Shipping Industry Almanac 2016 - EY - ey.com

518 Pages·2016·2.23 MB·English

EY | Assurance | Tax | Transactions | Advisory Shipping Industry
S
About EY h
EY is a global leader in assurance, tax, transaction and ip
p
addevliviseorr yh eslepr bviucields .t rTuhset iannsdig chotsn faidnedn qcuea ilnit yth see crvaipcietas lw mea rkets ing Almanac
and in economies the world over. We develop outstanding In
leaders who team to deliver on our promises to all of our du
stakeholders. In so doing, we play a critical role in building a st
better working world for our people, for our clients and for ry
our communities. A 2016
lm
EY refers to the global organization, and may refer to one or a
n
more, of the member firms of Ernst & Young Global Limited, a
c
each of which is a separate legal entity. Ernst & Young 2
Global Limited, a UK company limited by guarantee, does 0
1
not provide services to clients. For more information about 6
our organization, please visit ey.com.
© 2016 EYGM Limited
All Rights Reserved.
EYG No. XXXXX
ED None
ey.com
Shipping Industry
Almanac
2016
Shipping Industry Almanac 2016
About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality
services we deliver help build trust and confidence in the capital markets and in economies the world
over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders.
In so doing, we play a critical role in building a better working world for our people, for our clients
and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst
&Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK
company limited by guarantee, does not provide services to clients. For more information about our
organization, please visit ey.com.
© 2016 EY
All Rights Reserved.
Table of contents
Introduction i
Argentina 1
Australia 11
Barbados 29
Belgium 35
Brazil 55
Canada 75
China 93
Croatia 107
Curaçao 113
Cyprus 119
Denmark 125
Dominican Republic 133
Estonia 145
Finland 153
France 159
Germany 169
Greece 181
Hong Kong 193
India 201
Indonesia 213
Ireland 223
Isle of Man 233
Italy 243
Japan 251
Luxembourg 257
Malaysia 271
Malta 279
Mexico 289
The Netherlands 297
New Zealand 309
Norway 317
Oman 329
Panama 339
Philippines 357
Poland 381
Portugal 387
Romania 393
Russia 397
Singapore 411
South Africa 421
Spain 431
Sri Lanka 439
Sweden 445
Taiwan 449
Thailand 457
Turkey 465
United Arab Emirates 475
United Kingdom 483
United States of America 497
EY global shipping industry network 503
Shipping Industry Almanac 2016
Introduction
The Shipping Industry Almanac is published annually by the EY global shipping
industry network, which comprises shipping industry professionals in over more
than 60 EY member firms.
Our 19th edition of the Shipping Industry Almanac provides you with a
comprehensive summary of the local shipping industry infrastructure and
regulatory, corporate and tax environments in 49 jurisdictions around the world.
The content is based on information current as of 1 January 2016, unless
otherwise indicated.
A directory of EY shipping industry executives across our four service lines of
Assurance, Tax, Transactions and Advisory is at the back of the Shipping Industry
Almanac, and highlights our local industry knowledge and our global reach.
For more information, please visit us at ey.com or contact any
of our professionals listed in the directory.
Shipping Industry Almanac 2016 Shipping Industry Almanac 2016 i
Argentina
1. Tax
Argentina does not have a specific tax law for shipping companies. Shipping companies must comply
with general tax regulations. In Argentina, companies are subject to federal taxes (such as income tax
and value-added tax (VAT), among others), provincial taxes (such as turnover tax and stamp tax) and
municipal taxes. However, some guidance regarding shipping activity may be found in the federal and
provincial legal systems.
1.1 Income tax
For Argentine residents, income tax is levied on all income earned in Argentina or abroad. Income tax paid
on income from activities abroad may be claimed as a tax credit. For nonresidents and foreign beneficiaries,
income tax is levied exclusively on Argentine-source income. Nonresidents become residents if they have a
permanent establishment in Argentina.
In general, Argentine-source income arises from assets located, placed or used in Argentina, from the
performance of any act or activity in Argentina and from events occurring within Argentina. The income
tax rate is 35% and is applicable to the net income of companies residing in Argentina and the net presumed
income of foreign beneficiaries (in some cases, net-income basis applies).
The following items may be deducted from gross income to assess taxable income:
• In general, all expenses necessary to earn it or to maintain and keep its source
• The amortization or depreciation of construction, equipment and other assets, in general, based on their
estimated useful life
• The net operating losses (NOLs) from previous fiscal years (carryforward is allowed for five years; there
is no carryback system)
The Income Tax Law has many specific requirements regarding tax deductions for foreign loans when the
lender is a related company.
Section 18 of the Income Tax Law establishes the timing of the deduction of interest on foreign intercompany
loans (also applicable to other expenses that are considered as Argentine source income for the foreign
beneficiary). Interest derived from loans granted by foreign related parties or from tax havens (i.e.
noncooperative countries) may only be deducted in the same tax year the payments are made or in the
period of accrual, but only if actual payment takes place before the due date for filing the tax return for the
tax year in consideration.
If the lender is not a related company, then the deduction of interest is allowed on an accrual basis. If the
lender is a related party, thin capitalization rules must also be considered.
Thin capitalization rules are applicable when interest is paid to a foreign lender that controls the Argentine
borrower company, except for those cases when interest payments are withheld at 35%. Interest paid where
the liabilities exceed two times the amount of the company’s equity at year-end becomes nondeductible and
is taxed like dividends. In other words, the excess interest will become a permanent difference between the
book and tax basis.
Transfer pricing rules follow Organisation for Economic Co-operation and Development (OECD) guidelines
and apply on transactions with related parties or with entities in tax havens (i.e., noncooperative countries).
Additionally, there is no tax consolidation system in place.
Dividends paid in excess of net income, which are assessed using the general provisions of the Income
Tax Law and accumulate as of the prior fiscal year-end through the date of payment, are subject to a 35%
withholding rate. The 35% rate may be reduced if the foreign beneficiary is a resident of a country with which
Argentina has entered into a double-taxation agreement, as long as applicable treaty requirements are met.
Per the last Income Tax Law modification (September 2013), dividend distribution is taxed in Argentina at
1 Shipping Industry Almanac 2016
a rate of 10% when the payment is made by a local company to a foreign company or individual, or to local
individuals.
Earnings from the sale of shares of an Argentine company owned by a foreign shareholder are taxed at a
15% rate. Taxation is made through withholding, which can be calculated by applying the tax rate to the real
income or to the presumed income (90% of the sale price).
1.1.1 Shipping industry considerations
The Income Tax Law establishes that, for Argentine shipping companies, all income related to transportation,
either in Argentina or abroad, is considered Argentine-source.
For foreign shipping companies, Income Tax Law presumes (without admitting evidence to the contrary)
that any company providing transportation or carriage between Argentina and foreign countries has
Argentine-source net income equal to 10% of the total amount of freight and passenger transport earnings
from such trips (with a 3.5% effective rate). Further, 10% of all payments made by local companies to foreign
shipowners for charter services are also considered Argentine-source net income.
Foreign companies in the container business that provide transportation in Argentina or from Argentina to
other countries are presumed to have Argentine-source net earnings equal to 20% of the gross income for
this activity (with a 7% effective rate).
1.2 Double taxation treaties
To avoid double taxation, Argentina has entered into treaties with the following countries: Australia, Belgium,
Bolivia, Brazil, Canada, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Russia, Spain,
Sweden, Switzerland, the United Kingdom and Uruguay.
