Ship Management and Maritime Operations
It has now become the norm for ships to be registered in International Offshore Financial Centres (IOFCs) and there has been intense competition between some of the IOFCs to offer the most advantageous operating and fiscal regime. Owners are concerned with labour regulations and manning scales, as well as with the more obvious tax advantages.
Ownership, registration, administration and operation of ships are four different activities, and are often situated in two, three or even four different jurisdictions in order to achieve an optimum result. Thus, an owner in a high-tax, non-maritime country might register his ships in a low-tax jurisdiction, operate them from there, but administer them from a European port city.
It is normal to create a company in the low-tax jurisdiction for each ship, in order to provide insulation in the event of problems. In addition to ship ownership, other maritime activities sometimes conducted from IOFCs include container leasing and ship chartering. Private groups with their own aircraft sometimes use an IOFC to create a 'captive' aircraft operating company which can charge market rates and make a profit in the IOFC.
Liberia and Panama were for a long time the best-known 'flags of convenience', but a number of other countries now offer shipping registries, including Cyprus, Bahamas, Cayman Islands, Malta, Madeira, and The Netherlands Antilles.
Shipping registries are by no means restricted to 'offshore', however. Many high-tax countries offer 'tonnage tax' regimes, under which ship-owners are charged according to the tonnage of their fleets, thus preserving employment for the host country, and in some cases they run their own registries as well, although these are often 'closed' rather than 'open' registries.
A study by the Center for Freedom and Prosperity Foundation released in August, 2004, analyzed the impact of open registries on the global shipping market. These registries, maintained by about 30 countries, are open to shipowners from all nations and the study finds that they have boosted international trade and the world economy by reducing shipping costs and increasing efficiency in the industry.
The study was written by Heritage Foundation Senior Fellow Daniel Mitchell.Commenting on his study, Mitchell stated, "Unlike monopolistic national registries, open registries use a market-based model. And since they compete with each other to attract ships, this has led to better service for shipowners and more rational tax and regulatory systems."
The OECD has targeted open registries as part of its anti-tax competition campaign and the International Transport Workers' Federation (ITF) has been fighting against so-called flags-of-convenience since 1948. The International Maritime Organization, with the support of the United States government, has rejected these efforts to hinder international trade. Veronique de Rugy of the American Enterprise Institute warned that the anti-competition agendas of the Organization for Economic Cooperation and Development (OECD) and the (ITF) are contrary to the interests of all trading nations. "Restricting open registries and returning to the days of high-cost, over-taxed national registries would throw sand in the gears of the global economy," she explained.
In the Lowtax.net jurisdictions section, information is given about business activities in each of the following jurisdictions:
Andorra, Anguilla, Aruba, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands,Cayman Islands, Cook Islands, Costa Rica, Dubai, Cyprus, Gibraltar, Grenada, Guernsey,Hong Kong, Ireland, Isle of Man, Jersey, Labuan, Liechtenstein, Luxembourg, Madeira, Malta,Mauritius, Monaco, The Netherlands Antilles, Panama, Seychelles, St Vincent and the Grenadines, Switzerland, Turks & Caicos Islands and Vanuatu.