Philippines, Poland, Portugal,
Qatar, Romania, Russian Federation, Saudi Arabia, Serbia and Montenegro, Singapore, Slovak Republic,
Slovenia, Solomon Islands, South Africa, Spain, Sri Lanka, St. Kitts and Nevis, Sudan, Swaziland, Sweden,
Switzerland, Taiwan (ROC), Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Tuvalu,
Uganda, Ukraine, United States of America, Uzbekistan, Venezuela, Vietnam, Zambia, Zimbabwe.
Broadly, Lhe Lax LreaLies beLween Lhe UK and oLher counLries lollow Lhe 2008 OLCD Model lncome and
CapiLal 1ax ConvenLion Lo ensure LhaL prolLs lrom Lhe operaLion ol ships arisinq lrom inLernaLional LransporL
will be taxed in the jurisdiction where effective management is situated. There are some exceptions to this,
and in certain circumstances, some treaties confer the exclusive taxing rights on the state of residence and
not the place of effective management (if different).
1.4 Freight taxes
FreiqhL Laxes do noL apply in Lhe UK.
1here are no special Lax benelLs lor Lhe shipowner.
2. Human capital
1he UK LqualiLy AcL came inLo ellecL lrom OcLober 2010. lL ollers proLecLion Lo Lhe same qroups LhaL
were previously protected by existing equality legislation, protecting against discrimination based on: age,
disability, gender reassignment, race, religion or belief, sex, sexual orientation, marriage and civil partnership,
pregnancy and maternity. In addition, the new law gives additional types of legal protection that were not
previously covered by legislation and strengthens aspects of equality law. Policies and procedures for hiring
personnel, as well as in other HR activities, which have not been reviewed since this time should therefore be
checked to ensure that these are legally compliant.
New employees must be provided with a written statement of employment terms within two months of
starting employment. At a minimum, the written statement must include the following:
1he leqal name ol employee and employer
DaLe on which employmenL beqan
DaLe on which conLinuous employmenL beqan
Lmployee's raLe ol remuneraLion and inLerval ol pay {e.q., weekly, monLhly)
Job LiLle {or briel |ob descripLion)
Place ol work {or sLaLe il more Lhan one locaLion, sLaLinq Lhe employer's address)
Hours ol work
Holiday enLiLlemenL and holiday pay
ln|ury and sick pay arranqemenLs
CerLain pension scheme arranqemenLs,
NoLice periods {lrom employee and employer)
Any collecLive aqreemenLs which direcLly allecL Lhe Lerms and condiLions ol employmenL {specilyinq
parties to agreement and where the employer was not a party)
Where Lhe employee is required Lo work ouLside Lhe UK lor more Lhan one monLh, specily Lhe period
ol work abroad, currency ol remuneraLion, any addiLional remuneraLion/benelLs payable, Lerms and
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condiLions relaLinq Lo reLurn Lo Lhe UK
Where employmenL is noL permanenL, specily expecLed duraLion or, in Lhe case ol a lxed Lerm conLracL,
expiry date
CerLain inlormaLion abouL disciplinary and qrievance procedures
WheLher Lhere is a conLracLinqouL cerLilcaLe in lorce under Lhe Pension Schemes AcL 1993
1here is a wide ranqe ol laws and requlaLions qoverninq employmenL ol personnel in Lhe UK. 1hree areas
which may be of particular interest to the shipping industry are outlined below:
Regulation preventing illegal working
Lmployers have a responsibiliLy Lo prevenL illeqal miqranLs workinq in Lhe UK {lmmiqraLion, Asylum and
Nationality Act 2006).
Lmployees musL be reqisLered lor Lax and naLional insurance and musL be enLiLled Lo work in Lhe UK Lhrouqh,
for example, a work permit, passport or citizenship. The employer must request, and the individual must
provide, certain original documents to establish their eligibility to undertake the work on offer, before the
employmenL beqins. 1here are Lwo lisLs ol leqal documenLs speciled by Lhe Home Ollce lor Lhis purpose: A
and B. An individual who is not subject to immigration control, or is not subject to restriction on stay in the
UK, should produce documenLs lrom lisL A. ll an employee provides documenLs lrom lisL B, Lhe employer
must carry out follow-up checks every 12 months. The employer must check the validity of the original
documents and satisfy itself that the individual is the person named in them by undertaking various validity
checks. It must also make copies of the documents.
Employees without a National Insurance number must apply for one immediately upon commencing work, by
conLacLinq Lhe JobcenLre Plus ollce aL 08^5 600 06^3.
Regulations protecting seasonal employees
1radiLionally, some sealarers have been employed on a shorLLerm basis, wiLh ollcers, Lranslerrinq reqularly
between ships and companies. Employers should be aware that seasonal employees are protected from less
favorable treatment than comparable permanent employees under the Fixed-Term Employees (Prevention of
Less Favourable 1reaLmenL) RequlaLions 2002.
New employer pension duties
New laws which came inLo lorce on 30 June 2012 require all employers in CreaL BriLain Lo auLomaLically
enroll eligible job holders into a qualifying pension scheme and make minimum mandatory contributions,
unless the employee is already an active member of the employers qualifying scheme. The new duties are
formally implemented over 5.5 years starting on 1 October 2012, with larger employers being affected
before smaller employers and new businesses. The Pensions Regulator has published a Staging Date timeline
Lo conlrm Lhe indicaLive sLaqinq daLes LhaL will apply lor dillerenL sizes ol employer, alLhouqh Lhe exacL daLes
will depend on an employers PAYE data as at 1 April 2012. As a general guide the position is as follows:
More Lhan 250 employees: sLaqinq daLes beLween 1 OcLober 2012 and 1 February 201^
BeLween 50 and 2^9 employees: sLaqinq daLes beLween 1 April 201^ and 1 April 2015
Fewer Lhan 50 employees: sLaqinq daLes beLween 1 June 2015 and 1 April 2017
New employers seL up beLween 1 April 2012 and 30 SepLember 2017: sLaqinq daLes beLween 1 May
2017 and 1 February 2018.
Employers must comply with detailed requirements to provide information to employees about auto
enrolment, including their rights to opt in or join as the case may be. A jobholder will be free to opt out of
a scheme once he has been automatically enrolled. But while the individual remains an active member, the
employer is required to pay a minimum level of pension contributions. By default, workers who have opted
out will be automatically re-enrolled every three years.
The requirements for minimum contributions will be phased in over two transitional periods spanning six
years as follows:
Agency workers
1he Aqency Worker DirecLive and RequlaLions 2010 came inLo lorce in CreaL BriLain on 1 OcLober 2011.
