Ship management is a major sector of the shipping industry, with ship managers establishing themselves in a number of locations with notable ship management centres present in Cyprus, the Netherlands, Singapore and Hong Kong.
Ship management has been simply described as the function of taking care of a ship. It is generally carried out in-house, that is by the shipowner or a member of the same ship owning group. However, it is also often undertaken by third-party ship managers.
In brief, third-party ship management is performed by professional undertakings which are completely independent from shipowners who wishing to outsource ship management functions. The typical management roles offered by ship managers may be broadly split into three main service areas – technical, crew and commercial management. The services provided when offering technical management include ensuring compliance with flag state requirements and with the ISM and ISPS Code, making arrangements for and supervising the maintenance of the managed vessel and the supply of same with the stores and spares needed. Crew management services include the selection and engagement of crew, payroll, certification control, training as well as organising the transportation of the crew.
Despite the range of maritime services offered in and from Malta, the presence of third party ship managers in Malta is, so far, practically negligible. In order to attract ship managers to our shores, a comprehensive, stable and functional legal framework on ship management and on the formation, operation, regulation and taxation of ship managers is indispensable.
The news that the European Commission conditionally endorsed the Maltese tonnage tax system was therefore received with great enthusiasm. Following the Commission’s decision on December 19, 2017, Malta published Legal Notices 127 and 128 of 2018 which amended, supplemented and reinstated its tonnage tax law previously regulated by Legal Notice 83 of 2010. Published on April 13, 2018 and effective on May 1, 2018, the new law strives to ensure compatibility between the Maltese tonnage system and the European Union’s rules on State aid and is being regarded as a positive development by the Commission, Malta and the shipping industry.
As was the case with its predecessor, the scope of Legal Notice 128 of 2018 is not limited to ship owning activities – ship management and ship managers are also addressed. Ship management activities are now included in the tonnage tax system. Effectively this means that going forward, ship managers are permitted to pay a ‘tonnage tax’ which is equivalent to a percentage of the tonnage tax paid by the owners and/or charterers of the ships managed and this to the exclusion of the standard corporate tax levied under the Income Tax Act (Cap. 123 Laws of Malta).
by Jan Rossi, member of the MMLA and maritime lawyer within the shipping practice at Ganado Advocates
Source: Times of Malta