other country flag/ NO U.S. TAXES

[manderson110]

Does carnival and other cruise lines pay u.s.a. Taxes/?and is this why they tend to fly other country's flags? To avoid paying u.s.a taxes?

[aubreysmom]

I am not even going there :)

[mikedw]

They register there ships in what are called Flags of Convenience countries. By registering in these countries, they avoid US Taxes and Labor Laws. Even though most of the major cruise lines have there Headquarters in Miami, they're actually incorporated in foreign countries. Carnival is incorporated in Panama, Royal Caribbean in Liberia I believe and not sure about NCL.

 

In order to be registered in the US, ships have to be US built and crewed. The US does have a large merchant marine, but our shipyards are geared towards military and cargo vessels not cruise ships. Only major US flagged ocean going cruise ship sails around Hawaii. This ship was partially built in the US and finished in Germany when the original cruise line that ordered it went bankrupt. Since it was finished overseas it took an act of congress to flag it in the US.

[StrangeBrew]

This was from Florida Today on July 2nd .

 

 

Carnival Corp. and Royal Caribbean Cruises Ltd., both based in Miami, control about three-quarters of the world's cruise business, most of it from North America. Both trade on the New York Stock Exchange and pay millions in stock incentives to American executives. And they reported combined profits of more than $2 billion in their most recent annual reports to the U.S. Securities and Exchange Commission.

 

But Carnival and Royal Caribbean take advantage of maritime laws to avoid paying U.S. taxes, gain immunity from American labor laws, avoid U.S. courts in workplace disputes and fend off new environmental regulations, government records and industry reports show.

 

They have done that by incorporating in Central America and Africa and registering their ships under the flags of foreign nations -- giving tiny tropical countries regulatory power over one of Florida's major industries.

[manderson110]

Thanks i think i understand..but it just not right

[yst347]

From the Annual Report dated March 4, 2009:

 

NOTE 8 – Income and Other Taxes

We are foreign corporations primarily engaged in the international operation of vessels. Generally, income from the international operation of vessels is subject to preferential tax regimes in the countries where the vessel owning and operating companies are incorporated, and generally exempt from income tax in other countries where the vessels call due to the application of income tax treaties or domestic law which, in the U.S., is Section 883 of the Internal Revenue Code. Income that we earn which is not associated with the international operation of ships or earned in countries without preferential tax regimes is subject to income tax in the countries where such income is earned.

 

AIDA, Costa, Cunard, Ibero, Ocean Village, P&O Cruises and P&O Cruises Australia are subject to income tax under the tonnage tax regimes of either Italy or the United Kingdom. Under both tonnage tax regimes, shipping profits, as defined under the applicable law, are subject to corporation tax by reference to the net tonnage of qualifying vessels. Income not considered to be shipping profits under tonnage tax rules is taxable under either the Italian tax regime applicable to Italian registered ships or the normal UK income tax rules. We believe that the majority of the ordinary income attributable to these brands constitutes shipping profits and, accordingly, Italian and UK income tax expenses for these operations have been minimal under the existing tax regimes.

 

Carnival Cruise Lines, Princess, Holland America Line and Seabourn are primarily subject to the income tax laws of Panama, Bermuda, the Netherlands Antilles and Bermuda, respectively. As a general matter, the laws of Panama and the Netherlands Antilles exempt earnings derived from international ship operations and Bermuda does not have an income tax. With respect to the U.S. domestic law exemption, Section 883 regulations limit the types of income deemed to be derived from the international operation of a ship that are exempt from income tax. Accordingly, our provision for U.S. federal and state income taxes includes taxes on a portion of our ship operations, in addition to the transportation, hotel and tour businesses of Holland America Tours and Princess Tours.

 

We do not expect to incur income taxes on future distributions of undistributed earnings of foreign subsidiaries and, accordingly, no deferred income taxes have been provided for the distribution of these earnings. All interest expense related to income tax liabilities are classified as income tax expenses. In addition to or in place of income taxes, virtually all jurisdictions where our ships call impose taxes and/or fees based on guest

counts, ship tonnage, ship capacity or some other measure.

