Tonnage tax seen as key to unlocking SA ship-register growth
Thématique :
sud afrique
South Africa’s shipping industry held “exciting opportunities”, despite facing a number of challenges, Industrial Development Corporation (IDC) CEO Geoffrey Qhena said on Thursday.
Speaking at a function in Johannnesburg, Qhena noted that government had recognised the importance of developing the sector, particularly given that about 90% of South Africa’s trade was sea-borne.
South Africa was also an important gateway in stimulating trade in neighbouring African countries through its ports, Qhena said in remarks to an IDC-hosted a discussion forum on the shipping-industry opportunities.
The group’s transportation, financial services and other strategic business unit head Kugan Thaver acknowledged that the sector’s large capital requirements were a constraint and urged South Africa’s financial sector to look at ways over overcoming the challenge.
Commander Tsietsi Mokhele, who is CEO of the South African Maritime Safety Authority (Samsa), argued that the industry had to overcome a number of challenges if it were to develop and expand. He said that ship ownership, financing and insurance, shipping incentives, transformation and skills shortages were some of the issues that needed to be dealt with.
Mokhele noted that there was also a lack of policy in the maritime transport sector as well as inadequate incentives programmes for key maritime industries.
Further, he said that there had been “insignificant gains” in the implementation of black economic empowerment transformation in the industry, while training infrastructure was lacking.
TRANSFORMATION CHARTER
However, Department of Transport chief director of maritime transport regulation Advocate Nosipho Sobekwa noted that the Minister of Transport, Jeff Radebe, would launch the Transport Charter on Friday. The charter would deal with issues of transformation and skills shortages, among other matters.
But Mokhele acknowledged that the sector remained too fragmented with no coherent structures in place to engage on key strategic issues. He, therefore, proposed that the establishment of a national maritime cluster could bring together all the various parties in the sector as well as government departments to discuss and engage on these issues.
He noted that the Department of Minerals and Energy and mining houses would also have to participate in the cluster, as the mining industry was a major exporter of products through the country’s ports and harbours.
TONNAGE TAX
Mokhele also emphasised the importance of building up South Africa’s ship’s register. A growing ship’s register generally offered countries lucrative economic spin-offs.
Government’s proposed tonnage tax, which was released for public comment in July, formed part of initiatives to grow South Africa’s ship’s register.
A spokesperson for the National Treasury said that the period for public comment would also close on Friday.
The tonnage tax is a special tax for shipping companies that is based on the number and size of ships operated by a company and the number of days the ship is operated a year.
Treasury stated that the tax is an elective and presumptive tax where a notional profit is calculated.
The tax was easy to calculate and understand, while the level of tax could easily be determined. It would also offer a lower effective tax rate and increase competitiveness in the industry.
However, there were some “possible drawbacks”. The spokesperson noted, for instance, that there would be lock-in period during which the operator could not pull out of the tax system and that the tax had to be paid even in a loss-making period.
But the tonnage tax was seen as a key instrument in making South Africa’s maritime industry competitive against those of other countries.
However, the growth of the country’s ship’s register was not the only issue that needed to be taken into consideration, Maritime Law Association president Andrew Robinson asserted.
Robinson said that, while government seemed to have a broad understanding of the benefits of creating a ship’s register, not a lot of attention had been paid to the specifics of creating a register.
He stated that some countries had large ship’s registers, but still had very little cargo moving through their ports and were thus not making more money.
Further, he noted that government would also have to decide whether South African company law, as it applies to these shipping countries, would be open, or closed and confidential.
With a confidential register the identities of the directors and shareholders would not be made public, while there was no such protection under South African company law.
Robinson argued that, in anindustry where ship owners generally owned more than one vessel, it was often through necessary to keep confidential the identity of owners and controllers to prevent creditors proceeding against associated ships.
Speaking at a function in Johannnesburg, Qhena noted that government had recognised the importance of developing the sector, particularly given that about 90% of South Africa’s trade was sea-borne.
South Africa was also an important gateway in stimulating trade in neighbouring African countries through its ports, Qhena said in remarks to an IDC-hosted a discussion forum on the shipping-industry opportunities.
The group’s transportation, financial services and other strategic business unit head Kugan Thaver acknowledged that the sector’s large capital requirements were a constraint and urged South Africa’s financial sector to look at ways over overcoming the challenge.
Commander Tsietsi Mokhele, who is CEO of the South African Maritime Safety Authority (Samsa), argued that the industry had to overcome a number of challenges if it were to develop and expand. He said that ship ownership, financing and insurance, shipping incentives, transformation and skills shortages were some of the issues that needed to be dealt with.
Mokhele noted that there was also a lack of policy in the maritime transport sector as well as inadequate incentives programmes for key maritime industries.
Further, he said that there had been “insignificant gains” in the implementation of black economic empowerment transformation in the industry, while training infrastructure was lacking.
TRANSFORMATION CHARTER
However, Department of Transport chief director of maritime transport regulation Advocate Nosipho Sobekwa noted that the Minister of Transport, Jeff Radebe, would launch the Transport Charter on Friday. The charter would deal with issues of transformation and skills shortages, among other matters.
But Mokhele acknowledged that the sector remained too fragmented with no coherent structures in place to engage on key strategic issues. He, therefore, proposed that the establishment of a national maritime cluster could bring together all the various parties in the sector as well as government departments to discuss and engage on these issues.
He noted that the Department of Minerals and Energy and mining houses would also have to participate in the cluster, as the mining industry was a major exporter of products through the country’s ports and harbours.
TONNAGE TAX
Mokhele also emphasised the importance of building up South Africa’s ship’s register. A growing ship’s register generally offered countries lucrative economic spin-offs.
Government’s proposed tonnage tax, which was released for public comment in July, formed part of initiatives to grow South Africa’s ship’s register.
A spokesperson for the National Treasury said that the period for public comment would also close on Friday.
The tonnage tax is a special tax for shipping companies that is based on the number and size of ships operated by a company and the number of days the ship is operated a year.
Treasury stated that the tax is an elective and presumptive tax where a notional profit is calculated.
The tax was easy to calculate and understand, while the level of tax could easily be determined. It would also offer a lower effective tax rate and increase competitiveness in the industry.
However, there were some “possible drawbacks”. The spokesperson noted, for instance, that there would be lock-in period during which the operator could not pull out of the tax system and that the tax had to be paid even in a loss-making period.
But the tonnage tax was seen as a key instrument in making South Africa’s maritime industry competitive against those of other countries.
However, the growth of the country’s ship’s register was not the only issue that needed to be taken into consideration, Maritime Law Association president Andrew Robinson asserted.
Robinson said that, while government seemed to have a broad understanding of the benefits of creating a ship’s register, not a lot of attention had been paid to the specifics of creating a register.
He stated that some countries had large ship’s registers, but still had very little cargo moving through their ports and were thus not making more money.
Further, he noted that government would also have to decide whether South African company law, as it applies to these shipping countries, would be open, or closed and confidential.
With a confidential register the identities of the directors and shareholders would not be made public, while there was no such protection under South African company law.
Robinson argued that, in anindustry where ship owners generally owned more than one vessel, it was often through necessary to keep confidential the identity of owners and controllers to prevent creditors proceeding against associated ships.
