Thursday, July 18, 2019

Boost for Ship Registry as Nation Gets Delisted by European Commission

EU Code of Conduct Group Advises Tax Acceptance
Shipping News Feature
EUROPE – MARSHALL ISLANDS – The Republic of the Marshall Islands (RMI), which claims to be the world's leading ship registry (last figures we have put them in third place) got a major boost this week when the European Union (EU) Code of Conduct Group decided the RMI has warranted its removal from the list of non-cooperative jurisdictions for tax purposes.

This positive progress is the culmination of multiple months of constructive dialogue between the RMI and representatives from the Group and European Commission. The outcome of the meeting confirms that, upon passage of the amendments, a recommendation for the removal of the RMI from the list of non-cooperative jurisdictions for tax purposes will be made to the Economic and Financial Affairs Council (ECOFIN).

The RMI Registry says it is consistently held in high regard worldwide, maintaining an unprecedented fifteen consecutive years on the United States Coast Guard's Qualship 21 roster, a continued firm white list status with the Paris and Tokyo Memorandums of Understanding, and is the only leading registry with a perfect score from the International Chamber of Shipping. Further, the RMI is the jurisdiction of choice for publicly traded shipping companies. RMI Minister of Finance, Brenson S. Wase, commented on release of the news:

"The Marshall Islands is extremely pleased to hear that the changes to the Economic Substance Regulations have been met positively by the EU. Based on the outcome of last week's EU Code of Conduct Group meeting, the Marshall Islands expects to be delisted as a non-cooperative jurisdiction at the earliest opportunity, which will be following the September and October meetings of the EU Code of Conduct Group and ECOFIN.”

The RMI says it is determined to further develop its engagement with the EU to ensure that, within its specific context and scale as a small island nation, international standards of corporate governance and taxation are met today and in the future. They are also prepared to become a key EU partner and will continue to be an engaged global actor on other issues such as climate change. James Myazoe, RMI Deputy Registrar of Corporations, adding:

"We look forward to the outcome of the fall meetings and the removal of the Marshall Islands from the EU list of non-cooperative jurisdictions.”

Whether or not the RMI registry is the largest or not it is certainly in the top three. As a ‘flag of convenience’ it is frowned upon by the maritime unions and appears on the International Transport Workers’ Federation (ITF) list as such along with 34 other registries, The ITF believes that any vessel registered should have a tangible link with the country whose flag it flies, somewhat understandable when the list also contains landlocked places such as Mongolia and Bolivia. It remains to be seen if the RMI’s new status will see it delisted by the maritime unions as well as the EU.

The Registry also has a somewhat quirky status dating back to the very first ship registry. It is in fact based in Reston Virgina and operated by a company called International Registries Incorporated. Originally it was called Stettinius Associates-Liberia, Inc. the Liberian registry being the second ever flag of convenience after Panama.

When US labour organisations frowned on Panama’s human rights records after World War II, ex US Secretary of State, Edward Stettinius, who had served under two presidents, together with Liberian friend and then Liberian president William Tubman, formed the company which gave 25% of profits to the Liberian government, 10% to good causes in the country and retained the rest.

The nature of the arrangement changed when then Liberian President Charles Taylor demanded more money after the civil war of 1989/90 and the company incorporated the Marshall Islands flag where it remains to this day. Taylor, a man with the most chequered of careers including allegedly working for the CIA, was sentenced to 50 years in prison as a war criminal amongst other things by the International Court in the Hague.