ARLINGTON, Va. -- The
International Council of Cruise Lines (ICCL) is seeking a waiver
from the U.S. Treasury Department that would exempt Carnival Corp.
from paying income tax on the three cruise ships it chartered to
the Federal Emergency Management Agency (FEMA).
Most cruise lines are
exempt from federal income tax because they are classified as
foreign corporations involved in the international operation of
ships. Carnival Corp., for example, is incorporated in Panama, and
its ships are registered in the Bahamas. But a ship that is docked
and operating in U.S. waters is no longer engaged in international
operation and can be subject to taxes.
The ICCL appealed to
the Treasury Department for a waiver for FEMAs chartered vessels,
which comprise the Carnival ships as well as the Scotia Prince, a
ferry, and for any future ships chartered by FEMA for relief
As it relates to taxation, treat these
charters as essentially vessels that are operating on international
voyages. Dont change the tax status, said Michael Crye, ICCLs
president. In essence, thats what were asking.
If [taxes] are waived,
then the cost estimates will be reduced, he added. By waiving the
taxation, youre reducing the cost of the charters. Its a wash for
the government, it reduces the outlay for FEMA and it reduces
paperwork for Carnival, Scotia Prince and others in a similar
Carnival and FEMA
included a reimbursement for U.S. taxes when it structured the
The ICCL also
requested a waiver from the U.S. Department of Homeland Security
that would exempt the chartered ships from fines if they violate
the U.S. Passenger Services Act, which prohibits foreign-flagged
ships from beginning a voyage in one U.S. port and ending in
another before it calls at an international destination; it also
asked the government to waive visa restrictions on foreign crew
working onboard the docked ships.
There are a number
of issues that are involved in taking ships that are normally
engaged in international commerce and placing them into service as,
essentially, a hotel alongside the dock in the U.S., Crye
reporter Rebecca Tobin, send e-mail to [email protected].