Canada waives import taxes on some ships"


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October 4, 2010

Canada waives import taxes on some ships

Jim Flaherty, Canada's Minister of Finance, has announced a waiver of Canada's 25 percent import tariff on imports of all general cargo vessels and tankers, as well as ferries longer than 129 meters.

Remitting the 25-per-cent tariff is expected to save shipowners $25 million per year over the next decade.

"This duty relief will accelerate the renewal of the Canadian marine fleet across the country and will help replace aging vessels with cleaner, safer and more efficient ships," said the Chuck Strahl, Minister of Transport, Infrastructure and Communities. "All the while, it will build on unprecedented investments our Government has made in Canada's infrastructure and gateways by contributing to the upgrading of marine transportation links across the country."

Under the Customs Tariff imported ships are subject to a tariff rate of 25 per cent, the highest rate of duty for industrial goods.

To complement the new duty remission framework, decisions have been made on all outstanding duty remission requests that were in the Canadian Government's in-tray. As part of those decisions, the Government is remitting the $15.3 million in customs duties paid on two tankers, the Algonova and the AlgoCanada, imported from Turkey by Algoma Central Corporation in 2008 and 2009. It is also remitting $119.4 million in customs duties paid on four large-sized ferries, the Coastal Renaissance, the Coastal Inspiration, the Coastal Celebration and the Northern Adventure, imported by the British Columbia Ferry Services Inc. (BC Ferries) between 2007 and 2009 from Germany

Duty remission will support the competitiveness of Algoma Central Corporation's downstream users, primarily producers and users of energy products, who should benefit from lower shipping rates as a result of this measure. Duty remission will also be of benefit to BC Ferries and to its users.

BC Ferries President and CEO David L. Hahn said the refunded import taxes would be used for an across the board ferry fare reduction of about two per cent. The rate reduction will take effect on Monday October 18, 2010.

In addition to a commitment to lowering fares, BC Ferries is also allocating $20 million to upgrade key assets in the ship repair and maintenance business in British Columbia. The details of this initiative are still to be finalized.

Full details on the duty relief announced last week will be published in the Canada Gazette, Part II on October 13, 2010.

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