Mr. Gregory Viggiano is the Senior Director of Taxes at Maersk, Inc. in Madison, New Jersey. Gregory Viggiano is responsible for all aspects of the company’s tax function including research, planning, compliance and tax reporting. Maersk, Inc. is a 4 billion dollar company with activities in offshore oil and gas exploration, US flag shipping, marine terminal operations, trucking and logistics. Prior to joining Maersk, Inc., Gregory Viggiano was an International Tax Manager at KPMG LLP in New York, New York where he advised Fortune 1000 clients on mergers and acquisitions, reorganizations, tax & treaty interpretations,CFC,

PFIC, and numerous other tax issues connected with international operations. Prior to KPMG LLP, Gregory Viggiano worked for the internationally recognized public accounting firm of Coopers Lybrand, the law firm of Haight Gardner Poor & Havens and the law firm of White & Case all located in New York, New York. Mr. Viggiano earned his Bachelor of Arts degree from the University of Richmond in Richmond, Virginia in 1985; and also received his Juris Doctor from Georgetown University Law Center in Washington, D.C. in 1988.

KJ- You mentioned that you have enjoyed working for Maersk Inc for more than eight years. What is it that makes Maersk Inc a good and interesting company to work for?

GV-There are many reasons that Maersk Inc. is an interesting company to work for and the first thing that comes to mind is the people! We have some really great people working here and this makes it a pleasure for everyone. In addition, the culture is a fairly practical one ~ our focus is in getting goods from point A to point B. Our people therefore are focused on getting the job done and obtaining results. The other point that I want to make is that the company has grown significantly over the past ten years through acquisitions. We acquired three major competitors so the work in integrating those acquisitions and handling a more complex business has been very interesting. The container business has grown globally and this has caused the US operations to grow as well.

KJ- Maersk Inc. is a US company with a Danish parent. What is it like working for a Danish-based company?

GV-Our parent, A.P. Moller-Maersk A/S, has a stature in Denmark roughly equivalent to a combination of Exxon, General Electric and IBM in the United States - the company is so visible in Denmark! The people in Denmark who are attracted to work at Maersk Inc are therefore the highest caliber people in the country. However, more and more the group also is attracting people from all around the world to its leadership and it is rapidly becoming a global company.

KJ- What types of products does Maersk ship around the world?

GV- In general, the cargo that is shipped in our containers could be anything from manufactured products, electronics, furniture, clothing or numerous other items. Some of our biggest customers are Wal-Mart, Sears, Target, and Heineken. Much of Wal-Mart’s inventory comes from China in our containers. We have also shipped beer for Heineken for years. There are many things in people’s homes that have been shipped by Maersk.

KJ- What has been interesting from the perspective of a tax professional?

GV- First, as a result of our business growing globally the number of interesting issues we have dealt with have also grown. Moreover, the company has come to recognize that the tax department is important to the organization and consequently it has placed a greater importance on tax function. What we do is visible to the management of the company and we want to do it right. Secondly, the work is very interesting because tax-wise we work under a special tax regime. There is a general agreement among the industrialized nations that international transportation companies are only taxed in their home countries. Otherwise, transportation companies would be subject to burdensome taxation in each country it served. This principle is reflected in US tax law in Code Section 883 and also in Article 8 of most tax treaties. This is an area that is a world unto itself with its own details and nuances.

KJ- Is the focus more on Federal or State taxes?

GV-The focus is mainly on the Federal level, since the exemption for international shipping companies arises under Federal law. However, our US-based operations are also subject to state and local taxes. These taxes can be significant and we find we have to devote more attention to them as well.

KJ- What are some of the things that Maersk Inc. does not ship?

GV- Apart from government rules, our company also has internal restrictions. For example, we generally do not ship automobiles. While they can fit into containers, there are many safety issues involved in shipping automobiles - they have gasoline and oil that can leak or catch fire.

KJ- Is piracy an issue with shipping companies these days?

GV- These days mariners are faced with piracy in certain parts of the world. Recently, one of our ships was attacked and you can read the press coverage of it. (News reports from Maritime.net and the International Maritime Bureau Report stated the following: A Maersk Line ship, the Regensburg, escaped from a pirate attack 520 miles east of Dar-es-Salaam, Tanzania. Eight pirates in two separate speedboats chased and opened fire at the ship on Saturday December 6, 2008. The Regensburg was hit by gunfire and a fire was started on the ship. However, the nineteen-member crew was successful in putting the fire out and no one was hurt. Eventually, the ship was able to outrun the attackers.)

KJ- What would most tax professionals find interesting about the shipping business?

GV- Most people would be surprised at the complexity of the business. We have a shipping network that is in over one hundred fifty countries. Our network must have the ability to carry cargo from any of those countries and deliver it to any of the other countries in the vast network. This is an extremely complicated task. The first thing you need to do is determine the routes the ships will cover, balancing vessel deployment with anticipated cargo volumes. You must then consider other variables like weather and sea conditions and mechanical breakdowns that can cause the vessels to be late for delivery. You may also have issues where there may not be enough room on the vessels for all of the cargo and cargo may be left behind for the next ship. This type of situation does not make a customer happy so you need to be able to resolve these issues and make the customers happy.
Our specialty as a company is door to door service where we will arrange for the container to be dropped off to the client which the client fills. We arrange for the container to be picked up, taken to the port and delivered to the shipping vessel, taken to the destination port, taken off the ship and then delivered to the destination the client requests it be delivered. Coordinating all these activities so they operate seamlessly for the customer requires very close coordination of many different activities around the globe.
Our network is served by over 400 vessels carrying more than one million containers at any given time. We have to ensure that these vessels are optimally deployed and routed. We also have to keep track of all the containers and make certain that we do not lose anything.

KJ- Please tell me about a project that you worked on which you found particularly interesting from a tax perspective?

GV- The first thing that comes to mind is tonnage tax. Tonnage tax is a favorable system for shipping companies. Tax is imposed on the size and capacity of the vessel, regardless of how much income the vessel itself generates. Over the past ten years tonnage tax, which originated in Europe, has spread around the world.
In the US, an industry group was given the opportunity to work with Congressional staff to draft the tonnage tax regime, and I was privileged to have participated in that effort. It was fascinating to see the legislative process from the inside, and humbling to have had an impact on the final legislation.
Once the tonnage tax was incorporated in the Code in the 2004 JOBS Act, we had the further test of putting tonnage tax into effect on our return and in our accounts. Although I had helped shape the legislation and was conversant with the theory behind it, I still was challenged to answer the numerous practical questions that arose on implementation. Our operations people and I worked closely together to arrive at the right answers to all the questions.
Tonnage tax is one example of how the Maersk organization and its businesses offer a great combination of interesting and challenging projects coupled with good people to work with.

KJ- Gregory Viggiano, thank you for taking the time to answer our questions. Your perspective is valuable to the Tax Intelligence Report readers around the world and we genuinely appreciate the time you gave to share your experiences.

Kathleen Jennings (KJ)
Editor, The Tax Intelligence Report
Kathleen@etsearch.com

Gregory Viggiano (GV)
Senior Director of Taxes
Maersk, Inc. - Madison, NJ

If you would like an introduction to Maersk, Inc. or if you would like to send a private email to Gregory, please contact Kathleen Jennings at Kathleen@etsearch.com.