 

On December 1, 2007, we adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 clarifies, among other things, the accounting for uncertain income tax positions by prescribing a minimum probability threshold that a tax position must meet before a financial statement income tax benefit is recognized. The minimum threshold is defined as a tax position

that, based solely on its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution. FIN 48 was applied to all existing tax positions upon adoption. Our adoption of FIN 48 resulted in an $11 million reduction to our opening fiscal 2008 retained

earnings. In addition, based on all known facts and circumstances and current tax law, we believe that the total amount of our uncertain income tax position liabilities and related accrued interest are not material to our

November 30, 2008 financial position.

Carnival Corporation & plc 2008 Annual Report

[Nunu]

Thanks i think i understand..but it just not right

 

They'd probably be in litigation so much they'd be out of business if it were any other way if posts on here are any indication.

[sixgun8]

I think it is more for the Labor laws and the Social Security taxes rather than anything else. the crew work 16-18 hour days, 7 days a week for MONTHS at a time. Labor lawyers and unions would absolutely go nuts if they had to follow our laws as such. AND you'd have less PAX per ship to accomodate more crew and the cost would rise dramatically as both supply and demand would swing and the extra labor cost would also cause pricing increases. it's all pretty simple.

[amybeth4]

I don't have a problem with it. First of all, it's obviously legal, so why not take advantage of it?

 

If they had to have an American crew (meaning, mainly, stewards and wait staff) they'd have to pay them more...and no one would be able to afford to cruise!

[Traveler353]

It's just smart business. I don't blame them one bit. They still pay huge port usage fees here and bring a tremendous amount of business to the local port cities.

[Nunu]

I don't have a problem with it. First of all, it's obviously legal, so why not take advantage of it?

 

If they had to have an American crew (meaning, mainly, stewards and wait staff) they'd have to pay them more...and no one would be able to afford to cruise!

 

wasn't it ncl that tried that out of hawaii and almost went bankrupt?

[Schplinky]

Thanks i think i understand..but it just not right

 

 

If Carnival registered and paid US taxes. most people posting here would not be able to afford to sail Carnival. The ships would have to be staffed predominantly by Americans. Those high corporate taxes would be paid by the passengers through higher fees. This isn't the difference of an extra hundred or so.

[Patdmoose]

If I remember correctly. The first sailing of the US flagged cruise ship out of Hawaii had to cut the cruise short because the American crew was worn out. They came back after 4 or 5 days on a 7 day cruise.

 

Remember - Corporations do not pay taxes, people who buy from corporations pay those taxes!

[Schplinky]

If I remember correctly. The first sailing of the US flagged cruise ship out of Hawaii had to cut the cruise short because the American crew was worn out. They came back after 4 or 5 days on a 7 day cruise.

 

Remember - Corporations do not pay taxes, people who buy from corporations pay those taxes!

 

You are so right! Cruise lines would have to raise their prices to account for them.

 

I read a lot of NCL America reviews where people said the crew would be less than helpful (sort of like going to a mall food court).

[DocF]

If one goes to any major port in the United States, one sees that virtually all of the merchant fleet is flagged in "flag of convenience" nations. The cost of crewing a 250,000 deadweight ton tanker using U. S. seamen would be about $250,000 per month. Using officers from China and crew from Bangladesh (for example) it would be about $40,000 per month. The flag of convenience is here to stay for that very reason.

 

The U. S. merchant fleet, except for the Great Lakes, exists account of military contracts which require U. S. flagged vessels.

 

All the cruise lines register their ships in flag of convenience nations. It is to their advantage as the low-skill jobs can be done by low paid workers. And that is the way it is and will be. U.S. workers will not work for wages that make the cruise lines profitable. U.S. workers will not put in the hours needed to properly service the passenger. In other words, if you want to cruise, you will do it on a foreign flag vessel.

 

Doc

[Schplinky]

By the same logic, folks should all feel bad for buying duty-free liquor and smikes since buying it back home would be better for the economy.

[Traveler353]

Based on the level of customer service, or lack there of, here in the US I am glad that Americans do not work on cruise ships. Could you imagine the crappy service that would be provided.

[Powriv]

Lots of Canadians work on cruise ships

[sakapfet]

If Carnival registered and paid US taxes. most people posting here would not be able to afford to sail Carnival. The ships would have to be staffed predominantly by Americans. Those high corporate taxes would be paid by the passengers through higher fees. This isn't the difference of an extra hundred or so.

