Публикации

The Law on Amendments to Particular Legislative Acts of the Russian Federation for the Formation of the Russian International Ship Register has been approved on its third reading in the Russian state Duma.

The main purpose of the law is to make the Russian flag more attractive to shipowners. Approximately 1,425 vessels - representing 6.7 million deadweight tons of shipping - trade under the Russian flag. According to estimates supplied by the Ministry of Transport, the new legislation is expected to lead to the re-registration of 850 foreign ships (including 440 built in Russia and 105 owned by foreign shipping companies) within the next seven years.

The law exempts shipowners from certain taxes and customs duty. The new measures abolish the existing 18% value added tax (VAT) on the construction of new builds on Russian yards, subject to the inclusion of a clause in the build contract requiring that the vessel be entered into the international register. They further exempt shipping companies from income tax - presently levied at 24% - on income received from the operation of such ships, provided that either the loading or the discharging port is located outside Russia.

The importation of ships to be registered in the International Ship Register would also be exempt from VAT and customs duty; at present, a shipowner which imports a vessel into Russia must pay 18% VAT and 5% customs duty. However, the taxes and duty fall due for payment if the vessel is deleted from the register for reasons other than constructive and total loss (eg, if the vessel is sold) within 10 years of the registration date. On the other hand, expenses relating to the maintenance, repair and operation of registered vessels will no longer be deductible from taxable income.

The International Ship Register is to be kept by harbour masters along with the State Ship Register and Bareboat Ship Register. Vessels can be registered in the international register for a limited period, which may be extended, or for an indefinite period, subject to annual confirmation. A vessel chartered by a Russian company under a bareboat charter can be registered either for the period of the charter or for the period during which foreign registration is suspended.

The registration procedure is similar to that used for general ship registration and is subject to the payment of registration fees based on the gross tonnage of the vessel. A charge is also levied for annual confirmation. Vessels may be deleted from the register if:

• the owner so directs;
• they are not used in international trade; or
• the annual confirmation fee is not paid on time. 

Registered vessels are not subject to restrictions in respect of marine insurance and may be insured by Russian or foreign insurance companies.

The measures will now be referred to the Council of the Federation for consideration before they are signed into law by the president. The law will enter into force on its official publication date, with the exception of certain tax provisions which will take effect after January 1 2006, but no earlier than one month after official publication.