From this date, an agency worker who has been in a particular job for 12 weeks will be entitled to equal
treatment (i.e., at least the same basic working and employment conditions) as if the worker had been
recruited directly by the hirer. They must also be able to access a hirers collective facilities and amenities
and have access Lo inlormaLion abouL iLs |ob vacancies lrom Lhe lrsL day ol Lheir assiqnmenL. While Lhe
implementation of the new regulations does not give an agency worker full employment protection rights,
it has created cost implications for businesses using the services of agency workers and certain contractors.
Non-statutory guidance on the new regulations was published by the Department for Business, Innovation
and Skills {BlS) in May 2011.
CollecLive aqreemenLs beLween employers and unions in Lhe UK are qenerally noL leqally enlorceable beLween
the parties. Nevertheless, employers may incorporate the terms of these agreements into the terms of
individual contracts:
As ol 1 OcLober 2012, Lhe lollowinq sLaLuLory minimum waqe raLes apply:
2.65 per hour lor apprenLices under 19 {and Lhose aqed 19 and over buL in Lhe lrsL year ol Lheir
apprenticeship)
3.68 per hour lor workers aqed 16 Lo 17
^.98 per hour lor workers aqed 18 Lo 20
6.19 per hour lor workers aqed 21 years and over
Dependinq on Lhe naLure ol shippinq employees' work, circumsLances and duLies, Lheir sLaLuLory
working time and entitlement to annual leave are set out in The Working Time Regulations 1998
and oLher applicable requlaLions {e.q., 1he MerchanL Shippinq {Hours ol Work) RequlaLions 2002,
1he MerchanL Shippinq {Workinq 1ime: lnland WaLerways) RequlaLions 2003 see secLion 2.^
below, 1he MerchanL Shippinq {lnland WaLerway and LimiLed CoasLal OperaLions) {BoaLmasLers'
OualilcaLions and Hours ol Work) RequlaLions 2006). ln pracLice, Lhe sLaLuLory workinq Lime and
annual leave entitlement may be more generously agreed with trade unions and set out in individual
employment contracts.
lL is besL pracLice lor employers Lo adopL Lhe ACAS {Advisory, ConciliaLion and ArbiLraLion Service)
Code of Practice on disciplinary and grievance procedures (2009). In certain types of claim, an
employment tribunal awarding compensation has the power to increase or reduce compensation by
up to 25% where either party has unreasonably failed to follow the ACAS code. Employers should be
aware that there is a statutory right for employees to be accompanied at disciplinary and grievance
hearings.
Year Employer contribution Total employer and jobholder
contribution (including tax relief)
First transitional period:
from employers staging date
to 30 September 2017
1% 2%
Second transitional period:
from 1 October 2017 to 30
September 2018
2% 5%
Steady state period: 1
October 2018 onwards
3% 8%
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2.4 Application of the Merchant Shipping (Working Time: Inland Waterways)
Regulations 2003
1he MerchanL Shippinq {Workinq 1ime: lnland WaLerways) RequlaLions 2003, applies Lo oller cerLain
protections in general to workers on ships covered by these regulations, including:
A maximum ol ^8 hours workinq Lime a week averaqed over:
- a 17-week period
- a 26-week period in prescribed circumstances (e.g., if there is a foreseeable surge of activity)
- such other period up to 52 weeks as may be agreed in a collective agreement
A 77 hours' resL enLiLlemenL in every sevenday period
AL leasL lour weeks' paid annual leave
OpporLuniLy ol lree healLh assessmenL lor niqhL workers
Cenerally, UKresidenL/domiciled mariners workinq wiLhin UK LerriLorial waLers musL pay Class 1 NaLional
lnsurance conLribuLions {NlC). Under cerLain condiLions, Lhe mariner may conLinue Lo pay Class 1 NlC even
when workinq ouLside ol UK LerriLorial waLers. 1he employer will pay Class 1 NlC il Lhey are based in Lhe UK.
European Union (EU) social security agreement
Under LU social securiLy requlaLion 883/200^, a mariner who is an LU naLional, or cerLain persons who are
leqally residenL in Lhe LU and employed on board a vessel lyinq Lhe laq ol an LU Member SLaLe, will normally
lall liable Lo Lhe social securiLy leqislaLion ol LhaL Member SLaLe even Lhouqh he or she may noL reside Lhere.
RequlaLion 883/200^ now also applies Lo lceland, LiechLensLein, Norway and SwiLzerland. 1he UK does noL
apply 883/200^ Lo Lhird counLry naLionals who are employed on board an LClaqqed vessel. 1herelore, Lhey
may conLinue Lo lall wiLhin Lhe previous requlaLion 1^08/71 or wiLhin a reciprocal aqreemenL.
Reciprocal agreements
1he UK has reciprocal social securiLy aqreemenLs wiLh several nonLU counLries, alLhouqh Lhe Lerms ol Lhe
agreements can vary considerably. The majority does not contain special provisions for mariners. Therefore,
Lo deLermine an individual's liabiliLy or benelL enLiLlemenL, iL is imporLanL Lo consulL Lhe parLicular aqreemenL
relating to the individuals home country.
1o prevenL double social securiLy Laxes and Lo assure benelL coveraqe, Lhe UK has concluded reciprocal
agreements with the following countries:
Barbados, Bermuda, Canada, Guernsey, Israel, Jamaica, Japan, Jersey, Mauritius, Philippines, South
Korea (ROK), Switzerland*, Turkey, United States of America, Yugoslavia**.
* Effective from 1 June 2002, the EC social security rules apply to Switzerland.
** The UK honors the Yugoslavia treaty with respect to Bosnia-Herzegovina, Croatia, Serbia & Montenegro and
Macedonia.
2. FIyin the British Ba
ln order Lo ly Lhe BriLish laq, Lhere are Lhree main criLeria which musL be meL. 1hese criLeria concern Lhe
naLionaliLy ol Lhe shipowner/bareboaL charLerer, Lhe manninq ol Lhe vessel and a survey requiremenL.
Eligibility
LliqibiliLy Lo reqisLer a ship in Lhe UK needs Lo be considered aL Lhe ouLseL. ApplicaLions may be made by
either merchant or pleasure vessel shipowners or bareboat charterers who fall into one of the following
categories:
BriLish ciLizens
BriLish DependenL 1erriLories ciLizens
BriLish ciLizens livinq overseas
CiLizens ol an LU Member SLaLe exercisinq Lheir riqhLs under ArLicles ^8 or 52 ol Lhe LU 1reaLy in Lhe UK
Companies incorporaLed in one ol Lhe Luropean Lconomic Area {LLA) counLries
Companies incorporaLed in any BriLish overseas possession which have Lheir principal place ol business in
Lhe UK or Lhose possessions
Luropean economic inLeresL qroupinqs
Manning
An applicaLion musL be accompanied by sale manninq documenLs {SMD).
ln accordance wiLh Lhe inLernaLional convenLion on SLandards ol 1raininq, CerLilcaLion and WaLchkeepinq
{S1CW), unless Lhe ollcers hold UK cerLilcaLes ol compeLence, cerLilcaLes ol equivalenL compeLence
{CLC) will be required Lo be issued by Lhe MariLime and CoasLquard Aqency {MCA).
