Exemption of shipping profits
13A.—(1)  There shall be exempt from tax the income of a shipping enterprise derived or deemed to be derived from the operation of Singapore ships or foreign ships as hereinafter provided.
[Act 31/98, Wef 14/08/1998]
[20/91.11/94]
(1A)  Such exemption in respect of Singapore ships shall be backdated to the date of provisional registration if the owner has subsequently obtained a permanent certificate of registry in respect of the ship.
[Act 31/98, Wef 14/08/1998]
[11/94]
(2)  A shipping enterprise shall maintain separate accounts for the income derived or deemed to be derived from the operation of each Singapore ship or foreign ship.
[Act 31/98, Wef 14/08/1998]
(2A)  Where expenses have been incurred by a shipping enterprise which are not directly attributable to a Singapore ship or foreign ship, the Comptroller may allocate as expenses such amounts as might reasonably and properly have been incurred in the normal course of its business in respect of such ship.
[Act 31/98, Wef 14/08/1998]
(3)  In determining the income of a shipping enterprise —
(a)the capital allowances provided under sections 16, 17, 18, 19, 20, 21 and 22 shall only be made against the income exempt under this section, and the balance of such allowances shall not be available as a deduction against any other income; and
(b)a loss incurred by a shipping enterprise in respect of the operation of a Singapore ship or foreign ship for any year shall only be deducted against the income exempt under this section, and the balance of such loss shall not be available as a deduction against any other income.
[Act 31/98, Wef 14/08/1998]
[4/75]
(4)  The Comptroller shall for each year of assessment issue to a shipping enterprise a statement showing the amount of income derived from the operation of Singapore ships or foreign ships by the shipping enterprise; and Parts XVII and XVIII (relating to objections and appeals) and any rules made under this Act shall apply, with the necessary modifications, as if such statement were a notice of assessment.
[Act 31/98, Wef 14/08/1998]
(5)  Subject to subsection (8) where any statement issued under subsection (4) has become final and conclusive, the amount of income shown therein shall not form part of the statutory income of a shipping enterprise for the year of assessment to which the statement relates and shall be exempt from tax.
(5A)  For the purposes of subsection (5), the Comptroller may, before such statement has become final and conclusive, treat a specified amount of the income of a shipping enterprise as exempt from tax pending such statement becoming final and conclusive.
(6)  The following provisions shall apply to a shipping enterprise resident in Singapore:
(a)as soon as any amount of income of the shipping enterprise is exempted under subsection (5), such amount shall be credited to an account to be kept by the shipping enterprise for the purpose of this section;
(b)where such account is in credit at the date on which any dividends are paid by the shipping enterprise out of income which has been exempted, an amount equal to such dividends or to such credit, whichever is the less, shall be debited to such account;
(c)so much of the amount of any dividends debited to such account as are received by a shareholder in the shipping enterprise shall, if the Comptroller is satisfied with the entries in such account, be exempt from tax in the hands of such shareholder;
(d)any dividends debited to such account shall be treated as having been distributed to the shareholders of the shipping enterprise or any particular class of such shareholders in the same proportions as such shareholders were entitled to payment of the dividends giving rise to the debit;
(e)section 44 shall not apply to any dividends or part thereof which are exempt from tax under this section;
[1/90]
(f)where an amount has been received by way of dividends from the shipping enterprise by a shareholder and such amount is exempt from tax under this section, if that shareholder is a holding company any dividends paid by such holding company to its shareholders, to the extent that the Comptroller is satisfied that those dividends are paid out of such amount, shall be exempt from tax in the hands of those shareholders; and section 44 shall not apply to any such dividend or part thereof; and
(g)notwithstanding paragraphs (c) and (f), no dividend paid on or after 17th February 1989 on any share of a preferential nature shall be exempt from tax in the hands of the shareholder.
[3/89]
(7)  A shipping enterprise shall deliver to the Comptroller a copy of the accounts referred to in subsections (2) and (6) made up to any date specified by him whenever called upon to do so by notice in writing.
