Royal Caribbean Cruise Lines 2014 Annual Report Download - page 28

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Royal Caribbean Cruises Ltd. 27
PART I
Maltese and Spanish Income Tax
Our Pullmantur ship owner-operator subsidiaries,
which include the owner-operator of CDF Croisières
de France’s ship, qualify as licensed shipping organi-
zations in Malta. No Maltese income tax is charged
on the income derived from shipping activities of a
licensed shipping organization. Instead, a licensed
shipping organization is liable to pay a tonnage tax
based on the net tonnage of the ship or ships regis-
tered under the relevant provisions of the Merchant
Shipping Act. A company qualifies as a shipping orga-
nization if it engages in qualifying activities and it
obtains a license from the Registrar-General to enable
it to carry on such activities. Qualifying activities
include, but are not limited to, the ownership, opera-
tion (under charter or otherwise), administration and
management of a ship or ships registered as a Maltese
ship in terms of the Merchant Shipping Act and the
carrying on of all ancillary financial, security and com-
mercial activities in connection therewith.
Our Maltese operations that do not qualify as licensed
shipping organizations, which are not considered sig-
nificant, remain subject to normal Maltese corporate
income tax.
Pullmantur has sales and marketing functions. These
activities are subject to Spanish taxation. The tax
from these operations is not considered significant
to our operations.
United Kingdom Income Tax
We operate fourteen ships under companies which
have elected to be subject to the United Kingdom
tonnage tax regime (“U.K. tonnage tax”).
Companies subject to U.K. tonnage tax pay a corpo-
rate tax on a notional profit determined with reference
to the net tonnage of qualifying vessels. Normal United
Kingdom corporate income tax is not chargeable on
the relevant shipping profits of a qualifying U.K. ton-
nage tax company. The requirements for a company
to qualify for the U.K. tonnage tax regime include
being subject to United Kingdom corporate income
tax, operating qualifying ships, which are strategically
and commercially managed in the United Kingdom,
and fulfilling a seafarer training requirement.
Failure to meet any of these requirements could cause
us to lose the benefit of the tonnage tax regime which
will have a material effect on our results of operations.
Relevant shipping profits include income from the
operation of qualifying ships and from shipping
related activities. Our United Kingdom income from
non-shipping activities which do not qualify under
the U.K. tonnage tax regime and which are not con-
sidered significant, remain subject to United Kingdom
corporate income tax.
Brazilian Income Tax
Pullmantur and our U.K. tonnage tax company charters
certain ships to Brazilian companies for operations in
Brazil from November to May. Some of these charters
are with unrelated third parties and others are with a
Brazilian affiliate. The Brazilian affiliate’s earnings are
subject to Brazilian taxation which is not considered
significant. The charter payments made to the U.K.
tonnage tax company and to Pullmantur are exempt
from Brazilian income tax under current Brazilian
domestic law. Additionally, some remittances of reve-
nue from sales of certain cruises in the Brazilian mar-
ket benefit from an exemption from withholding taxes
which is scheduled to expire at the end of 2015. If the
exemption is not extended, this may result in increased
taxation for our Brazilian operations.
Chinese Taxation
Our U.K. tonnage tax company operates ships in
international transportation in China. The income
earned from this operation is exempt from taxation
in China under the U.K./China double tax treaty and
other circulars addressing indirect taxes. Changes to
or failure to qualify for the treaty or circular could
cause us to lose the benefits provided which would
have a material impact on our results of operations.
Our Chinese income from non-shipping activities or
from shipping activities not qualifying for treaty or
circular protection and which are considered insig-
nificant, remain subject to Chinese taxation.
Other Taxation
We and certain of our subsidiaries are subject to value-
added and other indirect taxes most of which are
reclaimable, zero-rated or exempt. Changes in the
application or interpretation of applicable indirect tax
laws or changes in tax legislation could have a mate-
rial impact on our results of operations.
Website Access to Reports
We make available, free of charge, access to our
Annual Reports, all quarterly and current reports and
all amendments to those reports, as soon as reason-
ably practicable after such reports are electronically
filed with or furnished to the Securities and Exchange
Commission through our website at www.rclinvestor.
com. The information contained on our website is not
a part of any of these reports and is not incorporated
by reference herein.