Panama's NEW Tax Incentive Regime for Group of Vessels
In a constant effort to maintain its status as the leading
Merchant Marine worldwide and aware of the competitive environment
these days, the Panama Maritime Authority has been promoting and
lobbying with members of the National Assembly for approval of a
package of tax incentives to offer the Shipping Community
attractive discounts on taxes when enrolling its vessels under the
Panamanian Flag while at the same time seeking to lure the
attention of the most attractive market of newbuilding vessels.
Today these efforts have been materialized into Law No. 25 of
June 3, 2002, which modifies and supplements Law 36 of 1995. This
legislation enables ship owners to obtain discounts of:
-
up to fifty percent (50%) on the
Registration Tax which is settled when enrolling a vessel in
Panama
-
up to thirty five percent (35%) on the
Annual Tax corresponding to each vessels for a four (4) year
period; and
-
up to fifty percent (50%) on the Annual
Consular Tax corresponding to each vessel, for a four (4) year
period.
WHO ARE ELIGIBLE FOR TAX DISCOUNTS?
-
Groups of at least three (3) vessels, under
same ownership or economic group will be eligible to apply for
the Registration Tax discount when applying for enrollment in
Panama, irrespective of the age of each vessel.
-
Groups of at least four (4) vessels, under
same ownership or economic group will be eligible to apply for
the Annual Tax and Consular Tax discount when applying for
enrollment in Panama, which are both granted for a period of
four (4) years, provided that these are newly constructed
vessels (newbuildings).
A quick glance at above will reveal then that
groups of newbuildings will be eligible to apply for all three
discounts (above a, b and c) so far as they constitute a minimum
of four (4) vessels.
HOW MUCH DISCOUNT WILL YOU BENEFIT FROM AS OWNER OR
REPRESENTATIVE OF A FLEET OF VESSELS?
This will depend on the fleet's gross tonnage
summed up altogether and in cases of Annual Tax and Consular Tax
vessels must be newbuildings also.
Tax discounts have been divided and classified
according to each applicable tax, on scales that are solely based
on tonnage represented by applicants, to wit:
Registration Tax discount scale (for groups of
no less than 3 vessels)
-
gross tonnage ranging between 30,000 and
50,000 may apply for a discount of up to twenty percent (20%);
-
gross tonnage ranging between 50,000 and
100,000 may apply for a discount of up to thirty percent
(30%);
-
gross tonnage exceeding 100,000 may apply
for a discount of up to fifty percent (50%).
Single Vessel Special Discount
Similarly, a tax relief has been created for
vessels whose gross registered tonnage exceeds 100,000. They may
apply for a fifty percent (50%) discount over its Registration
Tax.
Annual Tax discount scale (for groups of no
less than 4 newbuilding vessels)
-
gross tonnage ranging between 50,000 and
100,000 may apply for a discount of up to twenty five percent
(25%);
-
gross tonnage exceeding 100,000 may apply
for a discount of up to thirty five percent (35%).
Annual Consular tax discount scale (for groups
of no less than 4 newbuilding vessels)
-
gross tonnage exceeding 50,000 may apply
for a discount of up to fifty percent (50%).
Note that while the Registration Tax is paid
when enrolling a vessel in Panama Annual Tax and Annual Consular
Tax are both settled each year and Law 25 grants discount benefits
for these taxes not just for the first year but for the first four
(4) years.
Whilst the Directorate General of Merchant
Marine has discretionary powers to set the percentage amount of
discount for each applying fleet, there is a minimum guaranteed by
law, provided applicants fulfill requisites of tonnage, quantity
of vessels and newbuilding tonnage in the case of Annual and
Consular taxes.
In addition, the Directorate General of
Merchant Marine is authorized to consider the waiving of the
amount of taxes already settled at the current registry,
applicable towards partial or full payment of first year's taxes
of each vessel, applicable to those groups of vessels representing
more than 100,000 gross tonnage. (e.g. a shipowner decides to
change its fleet's flag to Panama, but when assessing the costs
realizes that he has to pay US$5,000 per vessel for their first
year's taxes in Panama and that he has already settled US$4,500
per vessel to cover annual taxes with his current Registry. He
might think it twice before changing flags as there may be an
overlapping period of the current fiscal year where the shipowner
will be settling taxes in both registries. In those situations, to
assist shipowners in coping with costs associated with the
changing of flag, Panamanian Merchant Marine Authorities are now
empowered by law to consider application of those taxes per
vessel, towards clearing of Panamanian's tax and registration
duties for the entire first year. In this example, they will pay
only US$500 per vessel, so long as the fleet is entered in Panama
at some point on the same fiscal year where those taxes were
advanced at the previous Registry).
Moreover, in special cases of groups of vessels
representing a registered gross tonnage of 150,000 or no less than
fifteen (15) vessels, already registered in the National Merchant
Marine, the Director of the Directorate General of Merchant Marine
may consider arrangements with vessel's owners or representatives,
for the payment of annual taxes and other obligations in special
time schedules which shall not exceed of the current fiscal year,
without incurring in surcharges or interests of any kind.
The same benefit shall be granted to shipowners
of any nationality in cases of economic or financial crisis,
declared by any Country where the Republic of Panama has Merchant
Marine Consulates, irrespective of their registered gross tonnage
or fleet's size. This benefit shall be expressly requested to
Panama and payments shall be settled at such Consular Office.
It must be noted that application for any of
above tax discounts or benefits granted in Law 36 must be duly
requested before or at the time of enrollment, through a
Panamanian licensed attorney and they will be granted by motivated
resolution of the Directorate General of Merchant Marine.
IMPORTANT NOTE:
For reference of all users of the Panamanian Flag, new registered
vessels will enjoy by law guaranteed same taxes up to a period of
20 years after registration. This means that even though annual
taxes may be raised with time, the increase in taxes shall not
affect already registered vessels and that is guaranteed for 20
years.
This information is issued in order to provide
our clients and friends with information that our firm considers
to be of interest. It should not be considered in any circumstance
as a legal opinion issued by ISM Shipping Solutions Ltd.
© 2002 Maria Dixon - ISM Shipping Solutions Ltd.
