SIMIC

CARRIERS operating under tonnage tax systems rather than paying tax on revenues benefited from the surge in profits in 2021, reports London's Lloyd's List.

In a bad year, fixed tonnage taxes mean carriers may have to pay tax even when they have made losses. But in 2021, even with the staggering profits, little of it will be taxed.

An analysis of recently published annual results by Sea-Intelligence showed that fixed taxes based on the amount of tonnage operated had proved invaluable in a highly profitable year.

"If profits suddenly increase sharply - as they did in 2021 - tonnage tax conveys a competitive advantage to carriers who can avail themselves of the tonnage tax versus those who cannot," said Sea-Intelligence CEO Alan Murphy.

Tonnage taxes apply only to revenues derived from ocean transport, and not to carriers' other activities, so a carrier with more revenue derived from inland logistics services will pay higher taxes than one focused more tightly on direct maritime services.

Nevertheless, a comparison of three companies operating under tonnage tax regimes - Maersk, CMA CGM and Hapag-Lloyd - with two that do not - Zim and Matson - indicates a significant advantage of the tax protection during periods of high profitability.

The three European container lines paid tax rates of between 0.7 per cent and 3.7 per cent for 2021. Zim, by comparison, paid 18 per cent, while Matson paid 21 per cent.

On a tax per TEU shipped basis, both Zim and Matson saw large increases in 2021. But with their fixed cost taxes, European carriers' tax increase per TEU was barely discernible.

But even within the carriers benefiting from tonnage tax, there were competitive advantages to be had, said Mr Murphy.

Maersk paid the highest level of tax per TEU, while Hapag-Lloyd paid the least.

"This also matches the fact that the taxation rate as percentage of the pre-tax income is also highest for Maersk and lowest for Hapag-Lloyd, among these three carriers," Mr Murphy said.