Cabotage transportation has become more beneficial for vessels registered in the international register
From January 1, 2019, changes to the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation) will come into force regarding the accounting of repair and depreciation costs when using ships registered in the international register of ships.
The Tax Code of the Russian Federation stipulates that the income of shipowners received from the use of ships registered in the international registry during international transportation is exempt from taxation. At the same time, the income of shipowners received from the use of such vessels in cabotage is included in the tax base for income tax. However, the reduction of taxable income from cabotage shipping for the costs of repairs and depreciation of ships registered in the international ship registry is associated with high tax risks of filing claims by the tax authority.
Maria KOROBOVA, tax lawyer at the Stepanov and Aksyuk Law Office, associated office of GRATA International in Rostov-on-Don (Russia).