The tonnage tax regime was introduced in the 2002 Finance Act to help the Irish shipping sector, which along with other EU countries faced competition from ships registered outside the EU. Several member states reacted to these developments by introducing a special low tax regime known as tonnage tax under which the tax is paid by reference to the tonnage of the ships.
The tonnage tax system currently applies in 12 EU countries, including Ireland, and the tonnage tax regimes for these EU countries have had to be cleared with the European Commission for state aid purposes. The European Commission is conscious of the need to protect the EU shipping sector and took this key objective into account when approving the tonnage tax regime.
I am informed by the Revenue Commissioners that only four companies have opted for the tonnage tax scheme and have accordingly paid tax in that manner. The total tax paid in 2003 under the regime was €100,000. None of these companies appear to give rise to concern about the appropriateness of tonnage tax in their circumstances.
I have no immediate plans to review the specific operation of the tonnage tax system. However, I assure the Deputy that all tax reliefs and incentives are kept under review, especially in the context of the budget and Finance Bill, to ensure that they continue to fulfil the objective or objectives for which they were introduced.
