A ship is berthing in India!

A new policy has been introduced in India recently

All CIF goods exported to the country

Will be based on the original freight

Additional 4.5% service tax

This charge is for shipping company!
 

At present, the shipping company has issued an emergency notice document, indicating that according to the requirements of the revised tax policy of the Indian government (notification no.26/2012-service tax and notification no.8/2015-service tax), from January 22, 2017, all freight prepaid goods exported from China (excluding South China) to India will be subject to a service tax of 4.5%.

It is reported that the Indian government's charge is for shipping companies. But the shipping company is bound to pass on the cost to the owner. It is expected that more shipping companies will levy the fee in these days. At present, the sea freight from China to India is about 300 US dollars, while the service tax of 4.5% is 13.5 US dollars. If 100 containers are exported to India in a year, an extra US $13500 of freight will be paid, which will increase the burden of foreign trade enterprises!

Although the main body of the service charge is the cargo carrier (shipping company), the shipping company will certainly turn to collect it from the cargo owner. At present, most shipping companies, such as OOCL / MSc / APL / saf / SCI / YML / Zim / CMA / ESL, have issued their implementation methods, and more and more shipping companies will surely collect the service tax in the future. Please pay special attention to this expense for foreign trade friends who export to India.

All shipping companies follow up

It is reported that the new deal has attracted wide attention of the international community, and everyone has condemned the unreasonable charges of the Indian government! How this policy will be implemented in the future remains to be further observed.

 

 

 

 

 

Extended reading

 

 

 

 

 

 

What is freight tax? How to reduce it? I'll give you a thorough explanation this time

Freight tax is a kind of tax levied by the tax bureau of a country on the freight earned in its territory. Many countries levy freight taxes. The tax rates are different and the names are different. For accurate information, please refer to BIMCO's annual publication "double taxation of non residential shipping".

The freight rate affects a country's shipping competitiveness. Low tax rate or tax exemption, on the one hand, can attract lessors from other countries to register, enhance the shipping strength of the country, on the other hand, can reduce the transportation cost of import and export goods in the country. The agreement of avoiding double taxation among countries can also reduce the freight tax of the carrier in other countries.

In the charter party, for the provisions of Gencon's sample of Freight Tax:

"13. Taxes and royalties

(a) With respect to the vessel - the owner pays all royalties, fees and taxes levied on the vessel.

(b) With respect to goods - the lessee pays all royalties, fees and taxes levied on the goods.

(c) In respect of freight / lessee to pay all taxes on freight unless otherwise stated in column 23. "

However, in practice, many C / P lessees pass this obligation on to lessors through additional terms.

Because different countries use different names for freight tax, such as common income tax, it is controversial whether this kind of tax belongs to freight tax. At this time, the nature of tax should be judged. For example, Iraq collects freight tax according to the number of voyages of ships to its ports, but calls it income tax, and the more freight income the shipowner receives, the higher the freight rate. On the face of it, the name of the tax is called income tax, which seems to be levied on ships. However, the British court of Appeal ruled that the tax is freight tax and should be paid by the charterer according to the charter party. [THE “GUNDA BROVING（1982）2 LLOYD‘S REP。 39]

Freight tax has different regulations in different countries. If the ship fails to pay the required freight tax to the port group of the country before departure, the ship will not be able to leave until the required freight tax is paid. As the carrier of freight tax, how to reduce or reduce the cost? In practice, agents can be used to understand the methods of reducing freight tax and provide the information needed by port authorities, such as C / P clauses, etc. Here are two examples, India and Vietnam.

India stipulates that if the government of India and the government of the freight beneficiary (i.e. the owner) sign the DTA agreement, the freight beneficiary can enjoy a 3.1365% discount, i.e. as long as it pays 3.1365% of the freight tax; while China / Singapore and the government of India have a 100% reduction, i.e. as long as the freight beneficiary (i.e. the owner) is registered in China or Singapore, it can enjoy 100% tax-free treatment and enjoy The freight beneficiary receiving such tax exemption treatment must provide the following documents: the business license of the freight beneficiary company, the tax registration certificate of the company in the country and the certificate of its notary office, the charter contract signed and sealed by the shipowner (the freight beneficiary) and the charterer (the name and country of the shipowner and the charterer must be indicated).

Vietnam port group collects 3% of the freight from the foreign ships loaded in Vietnam as the freight tax, and stipulates that Chinese shipowners have the right to apply to Vietnam port group for deducting 1% of the freight tax after the ship leaves the port, but it usually takes a long time. In fact, there is a more simple and feasible way in Vietnam, which is to make a recap figure with the signature and seal of the shipowner and the charterer, and change the freight in the recap figure to the original 50% or less, so that the freight tax collected will be reduced, which can save a lot of freight tax.

These documents need to be submitted to and approved by the local port group before the ship leaves the port. Otherwise, the ship cannot leave the port on time until the required documents are approved or the required freight tax is paid. Therefore, when providing these documents, it is important to keep track of them in advance until they are accepted by the local port authority. There are also many ports with freight tax requirements, such as the Philippine port has 4% freight tax, etc. as a ship owner, before sending a ship to load in the past, he should understand the local freight tax collection situation with the local agent, as well as the method and required documents for the reduction of freight tax, and make preparations as early as possible.