This alert is intended for non-PRC owners and charterers who may
or have time-chartered vessels to PRC entities.
There are two PRC tax regimes that levy taxes against hire
payments made by PRC time-charterers, the Enterprise Income Tax
("EIT") and the Business Tax ("BT").
Previously, hire payments made to foreign (non-PRC) entities had
enjoyed the benefit of certain long-standing exemptions from these
PRC tax regimes. However, these exemptions were removed in recent
years following the introduction of new laws and regulations in
relation to EIT and BT. Unfortunately, a recent flurry of enquiries
suggests that these changes have not yet become common knowledge
within the shipping community; which might leave some owners
inadequately protected by the terms of any time-charter
negotiated.
