• 1. Freight tax

Freight tax

Corporation Tax

2.64% of gross outward freight earned levied in the form of a final withholding tax.
 

Exemption Agreements

Residents of the following countries may benefit from double taxation agreements, which reduce or waive the tax.

Country Reduction Date of entry into force Date of effect
Algeria 100%   01/01/2001
Armenia  100% 08/04/2016 01/01/2017
Australia 100% 14/12/1992 01/07/1993
Austria 50%   01/01/1989
Bangladesh 50% 24/10/2008 01/01/2009
 Belarus   09/05/2018 01/01/2019
Belgium 100%   01/01/2002
Brunei 50%   01/01/2003
Bulgaria 100%   01/01/1993
Canada 100% 31/12/1998 01/01/1999
China 1 50%   01/01/2004
China 2 100% 12/01/1996 01/01/1997
China 3 50% 28/03/2012 01/01/2013
 Croatia 100%   01/01/2013
Czech Republic 100% 26/01/1996 01/01/1997
Denmark 100%   01/01/1987
Egypt 100%   01/01/2003
Finland 100%   01/01/1990
France 100%   01/01/1981
Germany 100%   01/01/1992
Hungary 50%   01/01/1994
India 100% 19/12/1987 01/01/1988
India (Renegotiated) 4, 5
50% 05/02/2016  
Iran 100% 01/12/2010 01/01/2011
Italy 100%   01/01/1996
Japan 100%   01/01/1983
Jordan 100%   01/01/1999
Korea, Democratic People's Republic 100%   01/01/2005
Korea, Republic of 100% 03/05/1989 01/01/1990
Kuwait 100%   01/01/1999
Laos 50%  11/10/2016  01/01/2017
Luxembourg 100%   01/01/1995
Malaysia 50%   01/01/1987
Mexico 100%   01/01/2005
Mongolia 100%   01/01/2001
Morocco   10/04/2012 01/01/2013
The Netherlands 100%   01/01/2004
New Zealand 100% 23/06/1988 01/01/1989
Norway 100% 16/05/1990 01/01/1991
Pakistan 100% 28/02/1991 01/01/1991
Papa New Guinea  100%    01/01/2015
The Philippines 100%   01/01/1983
Poland 100% 25/08/1993 01/01/1994
Portugal 100% 11/05/2007 01/01/2008
Qatar 4 100% 19/02/2007 01/01/2008
Romania 50%   01/01/2000
Russia 50%   01/01/2003
Seychelles 100% 16/05/2000 01/01/2001
Singapore 50%   01/01/1992
Slovakia 100% 30/01/2001 01/01/2002
South Africa 100% 23/11/1998 01/01/1999
Spain 100%   01/01/2000
Sri Lanka 50%   01/01/1995
Sudan 100%   01/01/2001
Suriname
100% 11/06/2013 01/01/2014
Sweden 100%   01/01/1990
Switzerland 50%   01/01/1990
Syria 100%   01/01/1999
Thailand 50% 23/10/2003 01/01/2004
Tunisia 100%   01/01/1994
Turkey 100%   01/01/2001
Ukraine 100% 09/11/1998 01/01/1999
United Arab Emirates 100%   01/01/2000
United Kingdom 6 100% 14/01/1994 01/01/1995
United States 7 100%   01/01/1990
Uzbekistan 100%   01/01/1999
Venezuela 100% 18/12/2000 01/01/2001
Vietnam 100% 10/02/1999 01/01/2000
Limited Treaties (Air and/or Sea)
Saudi Arabia (Air only) 0%   01/01/1989
Comprehensive treaty negotiations currently in progress:
Ratified by Indonesia Reduction Date signed Date ratified
Zimbabwe     02/03/2012
Signed but not Ratified
Serbia   28/02/2011  
Tajikistan   28/10/2003  
In the process of negotiation or finalised but not signed:
Estonia      
Myanmar      

Notes

  1. This treaty does not apply to residents of Hong Kong SAR, Macau SAR or Taiwan, Province of China.
  2. This treaty applies only to residents of Taiwan, Province of China.
  3. This treaty applies only to residents of Hong Kong SAR.
  4. The treaty is based on the country where the effective management of the enterprise is situated.
  5. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.
  6. This treaty only covers residents of the Great Britain and Northern Ireland. Note: The Isle of Man is not part of the United Kingdom
  7. The treaty provides that income from the operation of ships in international traffic includes income from the rental of ships (i) in international traffic on a full basis and  (ii) on a bareboat basis if the ship is operated in international traffic and the lessee is not a resident of the other Contracting State or a permanent establishment in that other State.

Remarks

As to trampers/sporadic callers, the Tax Department will not issue a "Surat Fiscal" unless the vessel's agent has been remitted funds by the owners and deposited 2.64% of the estimated gross freight to meet Corporation Tax. Furthermore, members report that, in most cases, the Tax Department will evaluate which freight rate they consider realistic for the intended voyage and will not automatically accept a freight rate as disclosed by owners' documents as basis for calculating 2.64% freight tax.

If the freight earned is covered by an exemption agreement, the tax payment is waived upon presentation of documentation establishing the freight recipient's country of residency. Otherwise, the tax must be paid within one month from the time the vessel sails.

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