The documents that have to be produced in order for a CEC to be issued include:
PassporL or discharqe book
NonUK cerLilcaLe ol compeLence
Lvidence ol compeLence in Lhe Lnqlish lanquaqe
CompleLed applicaLion lorm lrom Lhe sealarer
Sub|ecL Lo CLCs, Lhere are no naLionaliLy resLricLions associaLed wiLh ollcers or crew sailinq on UK vessels
except that in the case of strategic ships the master must be a British, British Commonwealth, NATO (North
ALlanLic 1reaLy OrqanizaLion) or LU naLional, or a naLional ol a sLaLe which is parLy Lo Lhe LLA aqreemenL.
Survey
Lvery ship musL be surveyed belore iL can be reqisLered. MCA's qeneral policy is lor Lhis survey Lo be carried
ouL by an MCA surveyor. However, under cerLain circumsLances, arranqemenLs can be made lor Lhis survey Lo
be carried ouL by a class surveyor on behall ol Lhe MCA.
2.7 Offshore manning arrangements in the shipping industry
UK companies which use Lhe personal services ol employees ol nonresidenL UK companies are sub|ecL Lo
employers' NlCs, reqardless ol wheLher Lhe UK company direcLly employs Lhe workers. 1here are, however,
special NlC rules in Lhe case ol mariners. Where ollshore manninq companies are used Lo supply UKresidenL
shippinq companies wiLh UKresidenL or UKdomiciled mariners Lo operaLe ships, providinq Lhe mariners do
noL wholly or mainly perlorm Lheir duLies in UK waLers classiled as A, B, C or D, neiLher Lhe UK shippinq
company nor the offshore manning company is required to pay NICs. However, shipping companies are liable
Lo NlCs il Lhose mariners perlorm Lheir duLies wholly or mainly in UK waLers classiled as A, B, C or D. Where
companies are unsure wheLher workers have been enqaqed in A, B, C or D waLer, Lhey can seek clarilcaLion
lrom HMRC.
CaLeqory A, B, C and D waLers are classiled under Lhe MerchanL Shippinq {CaLeqorizaLion ol WaLers)
RequlaLions 1992 and included in Lhe MerchanL Shippinq NoLice 1776 {M).
A nonUK residenL manninq company LhaL is based wiLhin Lhe LLA, providinq mariners wiLh LU naLionaliLy
Lo a UK shippinq company, will be LreaLed as il iL had a place ol business in Lhe UK and employer NlC will be
payable. 1he employer will be required Lo reqisLer wiLh HMRC in Lhe UK and have Lhe same obliqaLions as a
UK employer. ln Lhe evenL LhaL paymenL is noL made, Lhe LLA counLry where Lhe nonUK residenL manninq
company is based will collecL employer conLribuLions on behall ol HMRC in Lhe UK. 1he new LC requlaLions
will noL, however, apply Lo nonUK residenL manninq companies LhaL are based ouLside ol Lhe LLA and
employer NIC will continue not to be payable.
The most common legal structure is the limited liability company.
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CorporaLe income Lax is charqed aL Lhe same raLe on all prolLs in Lhe UK, wheLher disLribuLed or reLained.
There is no withholding tax on dividends.
CovernmenL supporL is qenerally limiLed Lo shipbuildinq and Lraininq raLher Lhan operaLion. 1here is,
therefore, no direct link between registration and eligibility for support. However, this is subject to comments
in secLion 1, "1ax," in relaLion Lo Lhe UK Lonnaqe Lax reqime.
Support for Maritime Training Scheme
1he SupporL lor MariLime 1raininq {SMar1) Scheme, adminisLered by Lhe Marine 1echnoloqy SupporL UniL
{Ma1SU) on behall ol Lhe MCA, is desiqned Lo provide lundinq lor mariLime Lraininq. A lxed annual budqeL
ol 12million unLil 31 March 2015 has been allocaLed by Lhe DeparLmenL lor 1ransporL, Lhe ma|oriLy ol which
will supporL iniLial Lraininq lor cadeLs sLudyinq aL |unior ollcer level.
Employer NIC reduction
A reduction of 0.5% is made in employers NICs in respect of seafarers on foreign ships sailing outside Europe
in recognition of the health care provided on board these ships.
Wage cost support
A foreign earnings deduction provides tax relief on earnings to seafarers working wholly or partly overseas
(see section 1.2 above).
The OECD Shipbuilding Agreement removing all shipbuilding subsidies resulted in the end of the Shipbuilding
Intervention Fund as well as the Shipbuilding and Ship Repair Innovation and Technology Support initiative.
No specilc incenLives are available Lo Lhe shippinq indusLry lor environmenLal awareness. However, Lhe
Carbon Trust does provide low rate or interest free loans to businesses to assist in the development and
implementation of clean technologies to reduce emissions and enhance environmental sustainability. There
may also be tax reliefs available for the development of clean technologies through the Research and
Development scheme.
No changes have been noted.
1he DF1 has a websiLe aL hLLp://www.dlL.qov.uk LhaL conLains a number ol links Lo oLher websiLes which
provide shipping-related information. The shipping area is www.shipping.dft.gov.uk.
1he MCA websiLe is www.mcqa.qov.uk.
1he Marine SocieLy provides inlormaLion and library services lor prolessional sealarers. lLs websiLe is www.
ms-sc.org.uk.
There is a government agency which gives an overview of marine activity and encourages links between the
government and the wider national marine community. It has a website on www.marine.gov.uk.
1he BriLish Marine FederaLion is Lhe Lrade associaLion lor Lhe BriLish boaLinq indusLry. lLs websiLe is www.
britishmarine.co.uk.
United States of America
1. Tax
Foreiqn shippinq companies LhaL Lrade vessels Lo porLs in Lhe UniLed SLaLes ol America {US) may be Laxed
on a neL basis on income ellecLively connecLed wiLh Lhe conducL ol a Lrade or business wiLhin Lhe US or,
alLernaLively, be sub|ecL Lo a Lax ol ^7 on USsourced qross LransporLaLion income.
Foreiqn shippinq companies may be exempL lrom LaxaLion in Lhe US lor income derived lrom Lhe inLernaLional
operaLion ol a ship, provided LhaL Lhey qualily lor Lhe benelLs ol a Lax LreaLy or meeL Lhe sLaLuLory and
regulatory requirements for exemption under Internal Revenue Code (IRC) 883.
