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registration fee and an annual tonnage charge. These
suggestions have probably arisen from the proposal in
the CD to link 'management and control' to the
individual ship rather than its owners. Since we have
modified our own views on this the case for a tax
'holiday' is not compelling.
The Tax Position
10.3.
Hong Kong shipowners are subject to tax under
the present law. They are, however, not liable to tax
on charter hire income attributable to an off-shore
permanent establishment. As can be expected, much of
the income arising from ships on the present register is
derived from just such charter hires.
shipowners have thus been enjoying quite legitimate tax
avoidance to a high degree.
Hong Kong
Genuine Link/Management and Control Requirement
10.4.
The requirement proposed in the Consultative
Document that the management and control of the ship
should be exercised from Hong Kong would have meant that
this recourse would no longer be available to
shipowners on the new register and thus their tax base
would be dramatically increased.