Isle of Man: Offshore Business Sectors
Ship Management and Maritime Operations
The Isle of Man passed the Merchant Shipping (Registration) Act 1984 in order to encourage registration of ships on the island. There is a zero-tax regime for ship management companies based on the Isle of Man.
In 2006, the Manx government announced a change of the name of the Marine Administration to the 'Isle of Man Ship Registry', a change designed to communicate greater "clarity of message" by describing exactly what the organisation does: the registration of ships and yachts and the technical regulation of, and jurisdiction over, those vessels on the register. The revamp came into effect February 1, 2007.
A Quality Registry
In August, 2006, the Isle of Man reached the White List of the Paris MOU and continues to be ranked in the top third for Port State Control. Annually over 18,000 inspections take place on board foreign ships in the Paris MOU ports, ensuring that these ships meet international safety, security and environmental standards, and that crew members have adequate living and working conditions.
The Isle of Man’s Ship Register was named one of the best registers in the world after emerging with no potential negative performance indicators in the 2010, 2011 and 2012 Shipping Industry Flag State Performance Tables.
Registers are measured annually on their performance on 19 objective criteria including convention ratifications, designated recognized organizations and fleet age. Only five other registers were rated the same as the Isle of Man: Denmark; France; Germany; Greece; Japan; Liberia; Marshall Islands; the Netherlands; Norway and Sweden.
Welcoming the report’s appraisal of the Isle of Man registry’s high standards, the island’s Minister for Economic Development, Allan Bell, commented in 2010: “This is a fantastic achievement by the Isle of Man Ship Registry and reinforces our commitment to maintain the Isle of Man as a leading international business centre renowned for professionalism and a longstanding policy of positive engagement with international standards. I would like to congratulate the team at the Isle of Man Ship Registry for ensuring the Isle of Man remains a world-class location for ship registration.”
The United States Coast Guard (USCG) has rewarded the Isle of Man with Qualship 21 Status, a maritime quality benchmark which currently only about 10% of foreign ships entering US waters meet.
Qualship 21 is the USCG’s matrix system of extending recognition to “foreign” ships, which fly the flag of a state which has demonstrated a good safety and pollution prevention record with respect to its ships. Ships in the Qualship 21 system are required to undergo significantly less Port State Control inspections by the USCG whilst in US waters.
Essentially, the Qualship 21 system ‘rewards’ good ships thereby contributing to the elimination of substandard ships.
The Isle of Man government announced in April 2008 that it had signed a contract with Pole Star Space Applications Limited for the provision of a dedicated ‘National Data Centre’ for Long-Range Tracking and Identification, for vessels registered in the Isle of Man.
Dick Welsh, Director of the Ship Registry commented on the move, announcing that:
"We are proud to have taken this proactive step of being one of the first governments to make a firm financial commitment to LRIT."
"We believe that Pole Star Space Applications Limited are market leaders for the provision of LRIT services, they have a proven track record and we are confident that they will provide us and our clients the services required by the deadlines imposed by IMO."
"Many of our clients already subscribe to their ‘Purplefinder’ product, so we are hoping that most of their vessel’s equipment will be compatible, minimising the cost to them. The cost of setting up the Data Centre and the daily position reports will be paid for by the Isle of Man Government," he added.
1,000 Ship Milestone Reached
The Isle of Man Ship Registry announced in February 2009 that it had reached another milestone with the registration of an anchor-handling supply vessel, bringing the total number of Isle of Man registered vessels to 1,000 for the first time ever.
The register itself has historically been in operation since 1786 serving the needs of local craft and operators, and it is to this maritime tradition on the Island that the modern register, created in 1984, owes its success.
At the time, the ship register comprised of the following types of vessels:
- 380 Merchant Vessels;
- 72 Commercial Yachts;
- 364 Pleasure Yachts;
- 73 Fishing Vessels, and
- 111 Small Ships.
Each vessel carries the identity of the Isle of Man and the register provides economic benefit for the local professional services which administer many of the vessels.
