Shipping looks like slipping through the net of global corporate tax rules being developed.

A progress paper at the OECD recognises that its Global Anti-Base Erosion Rules (GloBE) for a worldwide minimum tax on companies will not apply to shipping.

“The GloBE rules ... provide for an exclusion for international shipping income, using the definition of such income under the OECD Model Tax Convention,” said the document released on 1 July, which reflects the current consensus among 130 nations.

Richard Stephens, partner at Watson Farley & Williams, described this as good news for the industry.

“The update published yesterday by the OECD is hugely positive for shipping,” he told TradeWinds.

“Previously, it had simply been acknowledged that international shipping may be a special case and that its position within the new rules would need to be considered.

“It seems that the idea that international shipping is a special case has been accepted and that the requests made on behalf of the international shipping industry for retaining the status quo when it comes to tax have been successful.”

Under the current draft, the vast majority of shipping companies would probably escape even if no explicit exemption for the industry were made.

The primary object of the global tax is companies with a minimum annual revenue above €20bn ($23.7bn) for so-called "Pillar 1" digital economy giants — eventually to be lowered to €10bn - and above €750m for "Pillar 2" firms. Shipping companies would have fallen under the latter category.

Shipping should remain vigilant as talks at the OECD continue, according to Stephens.

“Progress on the negotiations will need to be monitored, but for now this is a good news story for shipping,” he said.

The news is a relief for an industry that is increasingly constrained by environmental and technological regulation.

As TradeWinds reported, the European Union is moving towards adopting ever stricter rules concerning the type of fuel ships use and the charges owners will have to pay for their ships' greenhouse gas emissions.

The article was amended after initial publication to clarify the different revenue thresholds applying to different kinds of companies under the proposed rules