UK Shipping Needs Stable 'Safe' Tax Regime

by Robert Lee, Tax-News.com, London

22 September 2008

While government statistics show sustained growth in the UK shipping industry, the Chamber of Shipping has warned that London is under serious threat unless its tax regime supports the industry.

The UK registered fleet is almost five times its size since the introduction of tonnage tax in 2000, but the Chamber has cautioned that its continued strength is dependent upon the UK’s ability to offer shipping businesses a stable and "safe" tax regime that encourages long-term investment.

Statistics published by the Department for Transport show that the UK registered trading fleet increased by 17 to 646 ships during 2007. Overall deadweight tonnage totalled 13.0 million tonnes (5% up on 2006, and 439 per cent up on 1997).

The UK registered trading fleet included 134 tankers, 133 ro-ro vessels, 165 container vessels and 38 passenger vessels. The trading fleet owned by UK companies increased by 10% to 19.6 million deadweight tonnes during 2007, 85% higher than in 1997.

Of the 738 trading vessels owned by UK companies, 168 were tankers accounting for one third of deadweight tonnage. There were also 138 ro-ro, 101 container and 52 passenger vessels. World tonnage of trading vessels totalled 1,092 million deadweight tonnes.

The Chamber says that this continued growth – founded on the fiscal and regulatory reforms of the late 1990s – has enabled the UK to take advantage of the long shipping boom. However, the next few years promise more difficult trading conditions and uncertainty, as the markets digest the effects of the turndown in British and other economies, the expectation of continued high prices for fuel, the worldwide shortage of skilled seafarers and the uncertainties of the eventual application of climate-change policies to shipping.

At the same time other global shipping centres – notably Dubai and Singapore – are aggressively marketing themselves as shipping business centres, determined to usurp London’s pre-eminence.

Uncertainties over the taxation status of non-domiciles and tonnage tax has already had an impact on the industry, the Chamber notes, with some shipping business already migrating away from the UK.

In its message to the government, the Chamber stated: "The challenges and opportunities are great – but a constant eye on the ball is required, both in Westminster and Brussels, to ensure British shipping stays strong and London maintains its status as the centre of the maritime world."

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