The European Commission has approved a special "tonnage tax" incentive for Irish shipping which was proposed over a year ago by the Minister for Finance, Mr McCreevy.
The new regime will allow shipping companies based in Ireland to pay tax on net tonnage of their fleet, rather than on profit. It will come into effect from January 1st, making Ireland the eighth member state to have EU approval for the system.
The approved legislation represents a "substantial tax saving for companies engaged in international maritime traffic", according to Mr Jim Healy of KPMG, who is tax adviser to shipping companies.
"Internationally, there is significant interest in availing of tonnage tax regimes and we hope some of that interest will now focus on Ireland" he says.
Companies must locate the strategic and commercial management of vessels in Ireland to avail of the scheme. Not all vessels will qualify. Among those excluded are fishing vessels, harbour ferries, sport and recreation vessels and dredgers.
Qualifying craft are designated as large (100 tons or more) seagoing vessels including ferries, container vessels, bulk carriers and tankers. The biggest ferry operator in Ireland is Irish Ferries, part of ICG, the quoted shipping group.
The legislation sets out a list of qualifying activities, including the transport of passengers and cargo and the provision on board of ancillary services; and granting rights to another company to provide these ancillary services on board.
Other qualifying activities include towage, salvage or other marine assistance provision; provision of marine research facilities at sea; and certain charter lettings.
The Revenue Commissioners have introduced detailed anti-avoidance rules to prevent the abuse of the regime.
These rules include percentage limits on the amount of boats that can be chartered in by a firm, and regulations preventing companies availing of the system from engaging in tax avoidance transactions.
The Irish Maritime Development Office (IMDO), which was active in lobbying for the new system, has predicted that it will put Ireland in a position of "significant growth" in the shipping and shipping services sectors.
The Government is already committed to a €58 million public-private partnership project to build a national maritime college at Ringaskiddy in Cork.
Focus Education, a consortium comprising Bovis Lend Lease and the Bank of Scotland Corporate Banking, has been selected as preferred bidder for development of the college, which will combine the training needs of the Cork Institute of Technology's Nautical Studies Department and the Naval Service.
Last year, it was estimated that there would be a demand for 16,000 ships' officers within the EU, and some member-states are seeking dispensation to employ non-EU officers aboard vessels. The maritime development office has recently established a "careers at sea" website to encourage interest in the area here. "As far as we are aware, the website is unique in the global shipping community," Mr Glenn Murphy, maritime office director, has said.
"It is independently maintained by our office and receives contributions from various educational bodies, industry representative associations, and those working in various roles in the industry." The website address is www.careersatsea.ie
