UK makes plans to compete with Singapore on post-Brexit shipping regime

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The UK is making plans to make London a rival to Singapore as a hub for shipping companies to register their ships after the Brexit transition period ends, people briefed on the proposals say.

Business organizations and unions have been asked about reform of the so-called tonnage tax of the shipping industry after January 1, 2021, when the UK is no longer subject to the aid scheme. EU state on subsidies.

The proposals, described as a ‘blue sky reflection’ by someone familiar with their content, are being worked out as EU-UK trade negotiations reach a crunch in Brussels – the issue of how to deal with differences. British regulations being the main bone of contention.

According to calculations provided to the government, the overhaul of the UK shipping tax and regulation regime could be worth £ 3.7 billion to the economy over three years and directly create 2,500 high-quality jobs and 25,000 in companies linked.

Plans due to be submitted to Department of Transport ministers last week included expanding the scope of the UK regime by counting oil rigs as “ships” for tax purposes – which is not. authorized under EU rules controlling the subsidy of maritime transport – in order to attract more businesses.

A government-funded £ 30million program to train cadets directly on behalf of shipping companies has also been considered.

A spokesperson for the Department of Transport said, “We are not commenting on the leaks.”

Since the Brexit vote, the tonnage of vessels registered under the British flag has fallen by a third, according to a report prepared for the government, due to the uncertainty of Brexit. The proposals indicate that this could in part be addressed by a campaign of “hearts and minds” to persuade shipping companies to register their vessels under the British flag.

Such a campaign would fit in with Mr Johnson’s post-Brexit rhetoric about restoring Britain’s greatness as a maritime nation. Last February, he chose the Painted Hall of the Royal Maritime Museum in Greenwich to deliver a speech in which he called Britain again a “hold”, waiting to forge a new future as a global trading power.

Among the projects under discussion, it is possible to include Floating Production Storage and Unloading Vessels (FPSOs) and drilling platforms in the UK tonnage tax scheme, in order to give the UK a competitive advantage over current EU regimes.

David Blumenthal, a tax partner of Clyde & Co who deals with tonnage tax issues, said the UK’s departure from the EU was an opportunity. “The idea is that if we are not limited by EU state aid, we might have more capacity to do things that would make the UK more attractive to shipping companies,” he said. -he declares.

In the EU, tonnage tax regimes are signed by the bloc’s state aid authorities. They offer shipping companies a way to avoid corporate tax in exchange for registering and managing their vessels in an EU country.

Another suggestion is that companies that choose to beat their ships in the UK might be faced with a ‘lighter’ test to determine how well their shipment is handled in the UK – a key requirement in tax regimes in the UK. EU tonnage. The proposal seen by the FT repeatedly refers to Singapore as a benchmark for the UK’s post-Brexit aspirations.

Britain’s tonnage tax scheme, put in place in 2000 under John Prescott, a former Labor Deputy Prime Minister and transport secretary, also includes a requirement for companies to train cadets, which the suggested proposals could now be accepted by the government – a form of subsidy.

Research for the government has shown that this training requirement makes the UK tonnage tax up to 14 times more expensive than Singapore and between eight and 10 times more than permissive EU jurisdictions such as Malta and Cyprus.

The maritime and maritime sector as a whole employs more than 200,000 people and contributes more than £ 46 billion a year to the UK economy, according to the UK Chamber of Shipping.

The chamber confirmed it was working with the government to explore options to improve the UK as a hub for international shipping. “By leaving the EU, we have the opportunity to develop our national maritime transport regime because we will no longer be bound by EU rules,” added a spokesperson.

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