Merchant Shipping (Hansard, 30 January 1987)

§ Sir Edward du Cann
asked the Secretary of State for Transport whether he will list in the Official Report information available to him on the aids for merchant shipping in the Republic of Ireland recently announced by the Government of that country, together with a list of the equivalent aids available to merchant shipping in the United Kingdom.

§ Mr. Moore
The available information is as follows:

Measures announced by the Irish Government on 6 January United Kingdom equivalent

(a) Corporations profit tax on shipping profits will be reduced from 50 per cent, to 10 per cent. (a) Corporation tax has been progressively reduced from 50 per cent, in 1983 to its present level of 35 percent. The small companies' rate has been reduced to 29 per cent.

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Measures announced by the Irish Government on 6 January United Kingdom equivalent

(b) Investment grants will be introduced providing for up to 25 per cent, of the purchase price of new ships and second hand ships less than five years old for ship-owners who employ Irish labour and remain on the Irish Register. Shipping will also be treated as an export service industry and as such qualify for investment under a National Development Corporation scheme. (b) No equivalent schemes. However, United Kingdom owners investing in United Kingdom new built ships are eligible for loans under the Home Shipbuilding Credit Scheme for 80 per cent, of the capital cost at a fixed rate of interest of 7.5 per cent, over eight and half years with discount available in the case of early repayment of loans. United Kingdom investors in ships (whether new or second hand) are also normally eligible for annual writing down allowances of 25 per cent, of the capital cost on a reducing balance basis, with special flexibility in choosing when to use these allowances.

(c) Shipping will now qualify to benefit from the business expansion scheme. (c) The business expansion scheme applies to shipping

§ Sir Edward du Cann
asked the Secretary of State for Transport if he will detail in the Official Report information available to him on the tax depreciation regimes applicable to investment in merchant shipping in each of the member countries of the European Economic Community.

§ Mr. Moore
The available information is set out below.

Method Rate

Belgium

Reducing balance Based on ship life of 8 years— 20 per cent, maximum, reducing to 10 per cent.

Denmark

(a) Reducing balance based on pooled assets system (i) Indexed to cost of living rate up to 30 per cent, maximum.

(b) Anticipated depreciation also available (ii) 25 per cent, per year up to 50 per cent, in all.

France

Reducing balance preferred but annual depreciation in excess of straight line depreciation may be deferred (i) Ship life of 8 years—31.25 per cent.

(ii) Ship life of 10 years—25 per cent.

(iii) Ship life of 15 years—16.66 per cent.

(iv) Ship life of 20 years—12.5 per cent.

Germany, Federal Republic of

(a) Straight line (i) Large passenger ships with ship life of 16 years—6.25 per cent.

(ii) Other ships with ship life of 12 years—8.33 per cent

Or optional reducing balance (i) Large passenger ships with ship life of 16 years—18.75 per cent.

(ii) Other ships with ship life of 12 years—25 per cent.

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Method Rate

Special advanced payment depreciation Up to 40 per cent, over first five years.

Greece

Special tax system Related to age and tonnage.

Ireland, Republic of

— Free depreciation for new ships for first year. 100 per cent, for secondhand ships for first year.

Italy

Straight line (i) Passenger ships, tankers and refrigerated ships—10 per cent.

(ii) Other ships—9 per cent.

Additional accelerated depreciation for each of first three years 15 per cent.

Luxembourg

— —

Netherlands

(a) Straight line or (a) Ship life of 12 years—20 per cent.

(b) Reducing balance (b) 12 to 16 per cent.

Portugal

(a) Straight line (i) Coastal fishing—10 per cent.

(ii) Deep sea ships—6.25 per cent.

(iii) General cargo—8 per cent.

(iv) Passenger/ferries/tankers— 10 per cent.

(b) Revaluation of assets may also result in further allowances

Spain

(a) Straight line or (i) Tankers and liquified cargo ships with life of 25 years—6 per cent.

(ii) Passenger and passenger/ cargo and cargo ships with life of 30 years—5 per cent.

(b) Reducing balance (i) Ship life of 3 to 5 years— 1.5 x straight line depreciation rate.

