From FT Alphaville:
Container shipping’s tonnage tax trick
Soon may the taxman come
Some of the world’s biggest shipping companies have been making a hell of a lot of profit while paying very little tax. A note out this week from Sea-Intelligence’s “Sunday Spotlight”, issue 577, had the line:The financial season has begun for Q2 and the results for the carriers are nothing short of spectacular. Maersk is posting a profit for the period of 8.6 billion USD and Hapag Lloyd is posting a result for the period of 4.5 billion EUR... In the case of Maersk, they are going to pay 164 million USD in taxes in 2022-Q2. This is a tax rate of 1.8%. Hapag Lloyd is going to pay 20.8 million EUR, meaning an effective tax rate of 0.5%.Maersk and Hapag-Lloyd aren’t gaming the system. They and their peers are taxed “based on . . . the tonnage they operate, instead of being taxed under the normal corporate tax system”, according to EU Commission rules.Some shippers are taxed on the weight of product they move, in other words, not their profits. The rule does mean that carriers have to pay into government coffers even when making a loss.Carriers largely struggled with over-capacity before 2020, but the pandemic-induced boom in demand for goods moved by sea and its impact on supply chains mean carriers now regularly make more in a single quarter than they used to in years. Suddenly, from a government official’s point of view at least, the so-called tonnage tax doesn’t seem to make much sense.Another quirk of the tax means only some carriers are eligible. Sea-Intelligence chief executive Alan Murphy notes that Maersk, CMA CGM and Hapag-Lloyd paid tax rates of between 0.7 per cent and 3.7 per cent in 2021 while smaller competitors Zim and Matson paid between 18 per cent and 21 per cent.Sea-Intelligence this week described the risk that creates for the bigger players:....
....MUCH MORE