US corporaLions enqaqed in shippinq are sub|ecL Lo Lax in Lhe US on Lheir worldwide income. For Laxable years
beqinninq alLer 31 December 200^, US parenL companies {and oLher US shareholders) may deler Lhe US
Lax on unrepaLriaLed shippinq income and cerLain leasinq income earned by Lheir loreiqn subsidiaries. US
corporaLions may qualily lor capiLal consLrucLion lund benelLs {lRC 7518). 1his provision allows any US
citizen owning or leasing one or more vessels to establish a capital construction fund, with an agreement
from the Department of Transportation, for the purpose of providing replacement vessels, additional
vessels or reconsLrucLed vessels, builL in Lhe US and documenLed as such lor operaLion in Lhe US or lor
nonconLiquous domesLic Lrade. DeposiLs Lo Lhis lund may be Laken as a deducLion lrom US Laxable income,
sub|ecL Lo Lhe specilc requiremenLs ol Lhe lRC. We noLe LhaL a specilc porLion ol Lhis provision addressinq
Lhe LaxaLion raLe ol nonqualiled wiLhdrawals chanqed in 2012.
Effective for taxable years beginning after 22 October 2004, corporations that would otherwise be subject
Lo Lhe normal US corporaLe income Lax may elecL an alLernaLive Lonnaqe Lax reqime lor qualilyinq shippinq
acLiviLies {limiLed Lo Lhe operaLion ol USlaqqed vessels in US loreiqn Lrade and relaLed secondary and
incidental activities).
This alternate regime tax consists of regular corporate rates applied to the daily notional shipping income
multiplied by the number of days of operation of the qualifying vessel. Daily notional shipping income is
delned as:
^0 cenLs lor each 100 Lons ol Lhe neL Lonnaqe LhaL does noL exceed 25,000 neL Lons
20 cenLs lor each 100 Lons ol Lhe neL Lonnaqe LhaL exceeds 25,000 neL Lons
MainLenance and care paymenLs made Lo hospiLalized sealarers and mainLenance paymenLs Lo ouLpaLienL
seafarers are not wages subject to withholding. The wages of seafarers are not subject to state income tax
withholding, only federal income tax withholding.
1he US has income Lax LreaLies in lorce wiLh 68 loreiqn counLries as lrom 1 January 2012. 1reaLies wiLh 3
countries and amendments to the existing tax treaties with 4 countries have been signed and are awaiting
raLilcaLion and Lhe exchanqe ol insLrumenLs ol raLilcaLion or US SenaLe approval, and LreaLies wiLh anoLher
26 counLries are under acLive neqoLiaLion. AddiLionally, Lhe US has ^1 reciprocal Lax exempLion aqreemenLs
for international shipping as from 1 January 2012, and agreements with 1 other country under active
negotiation.
The main issues in the tax treaties follow the Organisation for Economic Co-operation and Development
{OLCD) model, while some conLain laq resLricLions. Many conLain limiLaLion on benelLs arLicles LhaL look
Lo ulLimaLe benelcial ownership in order Lo limiL LreaLy shoppinq. Cenerally, ellecLive manaqemenL is noL an
issue. Treaties are with the following countries:
Armenia, Australia*, Austria*, Azerbaijan, Bangladesh, Barbados*, Belarus, Belgium*, Bermuda, Bulgaria,
Canada*, China, Cyprus, Czech Republic, Denmark*, Egypt, Estonia, Finland*, France*, Georgia,Germany*,
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Greece, Hungary**, Iceland, India, Indonesia, Ireland*, Israel, Italy*, Jamaica*, Japan***, Kazakhstan*,
Kyrgyzstan, Latvia, Lithuania, Luxembourg*, Malta, Mexico, Moldova, Morocco, Netherlands*, Philippines,
Netherlands Antilles, New Zealand*, Norway*, Pakistan, Poland**, Portugal, Romania, Russian
Federation, Slovak Republic, Slovenia, South Africa, South Korea (ROK), Spain***, Sri Lanka, Sweden*,
Switzerland*, Tajikistan, Thailand, Trinidad and Tobago*, Tunisia, Turkey, Turkmenistan, Ukraine*, UK*,
Uzbekistan, Venezuela.
* A prior income tax treaty was in force before the new treaties took effect.
`` A new income Lax LreaLy wiLh Hunqary is awaiLinq US SenaLe approval; a new income Lax LreaLy wiLh
Poland and a new income Lax LreaLy wiLh Chile are boLh awaiLinq US SenaLe consideraLion and approval. 1he
new Hunqary and Poland LreaLies conLain limiLaLion on benelLs provisions LhaL diller subsLanLially lrom Lhe
existing treaty. The Chile treaty is entirely new.
*** New protocols to the current income tax treaties with Spain and Japan were signed in early 2013 and are
awaiLinq US SenaLe consideraLion and approval.
1.4 Freight taxes
FreiqhL Laxes do noL apply per se, buL Lhere is a ^7 qross income Lax on USsource qross LransporLaLion
income. This tax may generally be eliminated by treaty or statutory exemption (see section 1.1). In addition,
Lhe US imposes a harbor mainLenance Lax on cerLain carqo unloaded in a US porL on an ad valorem basis
(currently 0.125% of the cargos value). Previous court decisions have limited the scope of the harbor
maintenance tax, and multiple proposals are pending to amend both the scope and rate of the tax.
USlaqqed vessels can qualily lor a 10year depreciable lile {i.e., cosL recovery period), whereas loreiqn
laqqed vessels have an 18year depreciable lile. ln addiLion, only USlaqqed vessels qualily lor Lhe elecLive
Lonnaqe Lax reqime {see secLion 1.1). 1here are no oLher special Lax benelLs lor USreqisLered vessels
{aside lrom Lhe subsidies limiLed Lo USlaqqed vessels discussed in secLion ^).
1.6 Recent changes to tax law
1he Lax raLe lor individuals on cerLain nonqualiled wiLhdrawals lrom a capiLal consLrucLion lund under lRC
7518 increased from 15% to 20% for tax years beginning after 31 December 2012.
2. Human capital
Besides compliance wiLh Lhe labor laws ol Lhe US, Lhe US CoasL Cuard requires preemploymenL druq LesLs lor
any personnel in safety-sensitive positions.
US labor laws apply Lo crew members ol all USlaqqed vessels.
1he US has recenLly enacLed sLricLer immiqraLion requlaLions lor loreiqners workinq in Lhe counLry or on
board USlaqqed vessels.
Collective bargaining agreements differ among employers.
1he US has social securiLy LoLalizaLion aqreemenLs in lorce wiLh 2^ counLries as lrom 1 January 2012. ln
1
Note that there are 43 agreements noted, but 2 relate only to aviation.
addiLion, a LoLalizaLion aqreemenL wiLh one oLher counLry has been siqned and is awaiLinq raLilcaLion, and
agreements with an additional four countries are under discussion.
