Advantages of Having a Malta Flags - Essay Example

ADVANTAGES OF HAVING A MALTA FLAG 01 February Lloyds International, The Managing Director, P& O, Ship Owners, London International Shipping Consultant MEMORANDUM Dear Sir, This has reference to your query on advantage of having Malta flag for the proposed new vessel to be acquired by you. Having a Malta flag is having many benefits to a ship owner. Despite of having of benefit of simple registration formalities , it is also having tax savings, savings on expenses on registration and administrative expenses. I am detailing the various advantages that may accrue to have a Malta Flag rather than an UK flag so that you can take an informed decision on the subject. (a) Summarise the factors that a ship owner should consider when selecting the country of registry for their ships A Ship owner will always consider the following factors while selecting the country of registry for their ships. Where the ship registration cost remains to be low Where the company formation expenses remain to be minimum If such country offers a complete tax exemption to ship owners, ship financiers and charterers. If such country does not have any restrictions on the sale and mortgaging of Maltese ships. If such nation offers no restriction on ship trading. If such country offers offshore companies operating ships to enjoy all the advantages and exemptions which will make such nation as an ideal for operations of ships. If such country offers a network of double taxation treaties to minimise tax incidence on income from dividends , interests and royalties and in majority cases ,if it offers no taxation at all. If central bank of such nation offer liberal regulations for the registration, sale, mortgage and operation of ships, repatriation of funds or profits or distribution of dividends. If such nation offers no restriction on the sale of ships registered in such nation to foreign nationals or mortgaging of ships registered in such nations in favour of foreign nationals. Further, if such country imposes no restrictions on the transfer or sale of stocks or shares of a company owning a ship. ( Dr Ademuni-Odeke 1998:223). If such country offers an exemption from social security laws and social security contributions unless it is demanded by ship company or its employees. If such country offers a privilege to the shipping companies to expatriate employment If such nation enjoys a stable social, political and economic stability. If such nation encourages bare boat chartering ( Bhalla & Bhalla 1997:164). (b) Describe the registration procedure, the certificates and other information required by the UK Register and ONE other register of your choice, highlighting the differences between them. Registration process for registering a ship in UK If a ship owner wants to register his ship on a permanent basis, he can do so in the UK by making an application in this regard either by person or through by post. If a ship owner wants to register his ship outside the United Kingdom under either part 1 or 2 of the register, he can do so by making a provisional application to any British consular officer or to any British High Commissioner office .Such office will forward the application to the Registrar, and if he satisfies that the applicant is eligible for registration, then registration will be granted by the Registrar within a period of ninety days. Details of documents to be submitted to the UK registry: For the registration of a British ship , an application is to be made; A declaration of eligibility ; In case , the ownership is yet to be passed , a declaration of intent ; In case of a company , certificate of incorporation; In case , if there is a change of the flag , then a certificate from an overseas register as regards to the certificate of registry issued by that register; Evidence of ownership –in case of a new ship , the builder’s certificate and in the case of an older ship , the sales invoice exhibiting the details of title of ownership for the last five years; A surveyor’s certificate indicating the measurement and tonnage.( Harwood 2006 :479) Registration procedure for registering a ship in Malta All varieties of vessels like from oil rigs to pleasure yachts may be registered under Maltese laws provided, they are owned by individuals qualified to own a Maltese ship. Individuals who are qualified to own a Maltese ship are detailed below: Citizens of Malta; Companies that had been incorporated in Malta and, which are subject to Maltese law; Such other individuals as the Maltese minister of transport may , by regulation , notify; In Malta, Minister of transport has been assigned with extra-ordinary authority to prescribe the degree of the class of ships of ownership of a ship eligible to be registered and may notify other regulations and conditions in associations with the necessary ownership for ships. To register a vessel under the Maltese flag by the foreign beneficial ownership, a shipping company must initially be incorporated under the Registry of companies of Malta. Again, a foreign shipping company can save a large sum of money as the minimum capital required by Maltese law is as low as with an authorised capital of £ 1250 of which a minimum of £ 250 must be paid-up. Further, the company registration expenses are very low amounting to just £ 250 and every year, annual return has to be filed by paying a fee of £ 125. There are several advantages for registering a shipping company in Malta as it has a quick process and also, it is inexpensive. For registering a shipping company at Malta, promoters need not personally present in Malta. They can register a shipping company by operating remotely by forwarding a power of attorney to their legal representative in Malta, which is generally a law firm. Further, the principal place of business of such shipping company need not necessarily be in Malta and there are no limitations whatsoever on the transfer and sale of shares in such a Maltese shipping company operating remotely. In terms of Maltese law, both provisional registration and permanent registration will have same effect. However, the Maltese authorities will accord their approval that vessel conforms to all the yardsticks demanded by the respective international conventions. It is to be noted that the provisional registration is only valid for six-months only. However, this could be granted an extension for an additional period of six-months during which the permanent registration of the ship is to be completed by filing all the important documents with the registration authorities. However, registration, reassign and release of mortgage may be carried on immediately after the provisional registration is completed by presenting specific documents to the