Revised State Aid Guidelines Prompt Amendments to Shipping Tax Regime

On May 13 2005 the Ministry of Finance presented proposals to amend the tonnage tax regime. The proposals,which were adopted by Parliament this Summer, are based on the revised State Aid Guidelines on maritime transport adopted by the European Free Trade Association Surveillance Authority on March 31 2004.

Two elements of the revised guidelines cause problems for the Norwegian tonnage tax regime: the flag requirement and the definition of 'maritime transport'.

There was no flag requirement under the old tax regime. Under the new provisions, a shipping company will have to maintain or increase its proportion of European Economic Area (EEA)-registered tonnage compared to the tonnage owned by the company as of July 1 2005 (except where the company owns at least 60% of EEA-registered tonnage). An exemption from the flag requirement applies where companies subject to the shipping tax regime have maintained or