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    83.820
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  • OTRI.USA
    21.920
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  • OTVI.USA
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American Shipper

Congress ends CBP ad valorem tax on U.S.-flag ship repairs overseas

Congress ends CBP ad valorem tax on U.S.-flag ship repairs overseas

   A coalition of U.S.-flag vessel operators and maritime unions successfully lobbied Congress to end a 50-percent ad valorem tax imposed by Customs and Border Protection on repairs done by American crews in foreign ports.

   The House approved the measure, which was included as a technical correction in legislation pertaining to the private pension system, at the end of July. The Senate passed the same legislation late last week.

   “This is language that our coalition has supported since the ink was scarcely dry on the previous technical correction enacted in 2004 that exempted vessel owners from the duty for repairs done by the American crew while on the high seas,” said Gloria Cataneo Tosi, president of the Washington-based American Maritime Congress, in a memo to the Vessel Repair Statute Coalition. “However, due to an ill-conceived interpretation by the Bureau of Customs soon after enactment, we had to go back to Capitol Hill requesting another technical correction.”

   In 2001, CBP imposed a 50-percent ad valorem tax on all supplies and parts used by American crews for routine repairs and maintenance at sea. AMC estimated the tax cost U.S.-flag vessel operators about $200,000 per ship per year, in addition to the paperwork burden to comply. CBP refused to budge on the tax and AMC went to Congress to have it eliminated.

   But AMC soon learned it had to further clarify the interpretation of the 50-percent ad valorem tax, because CBP insisted that it could still apply it to work done by American crews in foreign ports.