SHIPPING has been left out of the Organisation for Economic Co-operation and Development proposals for a global minimum corporation tax rate of no less than 15 per cent, Lloyds List reported on Monday.,

The exemption — which would apply to all companies from the largest to the smallest — will be welcomed by the industry, which had feared the possibility that at least the biggest companies by turnover may fall within the ambit of the rules, the report said.

Tax experts told Lloyd’s List the statement published on July 1 is by way of an outline of intentions, and the actual rules are yet to be hammered out. However, the chances of shipping being caught up now appear small.

Inclusion in the scheme would have ended decades of de facto soft treatment for owners in many jurisdictions, and entirely scupper the business model of lower-end open registries competing in large part based on effectively zero tax, Lloyds pointed out.

“To the consternation of tax justice campaigners, many flags — including both national and open registers — levy tonnage tax, which is based on deemed daily profit per gross tonne rather than actual income and expenditure,” the report said.

This makes it possible to calculate tax with reasonable accuracy over the lifetime of a vessel, which is vital in a cyclical industry.

Defenders point out that no tax relief is available on ships, fuel, offices and staffing costs, and no tax deductions are given for interest on financing shipping businesses.

Moreover, the tax remains in place even in years when shipping companies record losses. In the round, any advantage over companies paying standard corporate tax is smaller than it looks, the report continued.

Industry representative organisations are strongly opposed to a minimum tax rate for shipping.

Last year the World Shipping Council, International Chamber of Shipping, European Community Shipowners’ Associations and the Cruise Lines International Association outlined their concerns in a joint submission to the OECD.

The four trade associations cited the longstanding consensus that shipping profits should only be taxed in jurisdiction of residence, and that tax regimes should be assessed in the light of national policies to support national shipping.

A spokesperson for the ICS said: “We welcome the recognition of the unique status of the shipping industry in this conversation.”

Olaf Merk, the OECD’s expert on shipping taxation, and a high-profile public advocate of making shipping pay more than it does now, told Lloyds List that there were apparent anomalies in the agreement.

“The decision to exclude shipping income raises the question what exactly is ‘shipping’,” he said. “If it is in essence all that a shipping company does, excluding shipping from a global minimum tax could make terminal operators and freight forwarders wonder why they pay taxes for the same activities that for shipping companies are tax-exempt or partially tax-exempt.”