'Desperate' GRIs by carriers prop up Asia-Europe spot rates, for now
Container shipping lines on the main east-west trades this week managed to reverse 15 weeks ...
XOM: INCOME PLAYSTLA: BOUNCING FROM LOWSCHRW: A SLEW OF UPGRADES MAERSK: MOMENTUMAAPL: BOOOOMMMAMZN: CONF CALL TRANSCRIPT SCREENING ZIM: MAERSK BOOST DHL: SHRUGGING OFF CYBER TROUBLE SO FARGXO: WINCANTON RISK HEIGHTENSGXO: REMARKS THAT WERE NOT LIKEDMAERSK: SURGINGMAERSK: CLIENTS NOT EXPECTED TO PAY MORE FOR GEMINIMAERSK: NO GXO APPETITEMAERSK: 'NOT FULLY SATISFIED YET' MAERSK: 'GEMINI DESIGN' MAERSK: GEMINI NETWORK MOVING PARTSMAERSK: CAPITAL RETURNSMAERSK: CONSOLIDATION ON THE RADARMAERSK: CONF CALL
XOM: INCOME PLAYSTLA: BOUNCING FROM LOWSCHRW: A SLEW OF UPGRADES MAERSK: MOMENTUMAAPL: BOOOOMMMAMZN: CONF CALL TRANSCRIPT SCREENING ZIM: MAERSK BOOST DHL: SHRUGGING OFF CYBER TROUBLE SO FARGXO: WINCANTON RISK HEIGHTENSGXO: REMARKS THAT WERE NOT LIKEDMAERSK: SURGINGMAERSK: CLIENTS NOT EXPECTED TO PAY MORE FOR GEMINIMAERSK: NO GXO APPETITEMAERSK: 'NOT FULLY SATISFIED YET' MAERSK: 'GEMINI DESIGN' MAERSK: GEMINI NETWORK MOVING PARTSMAERSK: CAPITAL RETURNSMAERSK: CONSOLIDATION ON THE RADARMAERSK: CONF CALL
Foreign-flagged container shipping lines facing the heat from Indian tax authorities have been lobbying the government for relief, with no results thus far.
The issue has significant repercussions for the liner industry. Last year, all major box ship operators on Indian trades, received a government notice over their alleged failure to fulfil their obligations under India’s Goods and Services Tax (GST), a unified tax law implemented in 2017.
Maersk, for example, was told to pay a tax penalty of some $450m, according to available documents.
Leaders of the Container Shipping Lines Association (CSLA), an industry group representing foreign liner operators in India, held multiple rounds of talks with officials at the department of revenue to express their concerns.
“The GST council was expected to take a decision to sort out the issue, but it still remains undone,” an industry source told The Loadstar. “There appeared to be alignment at the highest level that industry concerns would be looked into.”
At the centre of the debate is the so-called “arm’s-length” relationship between a foreign entity and its local frontline office. But this concept or principle, under which international organisations are typically taxed only on earnings in the country of origin, has had its share of ambiguity and controversy. And governments worldwide have treated these transactions in different ways.
The CSLA submitted the industry view that there was “no supply” of goods or services involved to attract provisions of the GST framework. The group also argued that local carrier offices were merely acting as agents or frontline offices for the foreign entities.
“All the shipping contracts – including contracts with Indian customers – are entered into by the foreign shipping lines, which are overseas entities,” CSLA told the department. “The expenses incurred and the profits earned – including under contracts with Indian customers – are, likewise, of the overseas entities,” it argued.
According to local carrier sources, a review of the tax policy to grant exemption is critical for the liner industry, as the perceived liability could keep inflating.
“The remittances from India – ie, collections from Indian customers under the said contracts after payment of expenses in India – belong to the overseas entities and represent repatriation of funds belonging to the foreign shipping lines,” CSLA explained.
Foreign ocean carriers account for more than 95% of Indian containerised trade and as such, their stakes are enormous.
Meanwhile, foreign airlines operating out of India recently received relief from similar tax shocks following industry pushback, particularly from the International Air Transport Association (IATA). IATA said the GST rules were inconsistent with international practices and conventions.
So, signs of frustration among ocean carriers are growing.
“We do not know why our calls for relief continue to be ‘under consideration’,” one liner executive said.
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