In all of these treaties, except for the one signed with Uruguay, Section 8 establishes the provisions related
to navigation and shipping, as well as air transportation. According to these treaties, international shipping A
income may only be taxed by the country where the company is located, established or where its Board rge
n
of Directors is located, as appropriate. Some treaties also include charter activities among the company’s tin
benefits, subject to these provisions. a
Argentina has also entered into other treaties (or exchanged notes) exclusively related to international
transportation (by sea, air and/or land, depending on the country). The following are the signatory
countries: Chile, Colombia, Cuba, Ecuador, France, Greece, Iran, Israel, Italy, Japan, Malaysia, Mexico,
the Netherlands, Norway, Panama, Paraguay, Peru, Portugal, the United Kingdom, the United States and
Venezuela.
Each treaty determines whether double taxation on sea, air or land transportation may be avoided. Although
there are some variations among the countries, the main implication is that international transportation
income will only be taxed by the country where the company is established.
In these cases, the presumptions used to determine Argentine-source net income (refer to section 1.1)
would not apply due to the treaties in force.
1.3 Minimum presumed income tax
The minimum presumed income tax is complementary to income tax. The minimum presumed income tax
base comprises the asset value of certain taxpayers (for example, Argentine artificial persons, branches of
foreign companies) in compliance with the law in force. This tax rate equals 1%.
Applicable exemptions include:
• Investments in shares of other entities subject to the minimum presumed income tax
• Taxpayers’ assets located in Argentina when the value thereof (according to regulations) does not exceed
ARS200,000 (if assets exceed ARS200,000 the total asset value is subject to taxation)
Investments in new fixed assets are not computable — except for automobiles — and investments in real estate
construction are not subject to the minimum presumed income tax during the fiscal year the investment
Shipping Industry Almanac 2016 Shipping Industry Almanac 2016 2
is made and its immediately subsequent year. The annual income tax may be offset against the minimum
presumed income tax for the same year. However, if in any given year the minimum presumed income tax
is assessed and it is not fully absorbed by that year’s income tax, the tax effectively paid could be credited
against income tax — subject to certain conditions — over the subsequent 10 years. Tax credits resulting from
the payment of similar taxes abroad on taxable assets may be computed.
1.4 Tax on personal assets for corporations
Based on the presumption regarding indirect ownership by foreign individuals, foreign companies holding
business interests in Argentine companies are subject to taxation on personal assets. The personal assets
tax should be calculated and paid by an Argentine company as a substitute taxpayer. However, the Argentine
company is entitled to claim tax reimbursement from related shareholders. The taxable base is assessed
on the value of the local entity’s equity as disclosed in the last financial statement as of 31 December. The
applicable tax rate is 0.5%. On 16 December 2014, the Federal Supreme Court ruled in the case “The Bank
of Tokio” that branches of foreign companies established in Argentina are not subject to taxation on personal
assets. Therefore, Argentine branches must not act as substitute taxpayers.
1.5 Value-added tax
VAT is a general tax that applies to the sale of goods, the provision of services and the importation of goods
within Argentine territory, including:
• Sales of goods
• Services provided by any natural or artificial person performing business activities
• Final import of goods for consumption
• Services provided from abroad to be used in Argentina, provided the beneficiary is a registered VAT payer
VAT is applied to the goods or services net sales price (tax debit). It is assessed on a monthly basis. The tax
debit can be offset with the tax credits that are included in the purchase invoices of the different vendors
(tax credit) to assess the payment amount. If tax credits exceed tax debits, a technical tax credit results,
which may be used to offset future tax debits or, as the case may be, a freely available tax credit that may be
recovered through cash reimbursement, used against other taxes or transferred to third parties.
Applicable VAT rates are:
• 21% for general goods and services
• 27% for certain services, such as telecommunications, electricity, gas and water supply
• 10.5% for particular transactions, such as the final purchase or import of certain capital assets
Exports are VAT-exempt, but exporters may compute the tax amount they were billed by vendors as a
tax credit to offset the tax amount owed for other transactions subject to VAT at the local market. If such
computation results in an unabsorbed tax credit surplus, that amount is eligible for reimbursement, which
may be used to offset other federal taxes or may be transferred to third parties.
