MOSCOW. (RIA Novosti political commentator Vasily Zubkov) - The State Duma, the lower house of parliament, has passed the first version of a bill on retaining the Russian international shipping register.
This document was drafted by the Transport Ministry on orders from President Vladimir Putin.
Ships under the Russian flag now export just 5% of all Russian foreign trade cargos, with freight worth $300 million. Total freight value hit an all-time high of $7.5 billion last year, as the country exported 450 million tons of cargos. The Russian merchant marine is ready to carry more freight, but unfortunately its total deadweight has shrunk four-fold over the last 13 years, from 10.6 million tons to 2.6 million tons.
Russian ship-owners prefer flying flags of convenience because of exorbitant taxes, duties and other deductions at home that increase freight costs. These companies naturally profit as a result of open registration.
National shipping companies are in no position to compete against flag-of-convenience carriers. However, Russia plans to introduce its own international shipping register by this fall, including special tax regulations for all Russian ships listed in it.
"The bill will exempt shipping companies from profit, property, transport and value-added taxes," Deputy Transport Minister Sergei Aristov said. "They will not pay any ship-import duties either."
"No VAT will be charged on sales of Russian-made ships. Ship-owners will only pay initial registration duties and for annual extension of registration," he added.
The introduction of zero-rate VAT aims to expand national ship production and sales by 2010 by up to five times. Up to 18,000 new jobs will be created aboard these ships, and another 50,000 new jobs at coastal enterprises.
Crews flying Russia flag will be covered by Russian jurisdiction at foreign seaports. The same goes for social security, medical insurance and pension support.
The projected international shipping register hopes to increase the number of merchant ships and tankers by 750, worth $12 billion and with a total displacement of 17 million tons. The ships will be able to export up to 183 million tons of freight annually, with a total value in excess of $2 billion.
Ship-owners and shipyards alike are eagerly anticipating these measures. Particularly keen are St. Petersburg's Baltic and Admiralty shipyards, both of which can launch ships displacing up to 70,000 tons deadweight, and Kaliningrad's Yantar and St. Petersburg's Severnaya shipyards, both capable of building ships up to 15,000 tons deadweight.
The Merchant Marine Code, the Tax Code and the Law on Customs Tariffs will all be modified after the introduction of the international register. But the Government is sure that this bill must be passed as soon as possible, because it is a vital shipping incentive that does not require additional budget expenditure.
