China's "Xinxing", sunk by 500 shells, was leased and operated by Jiruixiang (Hong Kong) Shipping Co., Ltd. from Zhejiang Tongyu Company by bareboat in 2006. In order to facilitate the operation, the original name of the ship was changed from "Xintongyu 108" to "New Star" and the Sierra Leonean flag was hoisted, but the ship was completely owned by China Company.
It is a unique phenomenon in international shipping that ships hang flags of convenience. About 65% ships in the world merchant fleet fly flags of convenience. Some major shipping countries have taken measures and formulated policies to attract ships with domestic capital to register in China and fly their national flags. Ship migration is a worldwide problem. It is understood that Japan has the highest proportion of flag ships of convenience, reaching 85%, the United States 78%, Germany 77% and South Korea 70%.
Chinese ships flying flags of convenience have been concerned for a long time. As early as 1998, the deadweight of Chinese ships going abroad was 2010.5 million tons, accounting for 55.74% of the total tonnage of China's ocean-going fleet. At present, about half of the ships flying the flag of convenience in China are registered overseas, and the Chinese flag of convenience fleet surpasses the fleet flying the five-star red flag in scale and quality. The proportion of China ships registered overseas and operating under foreign flags has also increased year by year. At present, there are about 700 Chinese-funded ships flying foreign flags, accounting for about 50% of the total tonnage of China international shipping fleet. The ocean-going ship 1920 registered in China has a deadweight of about 24.58 million tons and flies the national flag of China.
According to experts, during the period of 1994, China's tax reform, new fiscal and taxation policies and changes in the domestic financing environment suddenly increased the proportion of foreign-built ships and foreign-moved ships, and remained high. For a long time, China has imposed a high tax rate on ship imports. From 1982, the state levies a tariff of 9% of the ship price on imported ships, and from 1985, it levies a value-added tax of 6%, which is further increased to 12%. After the tax reform of 1994, the total tax rate of ship import tariff and value-added tax reached 27.53% of the ship price, which was the highest among the shipping countries in the world. Paying such high tariffs and value-added tax has greatly increased the operating costs and burdens of international shipping enterprises, and put China shipowners at a disadvantage in the international market competition. Therefore, when China shipping companies build or buy second-hand ships abroad, most of them have to register overseas and operate with flags of convenience to avoid high import tariffs and value-added tax.
It is worth noting another policy change. 1984 the state stipulates that shipowners can be given low-interest loans to build ships. However, due to 1995, the People's Bank of China stipulates that the loan interest rate of all enterprises should be unified, so far there is no preferential loan for shipbuilding. In contrast, the interest rate of domestic ship loans is 4. 1 1 percentage point higher than that of foreign loans. In addition, foreign conditions are more favorable and convenient than domestic ones in terms of loan amount, loan term and deferred payment. In addition, the relatively low price of foreign ships leads China shipping companies to choose to order new ships or buy second-hand ships abroad, and passively accept the financing conditions of designated shipbuilding countries or flag countries.
After the implementation of the above two policies, domestic shipbuilding orders have crossed the ocean, and overseas shipbuilding and immigration have developed rapidly. According to statistics, domestic shipowners ordered 7.5 million new ships with large tonnage from abroad in 1994 ~ 1997, and most ships chose to fly flags of convenience without exception!
Another noteworthy economic factor is that, from the perspective of the operating income tax of ships, the tax rate of flag of convenience countries is quite low, and some flag of convenience countries are mostly exempt from income tax for the second-country transportation of ships registered in their own countries. For ships registered in China, the direct or indirect taxes and fees mainly include business tax, income tax, vehicle and vessel use tax, urban construction tax, education surcharge, stamp duty, etc. In order to avoid higher taxes and other commercial restrictions, it is not difficult to understand the operation of hanging the flag of convenience.
From the above factors, it is obvious that an empty patriotic slogan is not enough to promote the return of the China flag ship. Only when the relevant state departments really adjust the current fiscal and taxation policies from the overall interests can the existing immigration contradictions be solved. Once these major problems are solved, most Chinese flag ships will be registered in China.