Protests turned to riots in a number of major ports over the weekend as the United Nations announced that after years of debate and international diplomacy, an agreement has been reached that will see all seafarers taxed regardless of status in their country of residency, or amount of time spent therein. The plan will take effect on Jan.1, 2016.
The agreement consists of a process of pro-ration, in which a seafarer’s income will be taxed according to how many days in each nation they have spent while on duty, pro-rated to that country’s particular rate of taxation. It will also include days at sea, with days spent within the territorial waters of a nation counting equivalently to a day onshore there. For days spent in international waters the seafarer will pay tax directly to the United Nations at a set rate of 41% of net earnings. Seafarers that already pay income tax to a given nation will also have to adjust to the new system, as the agreement intends to tax them at whichever rate is highest.
“There are no free rides.” Says Emmanuel Bendovar, head of a new initiative at the UN known as Operation Tax Everyone. “Seafarers should have to pay tax somewhere, to someone at some stage in some way that means something. A commonly held misbelief is that as a seafarer is often not in their home country to use infrastructure, they should not have to pay into it. That is bullshit. They are in someone else’s country using someone else’s infrastructure, and when they are not they are at sea and that costs money. To rescue them for example, or to speak to them on the radio, or to spy on them for a long time from a long distance. This is not cheap and it costs money.”
What makes this complicated scenario possible is the development and mandatory adoption of an AIS (Automatic Identification System) at sea, and the now near-global ability to receive and track this data. With each commercial vessel now obligated to transmit their location, shoreside monitoring stations already in existence can easily follow vessel movements. They then correlate this with the crew list registered in the vessel’s last port of call (also visible on AIS) and tabulate the information in a global database created for the task, known as the Global Income Tracker Servicing Untaxed Mariners (GIT SUM).
Sensing the course of action most vessels would be likely to take given this method, Mr. Bendovar goes on to explain that “If a vessel turns off it’s AIS, the crew of said vessel will be taxed an equivalent amount due to every nation on earth for every day that they are untrackable.” When it was pointed out that this would be an extraordinarily high figure he confirmed this, saying, “Yes. It would be a shitload.”
Reaction amongst crew in the yachting industry, long known to be a business that plays fast and loose with tax regulations, has been effectively blind panic.
“Oh my god. Oh my god. Oh my god.” Was the response of one stewardess on being told of the development and asked her thoughts. A young man who identified himself as the fifth officer of a nearby 88m vessel, responded that this did not concern him as his accounts were in the Isle of Man. When told this would have no effect, and that the new regulations would still apply, he repeated the location of his accounts 4 more times before breaking down in tears.
The ramifications of the new agreement are certain to be widespread, and will undoubtedly wreck havoc on an industry whose wages are in large part predicated upon an assumption of reduced or nil taxation. With protests-leading-to-riots planned for every port in the Northern, Eastern, Southern, and Western hemispheres – and any overlap to result in combining of forces – tensions are building
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