Floating Tax

April 20, 2007 (LBO) – Sri Lanka’s tiny shipping industry has begun talks with the Customs authorities to clear a dispute over the payment of a tax on their vessels, an official said. Shipping analysts say taxing local owners could make them less competitive in international waters where their vessels trade and prompt them to shift to other countries with no import duty. Owners of ships registered under the Sri Lanka flag have to make a Customs declaration when their vessels sail into Colombo making them liable for a three percent tax called the port and airport development levy (PAL) which is levied on imported goods.

Members of the Lanka Association of Ship Owners (LASO) complain of visits by Customs officers demanding details of ships owned by them and corresponding documents.

“LASO and its members believe that ships cannot be considered as imported goods,” says the secretary general of LASO, Stephan Kuehl.

Accordingly, there’s no need to declare these ships, and accordingly no payment of dues, taxes or fees.”

Ship owners complain the move goes against government efforts to promote the shipping industry for which incentives were given in the last budget.