I dont understand why some corporations or some people want to avoid paying or pay as little taxes as possible but expect this country to have a powerful military, adequate healthcadre, great infrastructures, good schools for their kids ... I could go on an on ...

 

As a country of "teabaggers" we are screwed.

[Schplinky]

Lots of Canadians work on cruise ships

 

 

Not usually as crew. More often as better treated activities' staff

[ehfl]

There are a variety of reasons for flying foreign flags. The corporation is a US corporation, and does pay US corporate income taxes. However, each ship is it's own subsidiary corporation.

 

US law makes it virtually impossible to flag a vessel as US. No one would be able to afford a cruise on a US flagged vessel and the cruise industry simply would not exist.

[dan40]

GOOGLE the Passenger Vessel Services Act.

 

The PVSA was first passed in 1886. Its intent was to PROTECT American Passenger Vessels and the American Ship Building Industry. It states that IN ORDER TO BE REGISTERED in the US, a ship MUST be built in an American Shipyard [of which there are NONE capable of building a modern cruise ship] AND ir must be staffed by an American crew. Very hard to do and then you would have to contend with the prices.

 

The PVSA also states that if an American registered vessel is EVER re-registered in a foreign country, it can NEVER again be registered in the US.

 

So even if CCL, RCL, HAL and others WANTED to register in the US. UNITED STATES law would not allow it.

 

NCL cut a special deal where they bought and towed a hull built in Mississippi [yard went belly up], to Europe to be completed. Part of the deal was that they also buy the SS UNITED STATES, rusting at the dock in Philadelphia and restore it. They never will restore it but they did buy it.

 

The PVSA is often, mistakenly, called the "Jones ACT." But it is the PVSA that also does not allow a foreign registered cruise ship to carry passengers between 2 US ports without stopping at a "distant" foreign port.

[Powriv]

Not usually as crew. More often as better treated activities' staff

 

True most Canadians are in the entertainment staff, but there is the odd officer but I would be shocked to see any service staff or below deck staff

[scottyo72]

GOOGLE the Passenger Vessel Services Act. The PVSA was first passed in 1886. Its intent was to PROTECT American Passenger Vessels and the American Ship Building Industry. It states that IN ORDER TO BE REGISTERED in the US, a ship MUST be built in an American Shipyard [of which there are NONE capable of building a modern cruise ship]

 

There are American shipyards that can build cruise ships, but at a higher cost.

 

AND ir must be staffed by an American crew. Very hard to do and then you would have to contend with the prices.

 

True, but NCL America has apparently stabilized. The new NCL co-owners elected to continue the American-flagged service, even though they wrote themselves an escape clause when they intially invested in NCL.

 

The PVSA also states that if an American registered vessel is EVER re-registered in a foreign country, it can NEVER again be registered in the US. So even if CCL, RCL, HAL and others WANTED to register in the US. UNITED STATES law would not allow it.

 

I think waivers have been issued in the past, but it is not a given it would be approved again. None of the lines mentioned above have American-built hulls to re-register, so it's a no-go all around.

 

NCL cut a special deal where they bought and towed a hull built in Mississippi [yard went belly up], to Europe to be completed. Part of the deal was that they also buy the SS UNITED STATES, rusting at the dock in Philadelphia and restore it. They never will restore it but they did buy it.

 

Even though the cruise line that ordered the "Project America" hulls went bankrupt, Northrop Grumman's Ingalls Yard in Pascaguola, MS didn't. It was and is perfectly capable of completing the project. http://www.ss.northropgrumman.com/company/ingalls.html. NCL did buy the SS United States from a private estate at about the time NCL America was started with the stated intention of a return to service, but the purchase and restoration were a not, as has been widely repeated, a condition of the legislation that enabled NCL America's launch. It's painfully clear after 40 years of retirement that the US government has absolutely no interest in the SS United States existence, let alone restoration.

[Kurbanfan]

I think it is more for the Labor laws and the Social Security taxes rather than anything else. the crew work 16-18 hour days, 7 days a week for MONTHS at a time. Labor lawyers and unions would absolutely go nuts if they had to follow our laws as such. AND you'd have less PAX per ship to accomodate more crew and the cost would rise dramatically as both supply and demand would swing and the extra labor cost would also cause pricing increases. it's all pretty simple.

 

Not usually as crew. More often as better treated activities' staff

 

Sounds like we have a sweat shop going on:rolleyes: