Despite the urge to alter the UK tonnage tax regime, the Government has made no mention of it in the 2009 Budget or any other measures which significantly affect the shipping sector, leaving the industry completely out of the loop.
Shipping accountant Moore Stevens has indicated that although a variety of measures proposed in January 2008 were later withdrawn, including a potential amendment to the EU flagging rules excluding ships time-chartered into the fleet, they were not accounted for as they are complex issues depending on agreement with the European Commission.
Hailing the ‘no news is good news’ front on the lack of shipping’s acknowledgement in the UK Budget, Moore Stevens tax partner, Sue Bill, said: “In the current economic climate, it is not surprising that the relatively minor change to the tonnage tax regime which has been requested has not been made, and that the UK government’s position has not been clarified.
“Companies in the shipping sector may in any case have more pressing financial concerns at the moment. And, overall, the fact that there is not a great deal of specific interest for the shipping sector might be regarded as good news, because the taxation regime at least continues to be reasonably stable,” she added.
However, despite the positive turn on shipping’s exclusion, it may be more of a case of the customary ignorance of shipping activity and its invisible image in the larger scale of global economics, something the sector has long been struggling with.
The Budget does, however, include some provisions which could be of interest to some shipping groups, according to Moore Stevens. The Finance Bill 2009 will include an exemption from tax for most foreign dividends, posing some potential benefit for international groups.
In conjunction with this there are consequent minor changes to the rules relating to so-called ‘controlled foreign companies’ (CFCs). The exemption from the CFC rules which previously applied if the company followed an ‘acceptable distribution policy’ will no longer apply and certain holding company exemptions will also be removed.