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Flags of convenience

All merchant ships must be registered with one country or another. Owners of ships registered in the U.K. are subject to taxation there and must abide by all the legislative requirements of that country regarding crew conditions, wages, etc. To avoid onerous taxes and employment regulations, there has been a strong tendency (particularly since 1945) for shipowners to register their vessels in certain small countries where regulations and requirements are minimal. They must then fly the flag of that country; such flags are known as ‘flags of convenience’. The increasing influence of the trade union movement in the U.K. and other developed nations is already having an effect on reducing the advantages of this practice as far as conditions of employment are concerned. Parallel action by the Treasury and the Inland Revenue could eliminate it altogether.

Reference: The Penguin Business Dictionary, 3rd edt.