2. Mannin issues with Byin the US Ba
Due Lo manninq requiremenLs and labor laws, iL is qenerally more expensive Lo man USlaqqed vessels.
2.7 HeaIthcare ccverae fcr shipbcard empIcyees
1he US has recenLly enacLed a broad new healLh care law LhaL may allecL healLh insurance coveraqe
requirements for certain shipboard employees.
A corporaLion is Lhe mosL commonly used leqal sLrucLure lor shippinq acLiviLies. US corporaLions are sub|ecL
to a top tax rate of 35% of taxable (net) income. Foreign shipping companies are typically subject to 4% tax
on USsourced qross LransporLaLion income, in Lhe absence ol an applicable exempLion. However, loreiqn
shippinq companies LhaL do noL qualily lor an exempLion and operaLe vessels LhaL Lrade wiLh Lhe US on a
regular schedule (e.g., liner companies) may be subject to regular corporate income and branch tax at rates
in excess of 50%.
ProlLs can qenerally only be disLribuLed lree ol Lax wiLhin a consolidaLed qroup ol companies.
Dividends paid by a US corporaLion Lo a loreiqn shareholder are qenerally sub|ecL Lo a 307 wiLhholdinq Lax;
this rate may be reduced by treaty.
There are several subsidies available, including:
CapiLal consLrucLion lund {see secLions 1.1 and 1.6)
1iLle Xl Financinq Lhis proqram provides US qovernmenLquaranLeed loans Lo be used Lo consLrucL,
reconsLrucL or recondiLion commercial vessels in US shipyards. 1he vessels musL be eiLher:
1. For domesLic use and USowned and laqqed
Or
2. For exporL and documenLed under Lhe laws ol a counLry oLher Lhan Lhe US
AssorLed subsidies lor cerLain carqo {qenerally only applies Lo USlaqqed ships)
OualilcaLions, resLricLions and limiLs apply Lo each subsidy proqram and are sub|ecL Lo chanqe.
1he 1iLle Xl Financinq proqram described above is inLended Lo promoLe Lhe use ol US shipyards. lL applies Lo
vessels consLrucLed or recondiLioned in Lhe US {alLhouqh loreiqn componenLs may be used), wheLher lor
domestic use or export.
4.4 !ssues with Byin the US Ba
Some subsidy proqrams will only apply Lo USlaqqed ships.
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5.1 Infrastructure
Dockinq
SLoraqe
There are major airports close to all of these ports.
Ma|or mariLime educaLional insLiLuLions include:
Calilornia MariLime Academy {Valle|o)
Maine MariLime Academy {CasLine)
MassachuseLLs MariLime Academy {Buzzards Bay)
NorLhwesLern Michiqan Colleqe CreaL Lakes MariLime {1raverse CiLy)
SLaLe UniversiLy ol New York MariLime Colleqe {New York)
UniLed SLaLes MerchanL Marine Academy {Kinqs PoinL)
Name of port State
Baton Rouge Louisiana
Beaumont Texas
Corpus Christi Texas
Houston Texas
Lonq Beach California
New Orleans Louisiana
New York/New Jersey New York
Port of Plaquemine Louisiana
PorL ol SouLh Louisiana Louisiana
Valdez Alaska
1he US has implemenLed all requiremenLs ol ChapLer lX ol Lhe lnLernaLional ConvenLion lor Lhe SaleLy ol
Lile aL Sea {197^), and US shippinq companies are qenerally in compliance wiLh Phases l and ll ol Lhe
lnLernaLional SaleLy ManaqemenL {lSM) Code. Since 1 January 2002, Lhe US CoasL Cuard has required LhaL
all applicable vessels provide Lheir lSM Code cerLilcaLe inlormaLion prior Lo Lheir arrival aL US porLs.
All US CoasL Cuard requlaLions reqardinq saleLy and manninq musL be lollowed. 1hese requlaLions are
relatively strict.
There are numerous environmental and conservation regulations that may be relevant to shipping
companies, including but not limited to Oil Pollution Act of 1990 (OPA); Oil Terminal and Oil Tanker
LnvironmenLal OversiqhL and MoniLorinq AcL ol 1990; PorL and 1anker SaleLy AcL ol 1978; Comprehensive
LnvironmenLal Response, CompensaLion, and LiabiliLy AcL {CLRCLA); Ocean PolluLion ReducLion AcL;
Federal Water Pollution Control Act; Federal Clean Air Act; Protection of Navigable Waters and of Harbor and
River lmprovemenLs; AquaLic Nuisance PrevenLion and ConLrol; PrevenLion ol UninLenLional lnLroducLions ol
Nonindiqenous AquaLic Species and Hazardous MaLerials 1ransporLaLion AcL.
5.3 Registration
1he owner ol Lhe vessel musL be a US corporaLion or enLiLy. For coasLwise vessels, Lhe enLiLy musL be 757
owned by US ciLizens, and qenerally, Lhe ship musL be builL in Lhe US.
Vessel documenLaLion is processed by Lhe US CoasL Cuard, which provides a sLandard seL ol lorms LhaL musL
be completed in order for registration to be accomplished.
There is no possibility of parallel registration.
All ollcers and licensed individuals musL be US ciLizens.
There are no conventions of which we are currently aware.
1here are some special requiremenLs and rules wiLh reqard Lo ship reqisLraLion. ConLacL Lhe US CoasL Cuard
for details.
Due Lo Lerrorism concerns, Lhe Bureau ol CusLoms and Border ProLecLion {lormerly known as Lhe US
Customs Service) has instituted new programs to improve the inspection of inbound cargo. The Customs-
Trade Partnership Against Terrorism program directly affects all companies involved in the supply chain
{primarily LransporLaLion companies and US imporLers). 1he lmporLer SellAssessmenL Proqram locuses
on US imporLers buL does have an indirecL relaLion Lo LransporLaLion providers. Cenerally, Lhese proqrams
require LransporLaLion companies Lo implemenL and documenL cerLain securiLy procedures lor all USbound
vessels and cargo. Failure to qualify for these programs may subject cargo to additional customs inspections
and delays.
