maritime transport, besides the principal object of being competitive with the open
registries offering low tax or zero tax.
3 Tonnage Tax Regime in the UK
3.1 Background
The maritime heritage of the United Kingdom speaks for itself. Over a substantial
part of the last century as well as in the nineteenth century, the United Kingdom had
the distinction of having the largest tonnage in the world.
19 However, over the last
decades the size of the United Kingdom fleet on the world scale had diminished
considerably down to some 7 million tonnes deadweight tonnes (DWT) in 1999
from a high of 50 million DWT in 1975.This was mainly due to United Kingdom
registered ships flagging out to open registries which was a major setback in view of
the fact in the 1970s almost all UK-owned ships were registered in the UK. The
seafarer population of the United Kingdom fell correspondingly from 75 to 59%
over that period. By contrast, in the1990s, some 50% of UK owned ships were
registered under foreign flags which represent some 66% of DWT owned by UK
shipowners.
20 This state of affairs, which in some ways reflects the decline in the
world economy, is still most discouraging even though there is some solace in the
realization that a substantial amount of world shipping is still managed from the
United Kingdom by UK-based companies. The demise of UK shipping seemed to be
a foregone conclusion even if it was not imminent. This disturbing forecast was in
sharp contrast to the rapid increase in demand for shipping services worldwide.
21
As mentioned above, the principal object of the tonnage tax scheme was to
reverse the flow of UK registered ships flagging out. The strategy for achieving
the resurrection of the United Kingdom fleet was two-fold; namely, to increase direct
ownership of UK ships within the country and to increase the number of professional
seafarers at the levels of both officers as well as crew. It is significant that the strategy
seems to have succeeded in the United Kingdom; the fleet size has indeed increased
since the introduction of the tonnage tax system. The exodus seems to have ceased
and ships are returning to the United Kingdom registry.
It can be concluded from the data in Fig. 1 above that the aim of the tonnage tax
scheme has been realized completely. Furthermore, the basic attributes of the scheme
are apparent from the data in question. It is evident that up to 2003, the volume of
tonnage increased quite considerably which was reflected in the 5% plus average
annual growth. A sectoral analysis of tonnage indicates that much of the growth has
taken place in the container ship trade. However, the annual growth in the number of
19 Leggate and McConville (2005).
20 Ibid.
21 Brownrigg et al. (2005), p. 213.
The United Kingdom Tonnage Tax Regime: Compatibility with Relevant. . .
719
registries offering low tax or zero tax.
3 Tonnage Tax Regime in the UK
3.1 Background
The maritime heritage of the United Kingdom speaks for itself. Over a substantial
part of the last century as well as in the nineteenth century, the United Kingdom had
the distinction of having the largest tonnage in the world.
19 However, over the last
decades the size of the United Kingdom fleet on the world scale had diminished
considerably down to some 7 million tonnes deadweight tonnes (DWT) in 1999
from a high of 50 million DWT in 1975.This was mainly due to United Kingdom
registered ships flagging out to open registries which was a major setback in view of
the fact in the 1970s almost all UK-owned ships were registered in the UK. The
seafarer population of the United Kingdom fell correspondingly from 75 to 59%
over that period. By contrast, in the1990s, some 50% of UK owned ships were
registered under foreign flags which represent some 66% of DWT owned by UK
shipowners.
20 This state of affairs, which in some ways reflects the decline in the
world economy, is still most discouraging even though there is some solace in the
realization that a substantial amount of world shipping is still managed from the
United Kingdom by UK-based companies. The demise of UK shipping seemed to be
a foregone conclusion even if it was not imminent. This disturbing forecast was in
sharp contrast to the rapid increase in demand for shipping services worldwide.
21
As mentioned above, the principal object of the tonnage tax scheme was to
reverse the flow of UK registered ships flagging out. The strategy for achieving
the resurrection of the United Kingdom fleet was two-fold; namely, to increase direct
ownership of UK ships within the country and to increase the number of professional
seafarers at the levels of both officers as well as crew. It is significant that the strategy
seems to have succeeded in the United Kingdom; the fleet size has indeed increased
since the introduction of the tonnage tax system. The exodus seems to have ceased
and ships are returning to the United Kingdom registry.
It can be concluded from the data in Fig. 1 above that the aim of the tonnage tax
scheme has been realized completely. Furthermore, the basic attributes of the scheme
are apparent from the data in question. It is evident that up to 2003, the volume of
tonnage increased quite considerably which was reflected in the 5% plus average
annual growth. A sectoral analysis of tonnage indicates that much of the growth has
taken place in the container ship trade. However, the annual growth in the number of
19 Leggate and McConville (2005).
20 Ibid.
21 Brownrigg et al. (2005), p. 213.
The United Kingdom Tonnage Tax Regime: Compatibility with Relevant. . .
719