Minister for Trade and Industry, Hon David Cretney, MHK, commented:
“The Ship Register continues to enjoy steady growth which is evidenced by the size and quality of the fleet. The Ship Registry team work closely with all those involved in the safe operation of vessels, both on shore and at sea, and this has proved to be a success story for the Isle of Man which enhances our reputation internationally. Each and every Isle of Man registered ship – from supertankers to small ships – is an excellent ambassador for the Island as she is visible in all corners of the world proudly displaying the ports of Douglas, Peel, Castletown or Ramsey and flying the prestigious Manx Ensign.”
In June 2011, registration of commercial yachts broke the 100 barrier by totalling 103.
10 Million Tonne Milestone Reached
In September 2009, the Isle of Man Ship Registry, announced it had passed the 10 million tonne milestone in its fast-growing fleet, with the addition of a GBP21.7m bulk carrier.
The 190-metre ‘Caly Manx’ was unveiled and transferred to sail under the Isle of Man’s Red Ensign Group flag at a naming ceremony on September 30.
Dick Welsh, Director of the Isle of Man Shipping Registry commented this week that:
“In the last year, we have seen growing interest from China and elsewhere in the Far East, and this is the perfect opportunity to communicate the benefits of registering with the Isle of Man. Our fair fee structure, exceptional service levels and commitment to the highest standards have attracted an increasingly international client base, and we look forward to welcoming the Caly Manx as the latest addition to our fleet.”
David Cretney announced that:
"We are most grateful for this opportunity to witness the delivery of the Caly Manx and also to develop the island’s interests in the international arena. China possesses one of the world’s most powerful economies, so it is important for the Isle of Man to strengthen its links via a series of face-to-face meetings with influential contacts.”
The 10 million tonne milestone has since been surpassed. At the end of 2011, Gross Registered Tonnage (GRT) had increased by 12% to 13.84 million. On January 4, 2013, Gross Registered Tonnage was over 15 million.
Registration Process Enhanced
In August 2009, the Isle of Man Ship Registry announced three important changes to its operating practices to enhance its registration process and make it more attractive and simpler for its clients.
First, the Registry has removed some of the "barriers" – some perceived and some "real" – for clients wishing to register. It will now be simpler, easier to arrange, and more cost effective to register a vessel. The changes include:
- Pre-registry survey requirements – the Registry has retracted its policy wherein visits and inspections were mandatory prior to acceptance. The Registry will automatically accept vessels less than ten years of age, which satisfy the Registry’s vetting processes. This will include new builds, many of which are constructed in the Far East, in an effort to speed the registration process and reduce the initial costs for Isle of Man registration dramatically.
- Accepted Ship Types – The Registry is to welcome previously excluded ship types such as passenger vessels. According to the Registry, this is a natural progression as super yachts become larger and move towards full SOLAS compliance for greater "guest numbers."
- Age limits – the Registry has changed the limits to age on entry for ships. Previously set at 15 years, the limit will be extended to 20 years and even further for vessels which are technically managed from the Isle of Man.
Secondly, the Registry has also been able to extend the number of "Accepted Countries." In 2007, the Isle of Man introduced legislation to extend the number of countries accepted for ownership of Manx vessels. Previously, the Registry was constrained by legislation inherited from the UK to EU, EEA and British Dependent Territories. The list of accepted countries has now been extended to include Australia, the Bahamas, Canada, China, Hong Kong, India, Japan, Liberia, the Marshall Islands, New Zealand, Pakistan, Panama, Russia, Singapore, South Africa, United Arab Emirates, and the United States. This will allow ownership structures of vessels using companies registered in those countries to remain unchanged when vessels transfer registration to the Isle of Man and thus provide a smoother transition.
Thirdly, the Registry has bolstered its affiliation with law firm Stephenson Harwood. In lieu of British consular services in London, Stephenson Harwood have acted on behalf of the Isle of Man in receiving title documents (e.g. Bill of Sale, registration of mortgages) on behalf of the Registrar of Ships. This service has now been extended to include Stephenson Harwood’s offices in Piraeus, Hong Kong, Singapore, and Shanghai, thus covering many of the world’s major shipping centers.