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Ernst & Young shipping industry network
Contact, Service Line Telephone e-mail
Argentina
Daniel Dasso, 1ax +5^ 11 ^318 1770 daniel.dassoar.ey.com
Osvaldo Flores, 1ax +5^ 11 ^510 227^ osvaldo.loresar.ey.com
Aruba
Bryan lrausquin, 1ax +5999 ^30 5075 bryan.irausquinan.ey.com
Australia
JusLin AudcenL, 1ransacLions +61 8 9^29 21^9 |usLin.audcenLau.ey.com
David Burns, 1ax +61 2 92^8 5059 david.burnsau.ey.com
MaLhew Chamberlain, 1ax +61 8 9^29 2368 maLhew.chamberlainau.ey.com
Chad Dixon, 1ax +61 8 9^29 2216 chad.dixonau.ey.com
RoberL Kirkby, Assurance +61 8 9217 1298 roberL.kirkbyau.ey.com
Rob Lewis, Assurance +61 2 92^8 ^5^3 rob.lewisau.ey.com
Barbados
Javier Lemoine, 1ax +1 2^6 ^30 398^ |avier.lemoinebb.ey.com
Dominique Pepin, 1ax +1 2^6 ^30 3812 dominique.pepinbb.ey.com
Belgium
PieLer Van Den Berqhe, 1ax +32 3 270 12^2 pieLer. van.den.berqhebe.ey.com
Ronald van den Lcker, Assurance +32 3 270 1285 ronald.van.den.eckerbe.ey.com
Brazil
Carlos Assis, Advisory +55 21 3263 7212 carlos.assisbr.ey.com
Luiz Claudio Campos, 1ransacLions +55 21 3263 7121 luizclaudio.camposbr.ey.com
Marcio OsLwald, Assurance +55 21 3263 711^ marcio.l.osLwaldbr.ey.com
BeLh Ramos, 1ax +55 21 3263 7262 beLh.ramosbr.ey.com
Serqio Andre Rocha, 1ax +55 21 3263 7273 serqio.andrebr.ey.com
Allredo 1eixeira NeLo, 1ax +55 21 3263 7106 allredo.L.neLobr.ey.com
Bulgaria
John MysLakidis, Assurance +359 2 8177 100 |ohn.mysLakidisbq.ey.com
476
Canada
AlberL Anelli, 1ax +1 51^ 87^ ^^03 alberL.anellica.ey.com
Daniel Baer, Assurance +1 51^ 879 2603 daniel.a.baerca.ey.com
Cary S. Miller, Assurance +1 60^ 891 8350 qary.millerca.ey.com
Chile
Ralael ConLreras, Assurance +56 2 2676 128^ ralael.conLrerascl.ey.com
Juan AnLonio Rivera, 1ax +56 2 2676 1277 |uan.anLonio.riveracl.ey.com
China
Michael Bi, Assurance +86 21 22282397 michael.bicn.ey.com
Hollman Cheonq, Assurance +86 21 2228 6688 hollman.cheonqcn.ey.com
lvan Chan, 1ax +852 2629 3828 ivan.chanhk.ey.com
Sophie Chen, Assurance +86 10 5815 3303 sophie.chencn.ey.com
Francis Lai, Assurance +86 21 2228 2933 lrancis.laicn.ey.com
MarLin Nqai, 1ax +86 10 58153231 marLin.nqaicn.ey.com
Curaao
CrisLina de FreiLas Brs , 1ax +599 9 ^30 5070 crisLina.de.lreiLasan.ey.com
Bryan lrausquin, 1ax +599 9 ^30 5075 bryan.irausquinan.ey.com
Lrick R. SLaLius van Lps, Assurance +599 9 ^30 5025 erick.sLaLiusvanepsan.ey.com
Cyprus
NeophyLos NeophyLou, 1ax +357 2520 9706 neophyLos.neophyLoucy.ey.com
SLavros PanLzaris, Assurance +357 2220 9999 sLavros.panLzariscy.ey.com
Philippos RapLopoulos, 1ax +357 2520 97^0 philippos.rapLopouloscy.ey.com
Denmark
Henrik Koloed, Assurance +^5 5158 2719 henrik.koloeddk.ey.com
Niels Josephsen, 1ax +^5 5158 2773 niels.|osephsendk.ey.com
Jakob FoqL, 1ransacLions +^5 5158 272^ |akob.loqLdk.ey.com
Dominican Republic
Pablo ArrieLa, Advisory +1 506 2208 9912 pablo.arrieLacr.ey.com
Juan Carlos Chavarra Pozuelo, 1ax +1 506 2208 98^^ |uancarlos.chavarriacr.ey.com
Llran Jimenez, Assurance +1 506 2208 9800 elrain.|imenezcr.ey.com
Juan Carlos Villeqas Nuez, 1ransacLions +1 506 2208 9855 |uancarlos.villeqascr.ey.com
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Egypt
MedhaL All, 1ransacLions +20 2 2726 0260 medhaL.alleq.ey.com
Lhab Azer, Assurance +20 2 2726 0260 ehab.azereq.ey.com
Sheril LlKilany, 1ax +20 2 2726 0260 sheril.elkilanyeq.ey.com
Nabil lsLanbouli, 1ransacLions +20 2 3336 66^2 nabil.isLanboulieq.ey.com
Maissa Zidan, 1ax +20 2 2726 0133 maissa.zidaneq.ey.com
Estonia
lvar Kiiqemaqi, Assurance +372 611 ^662 ivar.kiiqemaqiee.ey.com
Ranno 1inqas, 1ax +372 611 ^578 ranno.Linqasee.ey.com
Finland
Markku Jarveno|a, 1ax +358 20 728 0190 markku.|arveno|al.ey.com
Rabbe Nevalainen, Assurance +358 20 728 0190 rabbe.nevalainenl.ey.com
France
Philippe PaulBoncour, 1ax +33 1 55 61 10 20 philippe.paulboncoureyadvocaLs.com
Germany
MarLin Creve, Advisory +^9 511 8508 17697 marLin.qrevede.ey.com
CarlHeinz Klimmer, Assurance +^9 ^0 36132 11^87 carlheinz.klimmerde.ey.com
Bernd RichLer, 1ransacLions +^9 ^0 36132 12^16 bernd.richLerde.ey.com
HelmuL Rundshaqen, 1ax +^9 ^0 36132 12565 helmuL.rundshaqende.ey.com
Greece
1assos AnasLassiadis, 1ax +30 210 288 6^15 Lassos.anasLassiadisqr.ey.com
DimiLris ConsLanLinou, Assurance +30 210 288 6215 dimiLris.consLanLinouqr.ey.com
1assos lossiphides, 1ransacLions + 30 210 288 6^23 Lassos.iossiphidesqr.ey.com
Lvqenia KousaLhana, 1ax +30 210 288 6251 evqenia.kousaLhanaqr.ey.com
