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The European Free Trade Association Surveillance (EFTA Surv) Authority has approved a Norwegian state aid scheme which grants tax refunds to ship owners.
Under the scheme, qualifying ship owners receive refunds of income tax and social security contributions paid on behalf of crew employed on Norwegian-registered vessels. The scheme effectively subsidizes the relatively high wages of Norwegian crew in an industry which is able to employ foreign labor at a considerable discount.
The tax refund scheme was introduced by the Norwegian Government as a temporary measure in 1993 and made permanent in 1994. The scheme applies to certain categories of ships registered in the two Norwegian ship registers, the Norwegian Ordinary Ship Register and the Norwegian International Ship Register.
The maritime industry is one of the most important sectors of Norway's economy, employing 110,000 people and generating NOK175bn (USD21.5bn) annually, according to EFTA. This consists of ocean transport, ship equipment, shipbuilding, shipbroking, financing, insurance, research and development, classification, and maritime offshore oil-related services, among other activities. Norwegian shipping companies employ almost 50,000 people.
In its decision, EFTA Surv said that the aid in question was justified because the maritime transport industry in Norway - and in other European Economic Area member states - faces aggressive competition from vessels registered in third countries "which do not take much care to observe social and safety rules in force at international level."
EFTA Surv last conducted a review of the scheme in 2006, and the Authority's approval of the scheme expires on June 30, 2016. The latest decision extends this approval for an additional 10 years.
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