Japanese shipping firms are ratcheting up pressure on the government to revise the nation’s tonnage tax system, claiming the limited application of the tax has put them at a disadvantage amid increasingly tough international competition.
The Japanese Shipowners’ Association compiled a written package of demands recently regarding tax reforms for the next fiscal year starting in April 2012. JSA, headed by MOL Chairman Akimitsu Ashida, also ran an advertisement in six major Japanese newspapers last Friday setting out its opinion about the tonnage tax system, which has the effect of reducing the tax burden on shipping firms.
In the advertisement, JSA said that the tonnage tax system has been introduced in major shipping nations, including the United Kingdom, France and Germany, since 1996 and applied to all vessels operated by domestic shipping firms.
“In Japan, the tonnage tax system was finally introduced in 2009, but the problem is that its application is limited to Japanese-registered ships, which account for only about 4 percent of all vessels operated by Japanese shipping firms,” JSA said. “In order to enable Japanese ocean-going shipping firms to compete on a level playing field with their foreign rivals, the nation’s tonnage tax system must be expanded to include foreign-registered ships,” JSA said.
JSA went so far as expressing concerns in the advertisement that if nothing is done, some Japanese shipping firms could be acquired by foreign investors.
Japan introduced the tonnage tax system in 2009 after its parliament revised the Marine Transportation Law in 2008 to allow the government to apply the tax system to domestic ocean-going shipping firms if they submit plans containing numerical targets for increasing Japanese registered vessels and sailors and get the transport ministry’s approval for their plans.
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