Tonnage tax provokes lively debate

The introduction of a tonnage tax
regime in South Africa was high
on the agenda at last week’s IDC
shipping forum.
Regarded by some as a means
of reviving South Africa’s
shipping industry and making
it competitive with other major
maritime countries, it has its
benefits and drawbacks.
Simply defined, tonnage tax is
a special tax regime for shipping
companies based on the number,
size of ships operated by a
company and the number of days
the ship is operated in a year.
“It is effectively a presumptive
tax where a notional profit is
calculated – and a standard tax
rate is applied to this notional
profit,” National Treasury’s Cecil
Morden said.
But since South Africa will be
among a host of countries offering
the tonnage tax regime, some of
the delegates saw it as a “blunt
instrument”, a concern addressed
by one of the speakers who noted:
“Tonnage tax may align South
Africa’s tax environment with
that of the world’s ship owning
nations and could be an incentive
towards South African ship
ownership, but to attract foreign
owners and operators from other
established jurisdictions South
Africa would have to create a
superior environment.”
Comment on the SA tonnage
tax proposals closed last Friday.