Michael PeLrodaskalakis, Advisory +30 210 288 6093 michael.peLrodaskalakisqr.ey.com
Yannis Pierros, Assurance +30 210 288 6116 yannis.pierrosqr.ey.com

Hong Kong
Leo Chan, Assurance +852 2629 3295 leo.chanhk.ey.com
Jacky Lai, Assurance +852 2629 3062 |acky.laihk.ey.com
Michael KK Ma, Advisory +852 2629 9^22 michaelkk.mahk.ey.com
Bernard Poon, 1ransacLions +852 28^9 9388 bernard.poonhk.ey.com
Jo An Yee, 1ax +852 28^6 9710 |oan.yeehk.ey.com
478
India
Abhaya Aqarwal, 1ransacLions +91 11^ 363 3060 abhaya.aqarwalin.ey.com
Himanshu Doshi, 1ax +91 22 6192 0795 himanshu.doshiin.ey.com
Probal Chosh, Advisory +91 ^0 6736 20^8 probal.qhoshin.ey.com
Samir Kanabar, 1ax +91 22 6192 0500 samir.kanabarin.ey.com
Janak Kapadia, 1ax +91 22 6192 08^8 |anak.kapadiain.ey.com
Jiqnesh Panchal, 1ransacLions +91 22 6192 2815 |iqnesh.panchalin.ey.com
Hemal Shah, Assurance +91 22 6192 0320 hemal.shahin.ey.com
Sushi Shyamal, 1ransacLions +91 22 6192 0570 sushi.shyamalin.ey.com
Indonesia
NaLhanael AlberL, 1ax +62 21 5289 5265 naLhanael.alberLid.ey.com
David Rimbo, 1ransacLions +62 21 5289 5025 david.rimboid.ey.com
BenyanLo Suherman, Assurance +62 21 5289 ^337 benyanLo.suhermanid.ey.com
Ireland
Sandra Dawson, 1ax +353 12 212 ^5^ sandra.dawsonie.ey.com
William Calloway, Assurance +353 51 872 09^ william.qallowayie.ey.com
John McCormack, Assurance +353 12 21 2^52 |ohn.mccormackie.ey.com
Michael Moroney, 1ax +1 212 773 3618 michael.moroneyey.com
Isle of Man
Paul Dully, Assurance +^^ 162^ 691 818 pdullyim.ey.com
Mary Palmer, 1ax +^^ 162^ 691 826 mepalmerim.ey.com
Italy
Ciacomo Albano, 1ax +39 068 5567338 qiacomo.albanoiL.ey.com
SLelano CarLa, 1ax +39 068 556 7339 sLelano.carLaiL.ey.com
DonaLo Ferri, Advisory +39 066 753 5522 donaLo.lerriiL.ey.com
Ciorqio Mosci, Assurance +39 010 530 8128 qiorqio.mosciiL.ey.com
Japan
Yoshihiro Ninaqawa, 1ax +81 3 3506 2172 yoshihiro.ninaqawa|p.ey.com
Koichi Sekiya, 1ax +81 3 3506 2^^7 koichi.sekiya|p.ey.com
Kuwait
Nazih Borqhol, Assurance +96 5 2295 5000 nazih.borqholkw.ey.com
Alok Chuqh, 1ax +96 5 2295 510^ alok.chuqhkw.ey.com
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Luxembourg
Michel Feider, Assurance +352 ^2 12^ 8797 michel.leiderlu.ey.com
Sylvie Leick, 1ax +352 ^2 12^ 72^2 sylvie.leicklu.ey.com
Paul Leyder, 1ax +352 ^2 12^ 72^0 paul.leyderlu.ey.com
Malaysia
Susanna Lim, Advisory +6 03 7^95 8773 susanna.limmy.ey.com
MayLee Leonq, 1ransacLions +6 03 7^95 7886 maylee.leonqmy.ey.com
Onq Chee Wai, Assurance +6 03 7^95 8776 cheewai.onqmy.ey.com
Anil Kumar Puri, 1ax +6 03 7^95 8^13 anilkumar.purimy.ey.com
Bernard Yap, 1ax +6 03 7^95 8291 bernard.yapmy.ey.com
Malta
RoberL ALLard, 1ax +356 213^ 213^ roberL.aLLardmL.ey.com
Ronald ALLard, 1ransacLions +356 213^ 213^ ronald.aLLardmL.ey.com
ChrisLopher Naudi, 1ax +356 23^7 1^^0 chris.naudimL.ey.com
Mexico
Francisco Alvarez, Assurance +52 55 5283 135^ lrancisco.alvarezmx.ey.com
SanLiaqo Chacn, 1ax +52 55 5283 1^^9 sanLiaqo.chaconmx.ey.com
Ricardo Delqado, 1ax +52 55 5283 1300 ricardo.delqadomx.ey.com
Jorqe Carcia, 1ax +52 55 5283 86^9 |orqe.qarciamx.ey.com
Fernando Carrido, Advisory +52 55 5283 1375 lernando.qarridomx.ey.com
Olivier Hache, 1ransacLions +52 55 5283 1310 olivier.hachemx.ey.com
Netherlands
Madelon Banqma, Assurance +31 88 ^07 86 52 madelon.banqmanl.ey.com
1heodoor Huiskes, 1ax +31 88 ^07 8^ 81 Lheodoor.huiskesnl.ey.com
Bruno Jelqerhuis Swildens, 1ransacLions +31 88 ^07 87 76 bruno.|elqerhuis.swildensnl.ey.com
Michiel de Vries, Advisory +31 88 ^07 88 ^8 michiel.l.de.vriesnl.ey.com
New Zealand
Joanne Oqq, Advisory +6^ 9 300 7095 |oanne.oqqnz.ey.com
Aaron OuinLal, 1ax +6^ 9 300 7059 aaron.quinLalnz.ey.com
480
Norway
Olav Hamre, Assurance +^7 2^ 00 26 07 olav.b.hamreno.ey.com
Paul Larsen, 1ransacLions +^7 2^ 00 22 55 paul.larsenno.ey.com
Lspen Ommedal, 1ax +^7 55 21 3^ 70 espen.ommedalno.ey.com
Asb|orn Rodal, Assurance +^7 2^ 00 21 35 asb|orn.rodalno.ey.com
Oman
Ahmed Amor AlLsry, 1ax +968 2^ 559 502 ahmed.amorom.ey.com
San|ay KawaLra, Assurance +968 2^ 559 503 san|ay.kawaLraom.ey.com
Morris Rozario, 1ax +968 2^ 559 563 morris.rozarioom.ey.com
Ra|eev Sinqh, 1ransacLions +968 2^ 559 659 ra|eev.sinqhom.ey.com
Sridhar Sridharan, Advisory +968 2^ 559 595 sridhar.sridharanom.ey.com
Panama
Pablo ArrieLa, Advisory +1 506 2208 9912 pablo.arrieLacr.ey.com
Juan Carlos Chavarra Pozuelo, 1ax +1 506 2208 98^^ |uancarlos.chavarriacr.ey.com
