TONNAGE TAX POLICIES: A COMPARATIVE STUDY OF TAXATION IN THE HIGH SEAS
Authors: Ibrahim S. Bello, Fatimah M. v
Published: May 2024
Abstract
<p>The global shipping industry has seen shifts in flag registrations as vessels move across different jurisdictions, prompting a need for innovative policies to prevent fleet decline. Tonnage tax has emerged as a significant approach in countries like Greece, Denmark, Norway, and the USA to address this challenge. Tonnage tax, in the context of this study, involves calculating taxes based on a ship's tonnage rather than traditional income-based assessments, as outlined in International Accounting Standard 12 (IAS 12). The study aims to explore the critical factors contributing to delays in implementing tonnage tax policies. While the focus is not on developing new accounting standards, the study investigates the factors behind the sluggish adoption of tonnage tax. The introduction of tonnage tax as a policy approach began in Greece in 1975, coinciding with the liberalization of shipping industries in non-traditional maritime nations. As ship owners sought registration in jurisdictions with lower taxes, the implementation of tonnage tax emerged as a solution to counteract fleet decline. This approach places importance on factors such as lock-in periods, qualifying assets, the location of management, and crew nationality management. Various authors have addressed tonnage tax from different angles, with some viewing it as an innovation to combat tax evasion, while others see it as an advantageous model for traditional maritime nations and disadvantaged countries to compete in the flag of convenience sector. This study delves into the dynamics and challenges of implementing tonnage tax in the global shipping industry</p>
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