Indian Shipowners Call For Tax Reform

by Robert Lee, Tax-News.com, London

03 April 2002

The Indian National Shipowners Association (INSA) called this week for the government to introduce a tonnage tax to replace corporate income tax, and for the abolition of personal income tax on sailors.

The maritime body argued that, faced with increasing competition from companies registered in low, or no tax jurisdictions, the industry risks falling behind if the authorities do not act soon.

The shipping body argued on Monday that tax reforms would: 'provide a level playing field, so that Indian shipping becomes internationally competitive'.

According to INSA, approximately 87% of the world's shipping fleets are registered in offshore jurisdictions, with low taxes meaning that they can charge less and invest more in modernisation and expansion. An annual review of the global shipping industry revealed that at the beginning of last year, six of the seven countries with the highest tonnage registered under their flags were 'flag of convenience' registries.

The shipowners group went on to emphasise the industry's importance to the Indian economy:

'With around 95% of India's international trade by volume and 68% by value being transported by sea, the presence of a strong national fleet ensures a competitive edge for Indian exports,' the Association argued.

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