After the ‘Paradise Papers’ revealed tax avoidance in UK overseas territories, Nautilus calls for the UK government to restrict the operation of so-called Red Ensign Group (REG) ship registries from the same locations.
With letters sent to foreign secretary Boris Johnson and shipping minister John Hayes, the union notes that these revelations by the ‘Paradise Papers’ show an extended use of UK territories and dependencies such as Bermuda, Gibraltar, the Cayman Islands and the British Virgin Islands in order for companies and individuals to avoid tax liabilities.
General secretary Mark Dickinson stated: “The papers contain extensive references to members of the Red Ensign Group (REG) which offer shipowners considerable incentives as well as the opportunity to use low-cost labour. Essentially, we believe they also serve as another form of tax haven subsidised by the British taxpayer.”
Continuing, Mr. Dickinson emphasized that according to ‘The 2016 Shipping Fleet Statistics’, UK Ship Register (UKSR) accounts for just 26% of the total REG deadweight tonnage, while as UNCTAD reports more than 80% of UK deadweight tonnage is registered with foreign flags, a fact that undermines the UK’s government stated aim of doubling tonnage under the UKSR.
Furthermore, there are evidences that a number of REG registers do not discharge their IMO/ILO convention responsibilities to the same level as the UKSR, with some being classed as flags of convenience by the International Transport Workers’ Federation (ITF), Mark Dickinson said. Thus, holding shipowners to account becomes more difficult.
“A reform of the REG is long overdue and he also called for ministers to make the findings of the Department for Transport’s study of the commercialisation of UKSR publicly available and to ensure there is open debate on its recommendations,” Mr. Dickinson highlighted.
Lastly, in order for the suspicion to stop, Mark Dickinson suggests that the 41m dwt of tonnage beneficially owned in the UK but registered in these exotic locations, as shown by UNCTAD, must return to the UKSR.