registrar. (Reuvid 2005:95). For registering a vessel or ship in Malta provisionally, the following documents are needed: An authorised agent or an owner can submit an application for registration or an application for change of the name. A copy of the International tonnage certificate of the ship is to be enclosed. Evidence as regards to qualification for the owning of a Maltese ship is to be enclosed. In case of a company, the memorandum or articles of association is to be enclosed. Either the authorised representative or the owner has to declare the ownership before the registrar. It is required to produce the evidence of seaworthiness and in case of trading vessels, confirmation of class is also required. A ship owner has to pay not only initial registration fees but also has to pay annual registration fees. (Reuvid 2005:96). Following documents have to be submitted to the registrar during the provisional registration in Malta. If the vessel has not been registered elsewhere, then a copy of the builder’s certificate is to be enclosed. Further, the invoice or bill of sale or any other corroborative document evidencing the transfer of the vessel to the applicant to the registry is to be submitted. As an evidence of showing that vessel is free from encumbrances, a cancellation certificate from the registry from the earlier country of registration is to be enclosed. A copy of the international tonnage certificate along with a copy of the certificate of the survey thereby guaranteeing that the vessel has been surveyed as per Maltese rules and regulations. Evidence supporting that the vessel has been marked as per the law is to be submitted. A list of the crew along with the officer’s certificates of competency is to be enclosed. (Reuvid 2005:96). Advantages of Malta Flag State for a UK based maritime company. Due to its geographical locational advantage and with its well designed harbours, maritime activities have been playing a customary role as Maltas citizens have made the Malta Island as an international maritime service centre. Malta has been regarded as one of the five largest international ship registers due to its highly equipped natural harbours, ports and other maritime facilities for shipping. Malta is a preferred maritime destination as it is having a triumphant Freeport as well as the oil terminal, also a hub for international yacht marinas, a centre for cruise liners thereby offering both repair and shore support services to ships. Further, Malta also hosts the” the Regional Marine Pollution Emergency Response Centre for the Mediterranean, Law Institute of International Maritime, and the International Ocean Institute and is continuously developing its legal, infrastructural and financial services. Malta Flag remains as one of the eight largest in the globe and is being regarded as being both a flag of choice and a flag of confidence as corroborated by its ever amplifying registration. (Reuvid 2005:94). Directorate of Maritime Authority is entrusted with the responsibility of organisation, management, administration and supervision of maritime services by law in Malta. Directorate of Maritime Authority is not only offering yacht and ship registration but also is responsible for the training and awarding certificates to seafarers and with the administration of international maritime agreements and conventions. In the case of emergencies, the Directorate also offers a day and night services to the maritime industry. (Reuvid 2005:94). In an effort to become one of the EU member states, Malta ratified five of the most significant ILO shipping agreements in 2002 including the convention 147, “the Merchant Shipping (Minimum Standards) Convention “ and its protocol. Malta is also now employing its own inspectors to inspect ships worldwide, which are registered in its registry. Finally, it became a member of EU in 2004. (DeSombre 2006:121). The operation of the Maltese Vessels and vessel registration is administered by the Merchant Shipping Act of Malta, which is basically borrowed the provisions of UK legislation. However, there are subsequent amendments made so as to introduce significant control initiatives and safeguards for financiers and to improve the financial features of this law, which further enhanced vessel financing and vessel registration in Malta as a preferred destination. (c) Recommend, with reasons, the register you would choose for the ship. After entry into the EU, according to Malta Maritime Authority , Maltas flag registration has witnessed high growth and yacht and ship registration are at the top of the maritime cluster and an ever increase of more than eight percent in tune of registered gross tonnage in the year 2009. Thus, Maltas flag has fortified its capacity to consistently fulfil its activities and have offered the industry with security of good reliability. (IMO 2009:33) Thus, according to IMO, Malta occupies 8th top place for shipping flags, whereas UK occupies 13th place as at December 2004. Malta offers various benefits to have its flag for the ship owners. Thus, if a ship with more than 1000 net tones is registered in Malta, the ship owner will enjoy automatic exemption from income tax, succession duty or donation and the stamp duty on assignments and transfers. Further, offers a tonnage tax where tax is payable according to the tonnage of the ship and not on profits earned. Further, a shipping company or owner is free to register his oil platforms, oil rigs, even vessels under construction and mortgages and mortgages can be arranged on this. For a Maltese Flag vessel or ship, there is no restriction on the nationality of director or shareholders of Maltese shipping companies or no bar on the nationality of the crew, officers and master of Maltese ships. The most attractive procedure that attracts more ships under Maltas flags is the very , very low company incorporation expenses and shipping registration charges added with easy shipping registration formalities or deletion and for the change of the vessel name and for the registration and waiver of mortgages. Hence, I strongly suggest that Maltese flag is preferable or the best for a UK ship owner as he can derive a lot of advantages including savings on taxes, repatriation of profits, registration formalities and so on. Yours Faithfully, Anthony Michael. Lloyds International, References Bhalla & Bhalla . (1997). Selected International Financial Centers. New Delhi : Anmol Publications Pvt Ltd. DeSombre , Elizabeth R. (2006).Flagging Standards : Globalisation and Environmental Safety and Labor. London: The MIT Press. DeSombre, E. (2008). Globalization, Competition, and Convergence: Shipping and the Race to the Middle. Global Governance, 14(2), 179-198. 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