In this Issue:-
1. Legal Alert – June 2013 – Marine, Shipping and Cabotage Regulations & Tax
2. Disclaimer Notice.
3. Copyright Notice.
Non-Resident Marine and Shipping Taxation
Section 14 of the Companies Income Tax Act (as amended), provides that any non-Nigerian owned or controlled sea company, that calls at any sea port in Nigeria, shall be liable to have its profit or loss arising from its carriage of passengers, mails, livestock or goods shipped to Nigeria, charged to Nigerian tax.
Profits arising from the carriage of passengers, mails, livestock or goods, solely for trans-shipment through Nigeria, or for transfer from one ship to another ship going out of Nigeria, are not however liable to bear Nigerian income tax.
The minimum tax payable by any non-Nigerian Company, engaged in transportation by sea business, shall not be less than Two per cent (2%) of the total sum receivable in respect of the carriage of passengers, mails, livestock or goods shipped to Nigeria.
Coastal and Inland Shipping (Cabotage) Act
To encourage the development of indigenous ownership of vessels for the carriage of goods by ships within the territorial waters of Nigeria, and to establish a Cabotage Vessel Financing Fund, the Coastal and Inland Shipping (Cabotage) Act (“Cabotage Act”) was passed into Law in 2003.
Prohibition of Non-resident Vessels, Tugs or Barges in Domestic Coastal Trade.
Any vessel, other than a vessel wholly owned and manned by a Nigerian Citizen, built and registered in Nigeria, shall not engage in the domestic coastal carriage of goods and passengers within the coastal, territorial, inland waters, island or any point within 200 nautical miles seawards from the coast of Nigeria.
Also, any tug or vessel not wholly owned by a Nigerian Citizen shall not tow any vessel from or to any port or point within the Nigerian Exclusive Economic Zone, which is an area extending up to 200 nautical miles seawards from the coast of Nigeria.
This restriction shall not however preclude a foreign-owned and registered vessel from rendering assistance to persons, vessels or aircraft in danger or distress in Nigerian territorial waters.
A vessel, tug or barge of whatever type other than a vessel, tug and barge whose beneficial ownership resides wholly in a Nigerian Citizen or legal entity shall not engage in the carriage of materials or the supply of services to and from oil rigs, platforms and installations whether offshore or onshore, or within any port or points in Nigerian waters.
A further prohibition is the inhibition of non-Nigerian built and registered vessels, of whatever type or size, engaging in any domestic trade of any kind in the inland waters of Nigeria.
In the case of rebuilding a vessel, such a vessel shall be eligible for cabotage services rendition if the entire rebuilding, including the construction of any major components of the hull or superstructure of the vessel, is effected in Nigeria.
Exceptions to Indigenous Cabotage Trade
Any foreign-owned vessel that is engaged in salvage operations, marine pollution emergency services and oceanic maritime scientific research that is beyond the capacity of Nigerian-owned and operated salvage vessels and companies are exempted from the above prohibitive domestic cabotage trade rule.
The prior approval of the Minister for Transportation (“the Minister”) is however required before a foreign-owned vessel can engage in any of the above-mentioned exempted activities. Such prior approval will not however be required for a foreign-owned vessel engaged in salvage operations that renders assistance to a person, vessel, or aircraft that is in danger or distress in Nigerian coastal waters.
Where the Minister is satisfied that no vessel that is wholly owned by Nigerians is available to provide the cabotage services required under the Cabotage Act, the said Minister may grant a waiver to a duly registered non-Nigerian owned vessel to provide cabotage services within 200 nautical miles seawards from the coast of Nigeria, for a limited period.
Also, where the Minister is satisfied that no Nigerian-owned ship building company has the capacity to construct a particular type and size of vessel specified in a waiver application, the Minister may grant a waiver to the statutory requirement for such a vessel to be built in Nigeria, by Nigerians.
Lastly, the Minister is authorised to, on the receipt of an application to grant a waiver to a duly registered vessel, on the requirement for such a vessel to be wholly and exclusive manned by Nigerian Citizens, grant such a waiver where he or she is satisfied that there is no qualified Nigerian officer or crew to man the position specified in the waiver application.
Priority in Granting Waivers
The sequential order for the Minister to consider whether to grant a waiver to non-Nigerian owned vessel or ship to engage in the restrictive domestic cabotage trade in Nigeria is that such Applicant non-resident c