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ANNUAL REVIEW 2012-2013 UK CHAMBER OF SHIPPING


That’s good news for the industry. Companies that had committed to the tonnage tax regime for 10 years, whose membership was brought into question, now have the assurance that they are solidly and securely within it. This sends out an important message. Shipping companies can now be certain that the UK tonnage tax regime is stable and secure over the long term and, therefore, that the UK remains a competitive place for UK shipping businesses to stay, and attractive to inward investors. A particular cloud of uncertainty was


lifted from the North Sea sector in June 2012, when the European Commission ruled that anchor-handling vessels should not be deemed to be tugs for the purposes of EU State Aid Guidelines. The Commission ruled that an anchor- handler should be treated as a merchant vessel rather than a tug. In practice, this means that anchor-handlers flagged in the Isle of Man can remain within tonnage tax on the same basis as when they first joined the regime. Again, this is a positive outcome for the stability of the system.


State aid On the European regulatory level, 2012 also saw the start of the review of the EU Guidelines on State Aid to Maritime Transport. These define the legal basis for tonnage tax and all other state aids, including employment cost alleviations, the SMarT scheme of financial assistance for seafarer training, and subsidies for lifeline ferry services. This periodic review of the EU State Aid Guidelines began with a three-month public consultation, with a questionnaire published in February 2012. The UK Chamber responded in detail,


both calling directly for the guidelines to be renewed broadly in their current form, so as to avoid disturbing tonnage tax and other schemes that are currently working well, and leading the response presented by the European Community Shipowners’ Associations (ECSA). The UK Chamber


Shipping companies


can now be certain that the UK tonnage tax regime is stable and secure over the long term


emphasised the importance of retaining flexibility within the guidelines, in order to enable companies to take decisions that are right for their business, and highlighted the dangers inherent in introducing any arbitrary constraints, particularly in relation to the flagging of vessels. The review is still under way and the UK Chamber continues to keep in touch informally with the officials concerned. It is encouraged by their open-mindedness on the anchor-handlers debate, and their willingness to listen to explanations about how the state aid rules affect shipping when applied to real-world scenarios.


Future The review of the EU State Aid Guidelines will be a major focus of work for the coming year. The UK Chamber’s objective will be to ensure that the tonnage tax regime is not disturbed and that stability is maintained. The shipping market remains weak, and the UK faces strong competition from emerging maritime centres, such as Singapore and Shanghai, that would be delighted if shipping companies relocated there from the UK. The UK needs to remain an attractive base for shipping companies and, in order to do that, it needs to be somewhere where they can compete successfully in global markets.


TONNAGE TAX – THE IMPACT


The tonnage tax has: l reversed a 25-year decline in the UK merchant fleet l increased the UK-registered fleet from 2.7m dwt to 16.6m dwt l increased the UK-owned fleet from 7.2m dwt to 21m dwt l doubled the number of officer cadets entering training annually l increased the shipping sector’s return to the UK economy,


providing: l


l


37,800 UK jobs directly (ie 80% of all shipping jobs), and supporting in total 115,100 UK jobs


£4.4bn pa in its direct annual contribution to GDP (ie 80%), and in total £8.2bn


l £455m pa in direct tax receipts (ie 76%), and in total £1.6bn. CHAMPIONING AND PROTECTING 13


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