Shipping industry considerations
In connection with the shipping industry, the VAT law includes some tax exemptions for international shipping
and related activities. Specifically, under the VAT law, international passenger and freight transportation is
tax-exempt and must be considered an export. This means that any tax credit may be recovered, transferred
or used to offset other taxes. Charter services are also tax-exempt when the vessels are used for international
transportation. This exemption only applies if the lessor is an Argentine shipowner, and the lessee is a foreign
company. These operations will also be considered exports. There is also a tax exemption for aircraft built
for passenger or freight transportation, as well as those envisaged for defense and national security (in the
latter case, its parts and components are also tax-exempt). Ships and vessels are also VAT-exempt, as well as
their parts and components, as long as the purchaser is the Argentine government.
1.6 Tax on bank account transactions
This tax is levied on bank account transactions, equivalent transactions, and generally on all movement of funds
3 Shipping Industry Almanac 2016
made on one’s own account and/or on third-party accounts within the Argentine territory at a general rate of
0.6%. An amount equaling 34% of the tax withheld over credit transactions in levied accounts may be computed
as a credit against income tax or minimum presumed income tax (prepayments and/or tax return amount).
1.7 Turnover tax
Turnover tax is a provincial tax charged by tax authorities in each of the 24 jurisdictions (including the 23
provinces and the autonomous city of Buenos Aires). This tax is levied on revenue resulting from traditional
profit-making activities, such as business, industry, professional activity, employment or service contracts,
regardless of the outcome, the nature of the service provider or the place where the activities are carried out.
The following exemptions, inter alia, may vary according to the jurisdiction involved:
• Transactions with securities, certificates and other documents issued by the federal, provincial or
municipal governments
• Transactions with shares and dividends
• Interest and/or indexation on savings accounts and fixed-term and checking account deposits
• Sale of fixed assets
• Exports
Turnover tax rates vary according to the jurisdiction and the activity involved — 4% is the average rate
applicable to the services rendered. Companies subject to turnover tax that perform activities in more than
one province have to allocate the tax base among the respective jurisdictions pursuant to an agreement they
have entered into for this purpose.
Shipping industry considerations
With regard to the shipping industry, the turnover tax is a jurisdictional tax, and therefore the operations
taxability will depend on each jurisdiction. Some jurisdictions, such as Buenos Aires or Mendoza, include a tax
A
exemption for international transportation in their fiscal codes. In many other jurisdictions, although shipping rg
e
activity is taxed, there is a provision in the fiscal codes that foreign companies from countries with double ntin
taxation treaties with Argentina will not be taxed on income derived from this kind of activity (international a
transportation). When performed within Argentina’s boundaries, freight and passenger transportation can
only be taxed by the jurisdiction where the trip originates.
1.8 Stamp tax
According to the respective provincial regulations, the stamp tax is levied on public or private instruments
granted within the provincial territory or, if the instruments are executed abroad, the tax is paid insofar
as the agreement has effects in Argentina. Conversely, as stated by the respective provincial laws, if the
transactions are formalized using the offer letters set by one party and then tacitly accepted by the other
party (i.e., without actually stating the legal implications of such document), the tax may not be triggered,
regardless of the jurisdiction where it may be executed.
In general, the applicable rate is 1%, with certain exceptions listed in the respective provincial tax codes.
Depending on the arrangement of the agreements entered into for the transactions analyzed, the stamp tax
may be levied in the jurisdiction where the mentioned agreements are entered into and/or in the jurisdiction
where they come into effect.
Shipping industry considerations
As with the turnover tax, the stamp tax is a provincial tax; therefore, it is necessary to observe whether each
jurisdiction makes any special considerations regarding the shipping industry. In most of them, there is no
tax exemption, but in Buenos Aires, the instruments signed for the sale or rent of a vessel or aircraft are tax-
exempt as long as they are exclusively used for commercial, not personal, purposes.
1.9 Tonnage tax regime
Argentina does not have a tonnage tax regime.
Shipping Industry Almanac 2016 Shipping Industry Almanac 2016 4