Taxation and Ship Management: A
Canadian Case Study
F. Mikis Manolis and Ron L. Bozzer
Abstract In 1991, Canada began implementing changes to its tax regime with
respect to international shipping activities, which were designed to address a steady
erosion of shipping knowledge, expertise and shipping-related job opportunities in
Canada. These changes represented a unique market-driven approach that sought to
create an attractive financial environment for international shipping operations in
Canada. Under this new tax regime, international shipping corporations were permitted to establish and maintain operations in Canada without being subject to
Canadian corporate tax liability. A central element of this initiative was the elimination of the so-called “mind and management” test. After more than two decades
since the initial implementation of these changes, it is clear that a significant number
of international shipping corporations have relocated and established themselves in
Canada and particularly so in Vancouver, Canada’s Pacific hub—which is now
described as among the world’s leading maritime centres exerting competitive
pressure globally.
1 Introduction
Beginning in 1991, Canada implemented a series of changes to its tax regime
applicable to international shipping activities designed to address a number of trends
faced by many nations, including traditional maritime nations. These trends included
a steady erosion of shipping knowledge, expertise and related job opportunities
arising from the increasing dominance of open registry vessels or so-called “flags
of convenience” in the business of international shipping.
1 Underlying these changes
was an acknowledgment that, in order to preserve and enhance maritime know-how,
F. M. Manolis (*) · R. L. Bozzer
DuMoulin Boskovich LLP, Vancouver, BC, Canada
e-mail: mmanolis@dubo.com
1 For a thorough discussion of the policy background underlying these legislative changes, see
Brooks and Hodgson (2005).
© Springer Nature Switzerland AG 2020
P. K. Mukherjee et al. (eds.), Maritime Law in Motion, WMU Studies in Maritime
Affairs 8, https://doi.org/10.1007/978-3-030-31749-2_21
457
Canadian Case Study
F. Mikis Manolis and Ron L. Bozzer
Abstract In 1991, Canada began implementing changes to its tax regime with
respect to international shipping activities, which were designed to address a steady
erosion of shipping knowledge, expertise and shipping-related job opportunities in
Canada. These changes represented a unique market-driven approach that sought to
create an attractive financial environment for international shipping operations in
Canada. Under this new tax regime, international shipping corporations were permitted to establish and maintain operations in Canada without being subject to
Canadian corporate tax liability. A central element of this initiative was the elimination of the so-called “mind and management” test. After more than two decades
since the initial implementation of these changes, it is clear that a significant number
of international shipping corporations have relocated and established themselves in
Canada and particularly so in Vancouver, Canada’s Pacific hub—which is now
described as among the world’s leading maritime centres exerting competitive
pressure globally.
1 Introduction
Beginning in 1991, Canada implemented a series of changes to its tax regime
applicable to international shipping activities designed to address a number of trends
faced by many nations, including traditional maritime nations. These trends included
a steady erosion of shipping knowledge, expertise and related job opportunities
arising from the increasing dominance of open registry vessels or so-called “flags
of convenience” in the business of international shipping.
1 Underlying these changes
was an acknowledgment that, in order to preserve and enhance maritime know-how,
F. M. Manolis (*) · R. L. Bozzer
DuMoulin Boskovich LLP, Vancouver, BC, Canada
e-mail: mmanolis@dubo.com
1 For a thorough discussion of the policy background underlying these legislative changes, see
Brooks and Hodgson (2005).
© Springer Nature Switzerland AG 2020
P. K. Mukherjee et al. (eds.), Maritime Law in Motion, WMU Studies in Maritime
Affairs 8, https://doi.org/10.1007/978-3-030-31749-2_21
457