If the move is approved, then instead of being taxed on income, shipping companies will be taxed at fixed rates on the basis of size and amount of days of operation.

“This notional or presumptive corporate income tax system will align South Africa’s shipping tax regime with the fiscal systems of other major maritime nations,” the Treasury explained, going on to add:

“It is an elective system, taxing shipping companies at fixed rates according to the size of their ships and days operated during an accounting period, and not according to the company’s business income results.”

"The tonnage tax will also form an integral part of Government’s Maritime Transport Agenda: 2010 which, inter alia, seeks to arrest the decline of the domestic shipping register."

"By potentially bringing shipping companies’ key strategic management decisions back to South Africa the scope of secondary support activities will broaden. This includes a growth in crewing opportunities for South African seafarers."

"It also has the potential of reducing the sizable transport service payments to the rest of the world, which in turn would have a positive impact on the current account," the Treasury concluded.