Commercial Shipping to be Introduced Pending South Africa Tax Reforms

South Africa is home to some of the busiest ports in the world. Despite infrastructural success however, these ports are devoid of local commercial ships. Pending South Africa tax reforms, officials have announced their intention to purchase merchant ships and gain an entry-way into commercial shipping and increased freight shipping. A multi-billion-dollar industry, the commercial shipping industry will allow South Africa to further its maritime reach and gain control of how its goods reach the market.

In 2005 the South Africa tax tonnage bill was tabled at a time when there were no local ships registered under the SA flag. The model allows ships to pay a fixed rate based on the size of vessel and its working days. Long overdue, the planning and research of the bill has been finalised, and the regime will begin in 2013.

Until the South Africa tax tonnage system is implemented, Safmarine has made it clear that it is not economically viable to register ships under the SA flag. Since 98% of local exports, including precious metals, coal and agricultural produce, are carried by foreign vessels, South Africa is losing out on billions of dollars in potential business per year.

Companies that have been registering their ships in nations like Singapore, that don’t have corporate income tax, will now have a reason to consider SA as a competitive maritime registration hub and port agency. In other words, now that the reform of South Africa’s tax table rates correspond with President Jacob Zuma’s planned port upgrades, the country has the opportunity to regain the 52 commercial vessels that carried the SA flag in the 1970s.