New Russian tax cuts may make port calls in Norway redundant

President Dmitry Medvedev has signed a law that will lessen the tax burden on fishing companies when making port calls in Russia. The law may have serious impact on Norwegian ports serving Russian vessels today.



Russia’s President Dmitry Medvedev has signed several laws intended to support Russian business and boost employment, Russian paper Rossiyskaya Gazeta reports. One of the laws removes taxes for fishing vessels repaired or modernized abroad. Until now, shipowners have had to pay value added tax and import duties on all new equipment when calling a Russian port. Consequently, a significant part of the vessels registered for example in Murmansk, never west to that port, but used ports in Norway as bases instead.

With the new law, Russian fishing vessels are expected to return to Russian ports, and employment in the Russian fish processing industry is expected to rise. It is believed that one fisherman at sea gives work to seven people on shore.

This new law can have a major impact on several Norwegian coastal towns, among them Kirkenes. The freezing terminal Kirkenesterminalen is the largest consignee of Russian fish in Norway. It recieves 27 000 tons of Russian frozen fish every year, Norwegian news paper Finnmarken reports. It will be a major blow to the terminal if the supply disappears.

- If the Russian vessels are to stop using the port of Kirkenes or reduce their calls considerably, employment will drop, not only here at the terminal, but in the whole municipality of Sør-Varanger, manager at Kirkenesterminalen Randi W. Mathisen says.

The community makes 800.000 NOK for every vessel call. An average Russian vessel bunkers oil for 1,5 million NOK per call, and in addition agents, quay owners, repair shops and the trade sector make good money on the Russian vessels.

The new Russian law also entitles fishing companies to payment of a unified agricultural tax. This will reduce the tax burden on these companies considerably. The fisheries sector claims that it will still be a major budget contributor, and that the extra capital will be used by the companies to modernize the fleet and create new processing factories.

Source: http://www.barentsobserver.com/