increasingly to open registries which offered extensive freedom in the choice of crew
nationality to shipowners. The potential demise of the shipping industry with its
impact on associated industries and the seafaring profession was thus viewed as
“commercially and strategically catastrophic for the whole maritime cluster”.
15
Thus, tonnage tax was seen as at least a partial remedy to the decline of European
shipping as a whole; and in particular, the virtual demise of the traditional ship
registries.
In embracing the tonnage tax system European shipping states began to emulate
or replicate what open registries had to offer by way of fiscal advantages and to bring
back European tonnage that had migrated to the open flags. It has been in operation
in this part of the world in different manifestations and degrees over several decades
taking its cue from the leading open registries. The system started with Greece which
has for many years, been the largest registry within the EU since the 1990s.
Netherlands and Norway followed suit in 1996 and the United Kingdom facing
competition from its own satellite states, the overseas territories, entered the arena in
2000. In the years following, a host of EU countries joined the fray. At present there
are quite a few of them including Belgium, Denmark, Finland, France, Ireland and
Italy.
16 Some have established secondary registers in overseas territories owned or
held by them; others are operating such registries physically from their regular
primary registries.
The offerings made by the traditional maritime countries of Europe in terms of the
tonnage tax regime were accompanied by a number of quid pro quo conditions,
among which, some countries such as the United Kingdom required shipowners to
engage in crew training activities to foster and encourage the enhancement of the
seafaring profession. The tonnage tax system has gained immense popularity within
Europe including the EU countries.
17
European shipping companies are not as prosperous in the international shipping
market as they used to be. The tonnage tax system is a boon to these states, but it is
important to note that the regimes differ from one state to another in the details of
practice and implementation even though the core principles are the same. This is
due to the peculiar jurisdictional features of each state and the importance that is
attached by them to the maritime industry. The notable factor is that those states that
have embraced the tonnage tax system have in one form or another incorporated it in
their legislation which prescribes the extent to which the system applies in terms of
shipping activities governed by the laws of that jurisdiction.
18
It is notable that these elements of tonnage tax which have been adopted in
different jurisdictions have the object of minimizing the possibility of tax avoidance
and, for the member states of EU, complying with the Guidelines for state aid to
15 Mukherjee and Brownrigg (2013).
16 Mukherjee and Brownrigg (2013), p. 178.
17 Ibid.
18 Community Guidelines on State aid to maritime transport Commission communication (2004/C
13/03) cl 43.
718
Y. Yin
nationality to shipowners. The potential demise of the shipping industry with its
impact on associated industries and the seafaring profession was thus viewed as
“commercially and strategically catastrophic for the whole maritime cluster”.
15
Thus, tonnage tax was seen as at least a partial remedy to the decline of European
shipping as a whole; and in particular, the virtual demise of the traditional ship
registries.
In embracing the tonnage tax system European shipping states began to emulate
or replicate what open registries had to offer by way of fiscal advantages and to bring
back European tonnage that had migrated to the open flags. It has been in operation
in this part of the world in different manifestations and degrees over several decades
taking its cue from the leading open registries. The system started with Greece which
has for many years, been the largest registry within the EU since the 1990s.
Netherlands and Norway followed suit in 1996 and the United Kingdom facing
competition from its own satellite states, the overseas territories, entered the arena in
2000. In the years following, a host of EU countries joined the fray. At present there
are quite a few of them including Belgium, Denmark, Finland, France, Ireland and
Italy.
16 Some have established secondary registers in overseas territories owned or
held by them; others are operating such registries physically from their regular
primary registries.
The offerings made by the traditional maritime countries of Europe in terms of the
tonnage tax regime were accompanied by a number of quid pro quo conditions,
among which, some countries such as the United Kingdom required shipowners to
engage in crew training activities to foster and encourage the enhancement of the
seafaring profession. The tonnage tax system has gained immense popularity within
Europe including the EU countries.
17
European shipping companies are not as prosperous in the international shipping
market as they used to be. The tonnage tax system is a boon to these states, but it is
important to note that the regimes differ from one state to another in the details of
practice and implementation even though the core principles are the same. This is
due to the peculiar jurisdictional features of each state and the importance that is
attached by them to the maritime industry. The notable factor is that those states that
have embraced the tonnage tax system have in one form or another incorporated it in
their legislation which prescribes the extent to which the system applies in terms of
shipping activities governed by the laws of that jurisdiction.
18
It is notable that these elements of tonnage tax which have been adopted in
different jurisdictions have the object of minimizing the possibility of tax avoidance
and, for the member states of EU, complying with the Guidelines for state aid to
15 Mukherjee and Brownrigg (2013).
16 Mukherjee and Brownrigg (2013), p. 178.
17 Ibid.
18 Community Guidelines on State aid to maritime transport Commission communication (2004/C
13/03) cl 43.
718
Y. Yin