Rieber Shipping sees "substantial negative effects" in Norwegian tax proposalsNews // September 14, 2007
Rieber Shipping says it sees what it called "substantial negative effects" in the Norwegian government's recent budget proposal for 2008 in which the government said it plans a new tonnage tax system for the shipping industry in Norway.
Said Rieber Shipping: "The Government states that shipping companies in the future will be tax exempt in-line with shipping regimes in EU countries. This will be positive for GC Rieber Shipping. However, in order to be allowed into the new system, the government proposes that the untaxed equity in shipowning companies under the current regime is made taxable over a 10 year period."
"This untaxed equity is not taxable under current rules. If this proposal is adopted, it will have substantial negative effect for GC Rieber Shipping."
"The company has according to the current rules treated this tax as untaxed equity. Our intention has been to remain within the current system, which means that, unless rules were seriously broken, the tax would have remained untaxed equity in the balance sheet."
"The fact that the Government now proposes this tax to be paid is looked upon as an obvious breach of promise and a severe punishment to a company that has been loyal to the system and developed a strong and sound shipping and offshore company based upon the competent and highly specialized maritime cluster in our region and within the framework presented by the authorities."
"Sad to say, it seems clear that once more the authorities have demonstrated a total lack of understanding for the need of stable long-term conditions within our industry," said Rieber Shipping in its statement.
"A preliminary calculation made by the company shows that the effect of the new proposed rules, should they be implemented, would be an immediate increase in tax liabilities and a reduction of equity of about NKr 250 million."
"As a consequence, the equity ratio would have been reduced from 51 per cent to 44 per cent. Further, should the proposal be passed as law, this will reduce our ability to invest in new technological advanced and environmental friendly tonnage by an amount of close to NKr 1 billion, and our competitiveness will be severely hampered compared to competitors that are operating under international tax regimes."
"We are sorry to realize that entering the current shipping tax system in 1996 in the trust that we would enjoy a stable and competitive business climate in Norway for our industry seems to have been a wrong decision," Rieber Shipping's statement concluded.