The European Commission (EC) has conditionally approved the new Maltese tonnage tax scheme for a period of ten years with the aim of supporting level playing between Maltese and other European shipping companies.
The approval was granted under EU State aid rules and also seeks to encourage ship registration in Europe.
It follows an in-depth investigation carried out by the EC in 2012 to evaluate the compatibility of the Maltese tonnage tax scheme with EU State aid rules.
The latest approval represents the EC’s conditional endorsement of the Maltese scheme, which is subject to the amendments introduced by Malta.
EC competition policy commissioner Margrethe Vestager said: “Tonnage tax systems are meant to promote the competitiveness of the EU shipping industry in a global market without unduly distorting competition.
“Moreover, by encouraging the registration of ships in the EU, the scheme will enable the European shipping industry to keep up its high social and environmental standards.”
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The Maltese scheme intends to tax shipping companies on the basis of ship net tonnage as opposed to the company’s actual profits.
The tonnage taxation process will primarily be applied to a shipping company’s core revenues from transportation activities, including cargo and passenger transport.
It will also include certain ancillary revenues that are closely connected to shipping activities, as well as revenues from towage and dredging activities that are subject to certain conditions.
Shipping companies hoping to benefit from the scheme will be mandated to operate a significant part of their fleets under the flag of a European Economic Area (EEA) Member State.
Furthermore, new entrants to the scheme are required to have at least 25% of its fleet subject to tonnage tax with an EEA flag.