LONDON: The UK tax authority, HM Revenue and Customs, recently released a new Brief informing shipping companies that they must carry out a “flagging test” to determine the eligibility of their vessels to tonnage tax, as this fiscal year is not an “excepted year.”
Under the UK tonnage tax regime, the registration (flagging) of a newly operated ship outside the European Union/European Economic Area (EU/EEA) may affect whether it is a qualifying ship for tonnage tax purposes, unless the year is an “excepted year.” Tugs and dredgers must always be registered in an EU/EEA member state to qualify for tonnage tax.
This year is not an “excepted year,” as the number and tonnage of ships in tonnage tax has decreased slightly in the last 12 months while companies have increased the number of ships in tonnage tax that are on the registers of countries that are not EU/EEA member states.
This means that if, during the financial year 2015 (the year starting April 1, 2015), a company in tonnage tax starts to operate a ship that is not registered in an EU or EEA member state, they must carry out a ‘flagging test’ to determine whether the ship qualifies for tonnage tax.