“The above changes have been brought about by the Ship Registry’s strive for continual improvement in its services to its clients. It will continue to challenge and improve the way in which it operates and more changes can be expected in the future. As always its focus will remain on customer service whilst the quality of the fleet remains of paramount importance,” the Registry said in a statement.
But Registration Fee Introduced
However, in March 2009, the Isle of Man Ship Registry announced its intention to introduce an annual registration fee for the first time in its 25-year history.
The fee has been set at GBP730 per merchant vessel (at the time about USD1,000) which compares favourably with the cost of registration with competitor flags. At the time of writing, the registration fee is GBP1,200.
Unlike other registries, the fee will not be dependent upon ship size or type. In addition the IoM Registry will grant "substantial discounts" for multi-vessel owners registering with the flag. The Registry has also announced that it is cutting the costs of other fees for services and certification as a result of the introduction of the annual fee.
The Isle of Man’s Ship Registry last year withheld an increase in its fees and promised the industry it would produce a revised structure for fees in recognition of the tough times that many owners now face.
An IoM Ship Registry statement said: "After a long period of consultation with the leading flag users and other owners, it was apparent that regular income from ships on the register would provide a more equitable fee system which will be effective from April 2010. As the international obligations of running a register become more onerous, this new funding will narrow the Ship Registry’s operating deficit whilst maintaining its not-for-profit status – a key differentiator between the Isle of Man flag and other registries. A release from the Isle of Man emphasized that the fee restructure continues to be in line with this approach."
The new fee structure offers discounts for owners and operators of multi-ship fleets on a sliding scale of discounts up to 25%, for operators of fleets in excess of 50 ships under the Manx Flag.
Minister for Trade and Industry, David Cretney, commented: “The introduction of the fee has been done in co-operation with the Isle of Man’s shipping sector. I am very confident that its introduction will still enable the Ship Registry to continue to deliver the very high standards that its clients have been accustomed to.”
Dick Welsh, Director of the Isle of Man Ship Registry added:
“We consulted widely, and this new fee system has been well received by our clients and potential clients. For the first time it provides owners with a direct comparison between our fees and those on offer from other flags where we believe we will come out favourably every time.”
“This has also allowed us to look at our other fees for services and certification, which we have been able to reduce accordingly. It is a new approach for us and we are delighted with the feedback we have received.”
“On a direct cost comparison basis with other flags, the Isle of Man still represents the best value for money for international owners seeking to place tonnage on a reputable, non-Flag of Convenience register.”
In 2006, the government announced the introduction of an Aircraft Register, after consultation between the Government, the private sector on the Island and the UK.
Brian Johnson was appointed Director of Civil Aviation. He worked for more than 10 years in the flight operations inspectorate of the UK Civil Aviation Authority. Latterly he was Head Flight Operations Inspectorate - Aeroplanes, based at Gatwick, and also acted as the UK Safety Assessment Coordinator - Foreign Aircraft Programme, for the UK Department for Transport.
Commenting on the new initiative and Mr Johnson's appointment, Alex Downie, Minister for Trade & Industry, said:
"I am delighted that Brian has agreed to become the Isle of Man's first Director of Civil Aviation. His knowledge and experience will be invaluable to the Department as we progress negotiations with the UK authorities for a civil aircraft register. We have already achieved agreement to the principle of an aircraft register and Brian will lead detailed negotiations in respect of the supporting legal and technical framework.
"Government is fully committed to the establishment of an aircraft register and I believe that it has very significant potential as a further element of economic diversification. The Isle of Man already has a very successful ship register that is independently recognised as among the best in the world and we will aim for similar quality for our aircraft register. We also have a strong cluster of aircraft manufacturing and design, plus some niche aviation businesses. I am confident that by establishing an aircraft register we can further raise the Isle of Man's profile as a leading jurisdiction for aviation business and encourage further growth, bringing with it increased wealth and new jobs."
