Let us pay taxes, shipping companies say

Ocean going companies came forward to pay taxes even though they were kept in the red, 'according to the books' by foreign exchange losses, and yet managed to make some pretty good money despite that.

According to the Korea Shipowners Association on Feb 2nd, 36 domestic ocean-going shipping companies recorded 1.1046 trillion won in sales profit and 404.8 billion won in non-sales related profit last year thanks to favorable shipping markets. Although they paid 1.3752 trillion won for vessel purchases and fuel expenses, they received ordinary profits of 134.2 billion won. However, they showed a deficit estimated at 745.9 billion won

The deficit was due to the won/dollar exchange rate depreciating by 114.30 won, compared to a year ago, reaching 1,259.70 won. The won's depreciation posted 880.1 billion won in foreign exchange losses, creating 7.7 billion dollars in net foreign debts.

On the other hand, shipping firm incomes were down 27 percent to 826.5 billion won in 1999 compared with 1.1378 trillion won profit in 1998. However, they paid 272.9 billion won in corporate taxes, as much as 10 times that of 1998. After all, in 1999, when sales results were not good, shipping companies paid more taxes, and in 2000, where they posted better sales records, they were not required to pay any taxes.

Even though shipping companies seemed to have plenty of money because they paid no taxes in 2000, they called for the government to change the account system for paying taxes. This was based on whether foreign exchange was re-flected and they jumped their cumulative debt to equity ratio to 482 percent, or if not, their cumulative ratio remained at 402 percent, causing financial strain and stock prices to fall.

A KSA official said that shipping companies, which owed lots of money from purchasing vessels, presented distorted accounting results depending on foreign exchange rates, instead of giving actual sales figures.