Senate bill would tax cruise line income

A little-noticed provision of the Senate’s tax reform legislation introduced last week would partly repeal an exemption from U.S. income tax that the cruise industry has enjoyed for decades.

The Senate’s Tax Cuts and Jobs Act addresses sections 873 and 883 of the tax code that provides for reciprocal exemption from income taxes for foreign corporations in the ocean shipping business.

All of the major cruise lines are legally incorporated in foreign nations such as Panama, although they maintain their principal headquarters in the United States.

The bill “creates a category of income defined as passenger cruise gross income,” according to a summary by the Congressional Joint Committee on Taxation. “As a result, effectively connected passenger cruise income is subject to net basis taxation,” the analysis said.

“Effectively connected passenger cruise income” is defined as the part of a voyage that occurs in U.S. territorial waters 12 miles from shore. It essentially applies to the embarkation and disembarkation days of cruises that leave from U.S. ports on ships owned by foreign corporations.

Cruise lines currently pay income taxes on land-based activities that occur in the U.S., such as excursions in Alaska, but it is a minor share of their overall income.

The cruise tax provision is detailed on the second-to-last page of the 247-page analysis under the heading “Other Provisions.”

Stock analysts attributed a swoon in cruise shares on Friday to investor discovery of the provision. Shares of Carnival Corp. closed down 2.3% on Friday, while shares of Royal Caribbean Cruises Ltd. fell 1.9% and shares of Norwegian Cruise Line Holdings sank 2.9%.

Analysts pointed out that the shape of a final tax bill in the Senate is far from set, and the House tax bill currently does not change the tax treatment of cruise shipping income for foreign corporations or nonresident owners.

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Panama Canal Gives Nod to New Pacific Port

Panama Canal Gives Nod to New Pacific Port

The Panama Canal Board of Directors this week formally approved the development and construction of a transshipment port in Panama’s Corozal region.

Upon completion, the port will have the capacity to handle more than five million TEUs within a 120-hectare area at the Canal’s entrance to the Pacific. The project is now awaiting the final step for approval from Panama’s National Assembly.

The two-phased port project will include the construction of a 2,081-linear-meter-dock, a container yard, offices and warehouse facilities within a 120-hectare area owned by the Panama Canal.

The project’s first phase will include 1,350 linear meters of docks, three docking positions for Post-Panamax ships, and an approximate handling capacity of three million TEUs. Currently, the Pacific side has an estimated capacity of five million TEUs. With the expanded Canal, demand on the Pacific side is expected to reach six million TEUs and by 2020, eight million TEU capacity.

The National Assembly is expected to review the bill in the coming days. If approved, the Panama Canal will move forward with the development and tender process. The Panama Canal will issue a call for bids to hire a company that will be responsible for all stages of the project. The contract will, most likely, consist of a 20-year concession, renewable once for 20 years.

”Advancing the terminal in the Corozal region is a priority. It is part of the Panama Canal’s goal to explore and develop areas, products and services that are close to our core business, and that add substantial value to our customers as a one-stop gateway with multiple services,” said Panama Canal Administrator/CEO Jorge Luis Quijano.

The new port terminal will also include the construction of port facilities capable of handling Post-Panamax vessels. With a terminal of 16.3-meter-deep access canal and a depth of 18 meters along the dock, the new facility will provide docking facilities for five Post-Panamax ships.

Clips of My Panama Canal Transit – 

https://www.youtube.com/user/wetravel2u/videos

Photos of Our Transit and More  –

https://www.flickr.com/photos/45642696@N07/sets/72157649685216732/

Work halted on Panama Canal expansion

By Tom Stieghorst

The Panama Canal Authority said almost all activity has ceased on the project to widen the canal, amid a payments dispute with the contractor.

A consortium led by Spain’s Sacyr Vallehermoso is seeking reimbursement for cost overruns of more than $1 billion.

Two weeks of negotiations have not produced a resolution, the authority said.

Canal Administrator Jorge Quijano said the authority continues to try to find a solution, but stressed that the contractor must resume normal activity, which is critical during the dry season in Panama.

The widening project had been scheduled for completion in mid-2015. Current canal passage is not affected.