Llran Jimenez, Assurance +1 506 2208 9800 elrain.|imenezcr.ey.com
Juan Carlos Villeqas Nuez, 1ransacLions +1 506 2208 9855 |uancarlos.villeqascr.ey.com
Philippines
Warren R. BiLuin, Advisory +63 2 891 0307 warren.r.biLuinph.ey.com
RenaLo Calve, 1ransacLions +63 2 891 0307 renaLo.|.qalveph.ey.com
JonaLhan A. Manqundayao, 1ax +63 2 891 0307 |onaLhan.a.manqundayaoph.ey.com
Mark AnLhony P. 1amayo, 1ax +63 2 89^ 9391 mark.anLhony.p.Lamayoph.ey.com
Jose PepiLo L. ZabaL, Assurance +63 2 891 0307 |ose.pepiLo.e.zabaLph.ey.com
Poland
Marcin Borek, 1ransacLions +^8 22 557 6612 marcin.borekpl.ey.com
RoberL Klimacki, Assurance +^8 61 856 2990 roberL.klimackipl.ey.com
Andrze| Kowal, Assurance +^8 61 856 29^0 andrze|.kowalpl.ey.com
KrzyszLol Sachs, 1ax +^8 71 375 1005 krzyszLol.sachspl.ey.com
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Portugal
Pedro Fuqas, 1ax +351 22 607 9698 pedro.luqaspL.ey.com
Pedro Paiva, 1ax +351 22 607 969^ pedro.paivapL.ey.com
Qatar
CarreLL Crennan, 1ax +97^ ^57^ 111 qarreLL.qrennanqa.ey.com
Finbarr SexLon, 1ax +97^ ^57^ 111 lnbarr.sexLonqa.ey.com
Russia
Ksenia Baqinian, Assurance +7 ^95 799 1838 ksenia.baqinianru.ey.com
VicLor Borodin, 1ax +7 ^95 755 9760 vicLor.borodinru.ey.com
Llena Lebedeva, 1ransacLions +7 985 233 ^7^5 elena.lebedevaru.ey.com
Andrei Sulin, 1ax +7 ^95 755 97^3 andrei.sulinru.ey.com
LkaLerina ZaLakavay, Advisory +7 985 76^ 1891 ekaLerina.zaLakavairu.ey.com
Singapore
Harsha Basnayake, 1ransacLions +65 6309 67^1 harsha.basnayakesq.ey.com
Shekaran Krishnan, Assurance +65 6309 6900 shekaran.krishnansq.ey.com
Lee Khoon 1an, 1ax +65 6309 8679 leekhoon.Lansq.ey.com
Mildred 1an, Advisory +65 6309 8200 mildred.Lansq.ey.com
ChesLer Wee, 1ax +65 6309 8230 chesLer.weesq.ey.com
South Africa
BriqiLLe KeirbySmiLh, Advisory +27 31 576 8161 briqiLLe.keirbysmiLhza.ey.com
Russell SmiLh, 1ax +27 21 ^^3 0^^8 russell.smiLhza.ey.com
South Korea (Republic of Korea)
Kyunq 1ae Ko, 1ax +82 2 3770 0921 kyunqLae.kokr.ey.com
Spain
Adollo Zunzunequi, 1ax +3^ 91 572 7889 adollo.zunzunequiruanoes.ey.com
Sri Lanka
Sulaiman NishLar, 1ax +9^ 11 557 812^ sulaiman.nishLarlk.ey.com
VelauLhapillai ShakLhivel, 1ax +9^ 11 557 8128 velauLhapillai.shakLhivellk.ey.com
482
Sweden
PerMikael Andersson, 1ax +^6 31 63 63 86 permikael.anderssonse.ey.com
Helena Herloqsson, Assurance +^6 31 63 63 30 helena.herloqssonse.ey.com
Lena Wei|e, 1ax +^6 31 63 77 90 lena.wei|ese.ey.com
Switzerland
Mark Hawkins, Assurance +^1 58 286 5657 mark.hawkinsch.ey.com
Taiwan
Calvin Chen, Assurance +886 7 238 0011 calvin.chenLw.ey.com
Ray Hou, Assurance, Assurance +886 2 2720 ^000 ray.houLw.ey.com
Thailand
KamolraL NuchiLprasiLchai, 1ax +66 2 26^ 0777 kamolraL.nuchiLprasiLchaiLh.ey.com
Sumalee ReewarabandiLh, Assurance +66 2 26^ 0777 sumalee.reewarabandiLhLh.ey.com
Yupa WichiLkraisorn, 1ax +66 2 26^ 0777 yupa.wichiLkraisornLh.ey.com
Turkey
Lrem Cermeyan, 1ransacLions +90 212 368 517^ erem.qermeyanLr.ey.com
LLhem KuLucular, Assurance +90 212 368 5315 eLhem.kuLucularLr.ey.com
Dursun Ozcan, 1ax +90 212 368 5509 dursun.ozcanLr.ey.com
Arzu Piskinoqlu, Advisory +90 212 368 5761 arzu.piskinoqluLr.ey.com

United Arab Emirates
1orsLen Blaschke, 1ransacLions +971 ^ 3129 189 LorsLen.blaschkeae.ey.com
Chandramouli Canesan, Assurance +971 ^ 3129 123 chandramouli.qanesanae.ey.com
Michael Hasbani, Advisory +971 ^ 3129 1^1 michael.hasbaniae.ey.com
Arvind Mishra, 1ax +971 ^ 7010 860 arvind.mishraae.ey.com
United Kingdom
David Lvans, 1ax +^^ 20 7951 ^2^6 devansuk.ey.com
SLeven Lunn, Assurance +^^ 20 7951 3299 slunnuk.ey.com
Clenn PeLers, 1ransacLions +^^ 20 7951 ^^23 qpeLersuk.ey.com
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United States
Bruce Baylson, 1ransacLions +1 212 773 5650 bruce.baylsoney.com
MaLLhew Blum, 1ax +1 617 585 03^0 maLL.blumey.com
David Cill, 1ax +^^ 207 951 ^180 dqill1uk.ey.com
Chris Kealy, 1ax +1 313 628 7352 chris.kealyey.com
Florence LenLini, 1ransacLions +1 212 773 09^8 lorence.lenLiniey.com
Leo NauqhLon, 1ax +1 212 773 ^998 leo.nauqhLoney.com
SLephen PueLL, 1ax +1 ^0^ 817 ^825 sLephen.pueLLey.com
Julia 1onkovich, 1ax +1 202 327 8801 |ulia.Lonkovichey.com
David R. Williams, 1ransacLions +1 212 773 1399 david.williams2ey.com
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EY 2013 Shipping Industry Almanac

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EY 2013 Shipping Industry Almanac

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