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Shipping Company Moves From Bermuda To Isle of Man

Royal Gazette

14 November 2000


This story is reproduced by kind permission of the Royal Gazette at http://www.accessbda.bm

Shipping management group Acomarit has moved its headquarters from Bermuda to the Isle of Man, claiming it makes more sense to be geographically close to Europe for business.

Bermuda could lose more business to the Isle of Man as it tries to woo shipping companies, offering low taxes and a good technical base for the companies.

Acomarit, whose main operations are in Glasgow and Geneva, earlier this year shifted its corporate offices, partly in response to the expansion of its business in Europe.

"Having our headquarters in the centre of Europe makes a lot more sense," Barry Hughes, the Douglas, Isle of Man-based director told The Financial Times recently. "Having a Bermuda exemption meant we had to have somebody else managing the office instead of running our own staff and offices."

He added that aside from a tight labour market - similar to Bermuda, there is one small note of caution about moving to the Isle of Man.

He said the tax exemption on shipping will change to zero rate taxation under the local government's five year tax strategy unveiled last month, in response to global concerns that tax exemptions should not single out particular industries over others.

Isle of Man has been seeking offshore shipping business and has been actively wooing companies to its shores.

The change in status of the Manx-based companies will not change the amount of tax companies will pay.

Ship operators there say they are reassured by the government's statements that nothing should undermine their position.

The island's focus on the sector has paid off, with 240 merchant vessels on its register.

The Isle of Man's government has been fighting a fierce rearguard action as global regulators have sought to tighten rules on tax havens.

The squeeze on all offshore jurisdictions has helped the Isle of Man stand out in a crowd, according to Manx government ministers.

They say that more than ever before the island is seen as a reputable place to do business.

Shipping management is a new industry for the island and it is still relatively small, but there are plans to grow the sector.

It has been built from scratch since the mid-1980s when the government decided it wanted to diversify the economy by creating a thriving merchant fleet on the island with a package of tax and other incentives.

"There was nothing 15 years ago and now shipping is quite a substantial part of island life," said Gerry Davidson, manager of Denholm Ship Management, the Manx offices of the global shipping group.

For most companies, reputation is increasingly important. The Red Ensign, under which Isle of Man registered ships sail, is still seen by many as a badge of quality.

"The Isle of Man operates its Marine Administration along British lines," says Mr. Davidson. "It is about hopping on the back of British standards, and building a reputation for safety, quality and so on. Living standards on the island are good and, more important, the government set out its stall to get shipping to the island offering very handsome incentives. We wanted the standards as well as the benefits."

One of the main incentives is the current tax exemption for shipping companies -there are also tax holidays, roll-over tax relief arrangements and a flexible shipping fees payments system.

Ship management companies say they have access to a sound technical base, training facilities and a labour pool, although skilled staff are increasingly in short supply.

Another important benefit is the ability to offer customers low labour costs for their crews through exemptions on employer national insurance contributions.

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