The Maritime Transport Committee has for some time investigated support measures provided to the maritime sector, both within and outside the OECD, to assist Members in their policy considerations.
The Committee recently considered a report which examines the impact of several important manning and fiscal/financial relief measures in OECD and a number of non-OECD countries. The purpose of the project was to analyse these measures to compare them with taxation and manning conditions in a range of non-OECD countries for which data was available, and to draw conclusions on the competitive situation of the different categories of OECD and non-OECD registries.
As well as covering most OECD Member countries, the project also covered the main open registries (Panama, Liberia, Cyprus and Malta) plus Hong Kong (China), Singapore and Chinese Taipei.
The main preliminary conclusions of this report were:
Under some circumstances effective tax rates under OECD regular taxation regimes can be lower than those faced by projects operating under tonnage tax systems. Consolidation of losses was a key element in producing such an outcome. Besides consolidation, other taxation variables that have the greatest impact on effective tax rates for shipping projects are: rate of depreciation, anticipated depreciation and treatment of book profits from the eventual sale of the ship.
The financial effects of access to low cost manning can be similar in scale to those of common corporate tax alleviation measures, while the effects of "wage flexibility" measures are smaller. The financial effects of manning measures increase in smaller, older or less valuable ships where manning costs assume a larger proportion of total operating costs. The relative importance of manning costs reductions also increase where shipping projects cannot consolidate with other projects for tax purposes.
This analysis will assist Member countries in future policy considerations.
In the interests of promoting transparency, the Committee prepared in 1997 an inventory of support measures provided by OECD governments to their maritime industry.
More specifically, the 1999 inventory covers:
Taxation of international shipping.
Financial aid.
Manning costs and crew relief.
Public services and public ownership.
Research and development.
Sectoral support measures.
Support to ports and auxiliary services.
Second registers and bareboats charters.
The MTC is currently updating this inventory, and will be extending its coverage of measures to ports and port operations.