(ii) Ship life of 6 to 8 years— 2 x straight line rate.

(iii) Ship life of over eight years—2.5 x straight line rate.

United Kingdom

Reducing balance Annual writing down allowances, which can be carried over to future years, of 25 per cent, of the capital cost for new and second ships.

Measures announced by the Irish Government on 6 January	United Kingdom equivalent
(a) Corporations profit tax on shipping profits will be reduced from 50 per cent, to 10 per cent.	(a) Corporation tax has been progressively reduced from 50 per cent, in 1983 to its present level of 35 percent. The small companies' rate has been reduced to 29 per cent.

Measures announced by the Irish Government on 6 January	United Kingdom equivalent
(b) Investment grants will be introduced providing for up to 25 per cent, of the purchase price of new ships and second hand ships less than five years old for ship-owners who employ Irish labour and remain on the Irish Register. Shipping will also be treated as an export service industry and as such qualify for investment under a National Development Corporation scheme.	(b) No equivalent schemes. However, United Kingdom owners investing in United Kingdom new built ships are eligible for loans under the Home Shipbuilding Credit Scheme for 80 per cent, of the capital cost at a fixed rate of interest of 7.5 per cent, over eight and half years with discount available in the case of early repayment of loans. United Kingdom investors in ships (whether new or second hand) are also normally eligible for annual writing down allowances of 25 per cent, of the capital cost on a reducing balance basis, with special flexibility in choosing when to use these allowances.
(c) Shipping will now qualify to benefit from the business expansion scheme.	(c) The business expansion scheme applies to shipping

Method	Rate
Belgium
Reducing balance	Based on ship life of 8 years— 20 per cent, maximum, reducing to 10 per cent.
Denmark
(a) Reducing balance based on pooled assets system	(i) Indexed to cost of living rate up to 30 per cent, maximum.
(b) Anticipated depreciation also available	(ii) 25 per cent, per year up to 50 per cent, in all.
France
Reducing balance preferred but annual depreciation in excess of straight line depreciation may be deferred	(i) Ship life of 8 years—31.25 per cent.
	(ii) Ship life of 10 years—25 per cent.
	(iii) Ship life of 15 years—16.66 per cent.
	(iv) Ship life of 20 years—12.5 per cent.
Germany, Federal Republic of
(a) Straight line	(i) Large passenger ships with ship life of 16 years—6.25 per cent.
	(ii) Other ships with ship life of 12 years—8.33 per cent
Or optional reducing balance	(i) Large passenger ships with ship life of 16 years—18.75 per cent.
	(ii) Other ships with ship life of 12 years—25 per cent.

Method	Rate
Special advanced payment depreciation	Up to 40 per cent, over first five years.
Greece
Special tax system	Related to age and tonnage.
Ireland, Republic of
—	Free depreciation for new ships for first year. 100 per cent, for secondhand ships for first year.
Italy
Straight line	(i) Passenger ships, tankers and refrigerated ships—10 per cent.
	(ii) Other ships—9 per cent.
Additional accelerated depreciation for each of first three years	15 per cent.
Luxembourg
—	—
Netherlands
(a) Straight line or	(a) Ship life of 12 years—20 per cent.
(b) Reducing balance	(b) 12 to 16 per cent.
Portugal
(a) Straight line	(i) Coastal fishing—10 per cent.
	(ii) Deep sea ships—6.25 per cent.
	(iii) General cargo—8 per cent.
	(iv) Passenger/ferries/tankers— 10 per cent.
(b) Revaluation of assets may also result in further allowances
Spain
(a) Straight line or	(i) Tankers and liquified cargo ships with life of 25 years—6 per cent.
	(ii) Passenger and passenger/ cargo and cargo ships with life of 30 years—5 per cent.
(b) Reducing balance	(i) Ship life of 3 to 5 years— 1.5 x straight line depreciation rate.
	(ii) Ship life of 6 to 8 years— 2 x straight line rate.
	(iii) Ship life of over eight years—2.5 x straight line rate.
United Kingdom
Reducing balance	Annual writing down allowances, which can be carried over to future years, of 25 per cent, of the capital cost for new and second ships.