Portugal passed a new law last week, introducing new tonnage tax. The new tonnage tax is part of Portugal’s attempt to improve its shipping industry. This includes measures to improve shipping, maritime labour, infrastructure and maritime suppliers.
As the European and International Shipowners Association of Portugal (EISAP) noted, with this law, Portugal aims to attract new shipping companies by providing attractive conditions. Some of the provisions of the new tonnage tax include the following:
- Tonnage tax rate: 0,70 Euro first 1,000 NT; 0,60 Euro 1,001 to 10,000 NT; 0,40 Euro 10,001 to 25,000 NT; 0,20 Euro above 25,000 NT;
- Ship ownership or ship management must occur in Portugal;
- If the tonnage tax applies, at least 60% of a fleet needs to carry an EU/EEA flag;
- Incentives for environmental friendly ships;
- Period to choose for tonnage tax minimum five years;
The new tonnage is effective retroactively by 1 January 2018.
Robert Lorenz Meyer, President of EISAP, welcomed this development saying that it is a “milestone for European shipping.” He also added that Portugal wants to become one of the most important shipping markets in Europe, especially ahead of Brexit.
The new law could contribute greatly to this goal, as it can provide tonnage profit determination for companies that generate their income mainly from operating merchant vessels.
Finally, for a fixed period, ship owners can choose a year by year flat taxable profit, in spite of the standard profit/loss calculation method.