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The Organisation for Economic Cooperation and Development (OECD) announced yesterday that 130 countries have joined the two-pillar plan to reform international taxation rules. The statement outlines plans for new rules on where companies are taxed at a tax rate of at least 15%. The new minimum tax rate would apply to companies with turnover above a 750-million-euro ($889 million) threshold, with only the shipping industry exempted.

CLECAT is disappointed as it had called for an inclusive proposal. CLECAT now calls on OECD countries to include all kind of cargo handling and activities considered ‘ancillary’ in the scope of BEPS Pillar 2. This means that the services provided by carriers, in the area of logistics and terminal handling cannot be considered ‘ancillary’ to shipping and should therefore remain in the scope of BEPS 2. In case logistics activities were to be considered as ‘ancillary’, this would result in significant distortion of competition between integrated carriers and freight forwarders carrying out similar activities.

In response to the announcement Olaf Merk, ITF’s Administrator for ports and shipping, noted: “The decision to exclude shipping income raises the question what exactly is shipping,” commented “If it is in essence all that a shipping company does, excluding shipping from a global minimum tax could make terminal operators and freight forwarders wonder why they pay taxes for the same activities that shipping companies could offer tax-exempt or partially tax-exempt,” he added. The International Transport Forum (ITF) calculated that shipping currently pays 7% tax on profits on average worldwide, compared to the worldwide average statutory corporate income tax rate for all industries estimated at 24%.

FEPORT stated in a press release in June that if this exemption were to happen, then this would further distort competition in the port services sector to the advantage of shipping companies and undermine the very purpose of the new OECD proposals.

The remaining elements of the Framework, including the implementation plan, will be finalised in October 2021, for an implementation of the new tax rules expected in 2023.