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"Tonnage Tax": a new beginning? ('l
Mark Brownrigg
I have been asked to give a generaI overview of the Tonnage Tax
regime in the UK - its introduction, its substance and briefly at its advantages
compared to other countries regimes. And then to look more
generali)' at the Iikely impact of the regime on British shipping, in terms
both of the fleet and - most important from a political viewpoint - of maritirne
training and jobs for British seafarers.
The UK's Tonnage Tax regime was incorporated in law in the 2000 Finance
Act, which was adopted last luI)'. Schedule 22 to that Act is a 50page
document. By and large, it is well written and, for the most part, accessible
even to la)' persons Iike m)'self ! But it is not the complete story.
That includes two sets of secondary regulations and at least two detailed
explanatory statements on the tax and training aspects, ali of which took
effect at the end of August.
It gives a number of us in the industr)' a wry smile to think that, after
lobbying so hard for so many years - in vain - for a change which might
have taken half a page, we have now given birth to getting on for 150!
By way of comparison, the originaI Dutch and the Gennan legislation
occupy less than 10 pages between them! Perversely, in time, this detailed
codification may in fact prove to be to Qur advantage.
We must have done something righI, because - in a recent speech she
made to ECSA in Brussels - EU Commission Vice-President Loyola de
Palacio said that: "I am peIòonally convinced that the \Val' the UK, to take
the latest example, has used the guidelines is an efficient and balanced
way to promote the competitiveness of its fleet. Linking the benefits of
the Tonnage tax to the training of seafarers is certainl:y an interesting approach
to promote better safety on board European vessels."
So: \Vhat is it ali about? What are the advantages of the Tonnage Tax?
In practice, the impact for individual companies in tenns of cash savings
wili be mixed. Some \vill acrueve savings. But, for others, the level of cash
tax that they currently pay may not be significantlv affected. However, in alI
cases, the Tonnage Tax wiU enable the companies to have the advantages of:
• certainl>; srnce the level of tax \viU be kno\VTI and minimal. That will reduce
the need to make prm·ision for deferred tax and increase eamings per sbare;
{') Report rnade at Congress on "La fiscalità marittima nell'Unione Europea: le
prospettive italiane", held on 2th aprii 2001 in the University "La Sapienza" of Rome.
RI\lSTA DI DIRITTO mBlTARIO It'-TER.\'AZIO\ALE 31::001