The UK is widely recognised as a leading centre of global maritime expertise and, as such, a fitting location for some of the world’s leading shipping organisations. It is also the venue for London International Shipping Week, now firmly established as a pre-eminent meeting place for industry leaders and decision-makers.
The UK will remain an attractive base for shipping businesses even after it ceases to be a member of the EU following Brexit, whether on a Deal or No Deal basis. There are a number of reasons for this.
Most of the UK tax rules as they affect shipping are not dependent on EU membership. There are a limited number of EU Directives, but 99% of UK tax benefit reliefs will survive post-Brexit. As a result, the UK will continue to be a business-friendly place from which to conduct shipping activities.
In particular, the UK government has indicated that the UK tonnage tax regime - introduced in 2000 as an EU-approved state aid - is highly likely to remain in its present form, and may indeed be enhanced. Moreover, there has been no indication thus far that there will be any additional tonnage tax costs arising as a result of Brexit.
The UK also benefits from extensive double taxation treaties that not only reduce the tax on cross-border payments but also, in most cases, reduce overseas freight taxes to zero.
UK companies are generally not subject to tax on dividends received, while there is no withholding tax on dividends paid. Therefore, while Brexit may result in certain political changes, there appears to be very little likelihood of any alteration in practical tax terms affecting UK shipping.
The UK is an attractive option for companies looking to restructure and relocate offshore because the focus by authorities in the EU and elsewhere on harmful tax practices, such as those identified by the OECD/BEPS initiative, makes it increasingly difficult to operate shipping businesses from low-tax jurisdictions.
The UK continues to offer excellent infrastructural support for shipping businesses, including unrivalled industry knowledge and expertise, and a reputation as the principal legal jurisdiction for shipping. These factors, combined with the presence in London of leading maritime organisations such as the IMO, the UK Chamber of Shipping, the Baltic Exchange and the International Chamber of Shipping, mean that the UK and London will continue to flourish as centres of global shipping excellence following Brexit, especially given the advantages inherent in the existing and continuing UK tonnage tax regime.
BDO looks forward to working with our shipping clients before, during and after Brexit, as well meeting them during London International Shipping Week, of which we are proud sponsors. We also have a team competing in the OSCAR Dragon Boat Race at London’s Docklands.