Regarding his appointment Mr Johnson said: "I feel very privileged to have this opportunity to help establish a Civil Aircraft Register in the Isle of Man and I look forward to us developing a Register, which is internationally respected for quality and service."
Unlike most other registries, where both private and commercially operated aircraft are accepted, the Isle of Man’s register is focussed solely on high quality private and corporate aircraft. This is supported by the Island’s well established banking sector experienced in financing aircraft, lawyers familiar with aviation law, insurance companies which can provide cover without the addition of an insurance premium tax and corporate service providers experienced in structuring companies to take advantage of the Island’s beneficial tax regime. The Isle of Man has become widely regarded as a one-stop shop for worldwide aviation business.
Since 9/11 there has been a huge growth in sales of private and corporate business jets. In 2007 worldwide annual sales of new jets exceeded 1,000 aircraft for the first time. Corporate aviation is increasingly providing the business community with a cost effective and time saving alternative to commercial travel with its reputation for delayed flights and security queues.
The Aircraft Registry’s target aircraft are professionally-flown new corporate jets for international blue-chip companies.
Unlike some other registers, M prefix registrations can be transferred between aircraft. International financier Jim Mellon registered the very first aircraft as M-ELON. This has since been joined by M-AGIC and M-YSKY.
David Cretney, Minister for Trade and Industry said in May 2007:
“Our original estimate was that a combination of up to 12 corporate jets and helicopters might be registered in the first year but we have now registered no less than 51 aircraft. The number is all the more impressive when you consider that we have turned down a similar number of aircraft, including historic war planes and light aircraft, which did not meet our business plan. The register has proved to be a huge success.”
Director of Civil Aviation Brian Johnson added:
"The registration process itself is very straightforward and, like the successful Isle of Man Super Yacht register, is cost neutral and not a ‘flag of convenience’. We provide a friendly customer focused service with a highly competitive scheme of charges not usually found in Government registers.”
The Isle of Man Aircraft Registry celebrated its third anniversary on May 1, 2010, by announcing continuing and impressive quality growth in its fleet. This is expected to continue, with widespread registrations coming from the Middle East, Russia, the USA, and many other parts of the world.
Despite the economic downturn in the rest of the world, the Registry continues its impressive growth; its third year of operation saw 119 further aircraft registered, making it the world’s fastest growing offshore corporate aircraft register.
According to the Registry, this success can be attributed to "the personal service, competitive charging structure, and the excellent regulatory standards" that it offers.
Director of Civil Aviation, Brian Johnson stated: “High regulatory standards, a personal service, and a competitive scheme of charges have ensured the success of the Isle of Man aircraft register, as the number of registrations now demonstrates. The Isle of Man Registry has pioneered a new model for aircraft registration, with less bureaucracy and a customer-focused service. We are confident that this success will continue for the foreseeable future.”
300-Plane Milestone Reached
The Isle of Man Aircraft Registry announced in November 2010 that it had registered its 300th aircraft since its launch in May 2007.
Announcing the achievement, the Registry noted that it had achieved significant expansion despite the current economic climate, noting that the pace of the registry's growth had exceeded expectations. Further the Registry said that it continues to be the fastest growing offshore aircraft register in the world.
Welcoming the announcement, the island's Minister for Economic Development, Allan Bell, stated: “The continuing success of the registry demonstrates the strength in the partnerships that exist between the team at the Aircraft Registry and those in the private sector involved in aviation. The dynamic and business-friendly approach within the sector typifies the broader advantages of the Isle of Man as an international business centre. I wish to congratulate both Brian Johnson and his team, and those in industry, who work so hard to deliver truly world class service to their clients.”
Director of Civil Aviation, Brian Johnson, added: “Many of the aircraft registered with us belong to some of the most successful companies in the world. For several of them, this represents the first time that they have encountered the Isle of Man in a business context, which has enabled us to highlight the many benefits of doing business here. We are confident that 2011 will be another successful year with a further 11 new private and corporate jets already planned for registration.”
Indeed, the success of the Registry continues: the 500th aircraft was registered in July 2012.