The fiscal implications of shipping activities : a review

Abstract

This thesis examines the fiscal implications of shipping activities and the impact that a State's fiscal policy has on the success or failure of its shipping industry. The Merchant Shipping Act enacted in 1973 laid the foundations which enabled Malta to occupy a place among the world's leading maritime nations. The Act established an attractive fiscal regime which was complemented by a legal framework that was both reliable and flexible. Malta together with Liberia, Panama and Greece adopted the special regime of tonnage tax whereby shipowners were exempted from the requirement to pay income tax on shipping profits provided a registration and annual fee based on the tonnage operated was paid. This fiscal benefit attracted a significant number of foreign shipowners to the Maltese ship register. However, in a bid to halt the decline of their shipping industry, nations perceived that a successful shipping policy could not be achieved without the creation of a tonnage tax regime that would ensure a low tax environment. Today, the widespread adoption of the tonnage tax regime and the fact that the shipping industry is a highly competitive and mobile industry mean that Malta cannot sit on its laurels but must ensure that it has the best tax and legal infrastructure to enable it to remain a leading player in this sector.