(8)  Notwithstanding subsections (1) to (7), where it appears to the Comptroller that —
(a)any income of a shipping enterprise which has been exempt; or
(b)any dividend (including a dividend paid by a holding company to which subsection (6)(f) applies) exempted in the hands of any shareholder,
[11/94]
ought not to have been so exempt, the Comptroller may at any time within 6 years from the date of the statement referred to in subsection (4) —
(i)make such assessment or additional assessment upon the shipping enterprise or any such shareholder as may appear to be necessary in order to make good any loss of tax; or
(ii)direct the shipping enterprise to debit its account kept in accordance with subsection (6) with such amount as the circumstances may require.
(9)  Parts XVII and XVIII (relating to objections and appeals) and any rules made under this Act shall apply, with the necessary modifications, as if an assessment or a direction under subsection (8) were a notice of assessment.
(10)  In this section —
“foreign ship” has the same meaning as in section 13F;
[Act 31/98, Wef 14/08/1998]
“holding company” means a company which holds not less than 50% beneficial interest in the issued shares of a shipping enterprise;
“income of a shipping enterprise” means the income derived by a shipping enterprise from the carriage (other than within the limits of the port of Singapore) of passengers, mails, livestock or goods —
(a)by sea-going Singapore ships, or from towing or salvage operations carried out (other than within the limits of the port of Singapore) by sea-going Singapore ships, and includes the income from the charter of such ships; or
(b)shipped in Singapore by foreign ships, excluding such carriage arising solely from transhipment from Singapore;
[Act 31/98, Wef 14/08/1998]
“operation of Singapore ships” includes the charter of such ships;
[26/93]
“shipping enterprise” means any company owning or operating Singapore ships or foreign ships;
[Act 31/98, Wef 14/08/1998]
“Singapore ship” means a ship in respect of which a permanent certificate of registry has been issued under any written law in Singapore relating to merchant shipping.
[26/73]
[20/91]
(11)  Nothing in this section shall affect the operation of section 27 in ascertaining the income of a non-resident person owning or operating Singapore ships or foreign ships.
[Act 31/98, Wef 14/08/1998]
(12)  Where in the basis period for any year of assessment a ship ceases to be a Singapore ship the income derived from the operation of which is exempt under this section, the capital allowances in respect of that ship for that year of assessment and subsequent years shall be calculated on the residue of expenditure or reducing value of the assets after taking into account the capital allowances provided for in sections 16, 17, 18, 19, 20, 21 and 22 for those years of assessment during which income derived from the operation of the ship was exempt from tax notwithstanding that no claim for such allowances was made.
[4/75]
(13)  Subsections (3) and (12) shall have effect notwithstanding any other provisions of this Act.
(14)  Notwithstanding anything in this section, a shipping enterprise may at any time elect that its income derived or deemed to be derived from the operation of all its Singapore ships shall be taxed at the rate prescribed by section 43(1)(a).
[11/94]
(15)  An election under subsection (14) shall be made by a shipping enterprise by notice in writing to the Comptroller and shall be irrevocable.
[11/94]
(16)  Where a shipping enterprise has made an election under subsection (14) —
(a)subsections (1) to (11) shall not apply to the income derived or deemed to be derived from the operation of Singapore ships by the shipping enterprise for the year of assessment immediately following the year in which the election is made and for subsequent years of assessment;
[Act 31/98, Wef 14/08/1998]
(b)any capital allowances or the balance thereof which were not made against the income of the shipping enterprise exempt under this section for any year of assessment during which its income was exempt from tax shall not be available to be made under section 23 against its income (other than income exempt under this section) for the year of assessment immediately following the year in which the election is made and for subsequent years of assessment;
[Act 31/98, Wef 14/08/1998]
(c)any loss or the balance thereof incurred by the shipping enterprise in respect of the operation of a Singapore ship for any year of assessment which was not deducted against its income exempt under this section for any year of assessment during which its income was exempt from tax shall not be available as a deduction under section 37(2)(a) against its income (other than income exempt under this section) for the year of assessment immediately following the year in which the election is made and for subsequent years of assessment; and
[Act 31/98, Wef 14/08/1998]
(d)any capital allowances in respect of Singapore ships of the shipping enterprise for the year of assessment immediately following the year in which the election is made and for subsequent years of assessment shall be calculated in accordance with subsection (12) as if the Singapore ships were ships which had ceased to be Singapore ships.
[11/94]
[4/75]
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Last updated 27 Sep 2024
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