Income Tax Act - Singapore Statutes Online

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.

[4/75; 20/91; 31/98]

(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.

[11/94; 31/98]

(1B) For the year of assessment 2009 and subsequent years of assessment, the income of a shipping enterprise referred to in this section shall include income derived from foreign exchange and risk management activities which are carried out in connection with and incidental to the operation by the shipping enterprise of Singapore ships.

(1C) The income of a shipping enterprise referred to in this section shall include income derived on or after 22nd February 2010 by the shipping enterprise from the provision of ship management services to any qualifying company in respect of Singapore ships owned or operated by the qualifying company.

(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.

[31/98]

(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.

[31/98]

(3) In determining the income of a shipping enterprise from the operation of Singapore ships or foreign ships —

(a)	the capital allowances provided under sections 16, 17, 18, 18B, 18C, 19, 19A, 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 [29/2010 wef 23/02/2010]
(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. [4/75; 31/98; 7/2007]

(4) The Comptroller shall for each year of assessment issue to a shipping enterprise a statement (to be included in a notice of any assessment served on the shipping enterprise under section 76) 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.

[31/98]

(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 from the operation of Singapore ships or foreign ships as exempt from tax pending such statement becoming final and conclusive.

[7/2007]

(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 accordance with the proportion of their shareholdings in the shipping enterprise;
(e)	section 44 shall not apply to any dividends or part thereof which are exempt from tax under this section;
(f)	where an amount has been received by way of dividends from a company by a shareholder and the amount is exempt from tax under this section, if that shareholder is a company, any dividends paid by that company to its shareholders, to the extent that the Comptroller is satisfied that those dividends are paid out of that 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 any share of a preferential nature shall be exempt from tax under this section in the hands of the shareholder. [3/89; 1/90; 37/2002; 21/2003]

(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 exempted from tax; or
(b)	any dividend which has been exempted from tax in the hands of any shareholder,

ought not to have been so exempted, the Comptroller may at any time within 6 years (if the year of assessment to which the statement relates is 2007 or a preceding year of assessment) or 4 years (if the year of assessment to which the statement relates is 2008 or a subsequent year of assessment) 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. [11/94; 37/2002; 53/2007]

(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) 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.

[31/98]

(11) 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, 18B, 18C, 19, 19A, 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.

[29/2010 wef 23/02/2010]

[4/75; 7/2007]

(12) Subsections (3) and (11) shall have effect notwithstanding any other provisions of this Act.

(13) 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]

(14) An election under subsection (13) shall be made by a shipping enterprise by notice in writing to the Comptroller and shall be irrevocable.

[11/94]

(15) Where a shipping enterprise has made an election under subsection (13) —

(a)	subsections (1) to (10) 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;
(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;
(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(3)(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
(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 (11) as if the Singapore ships were ships which had ceased to be Singapore ships. [11/94; 31/98]

(16) In this section —

“foreign ship” has the same meaning as in section 13F;

“operation” means —

(a)

in relation to a Singapore ship —

(i)	the carriage of passengers, mails, livestock or goods outside the limits of the port of Singapore;
(ii)	towing or salvage operations outside the limits of the port of Singapore;
(iii)	the charter of the ship for use outside the limits of the port of Singapore; or
(iv)	for the year of assessment 2007 and subsequent years of assessment, the use outside the limits of the port of Singapore of the ship as a dredger, seismic ship or vessel used for offshore oil or gas activity; and

(b)

in relation to a foreign ship, the carriage of passengers, mails, livestock or goods shipped in Singapore, except where such carriage arises solely from transhipment from Singapore;

[29/2010 wef 22/11/2010]

“qualifying company”, in relation to a shipping enterprise, means a company at least 50% of the total number of the issued ordinary shares of which are beneficially and directly owned by the enterprise;

“ship management services” means any of the following activities in respect of a ship:

(a)	making a purchase or sale of it, or a decision regarding its ownership;
(b)	deciding on its flag and registry;
(c)	sourcing for and deciding on financing for its acquisition;
(d)	awarding contracts, entering into alliances or deciding on pooling in respect of it;
(e)	securing its employment or its cargo;
(f)	planning its route and tonnage;
(g)	appointing a ship manager or ship agent for it;
(h)	collecting freight in exchange for its use;
(i)	arranging insurance for it;
(j)	undertaking crew related matters such as the appointment of a crew manager;
(k)	arranging dry-docking or ship repairs or overhaul;
(l)	ensuring that it is adequately equipped with supplies, provisions, spares and stores;
(m)	supervising its construction, conversion or registration;
(n)	liaising with the relevant competent authorities or bodies on ship safety and manning requirements and other similar matters;

“shipping enterprise” means any company owning or operating Singapore ships or foreign ships;

“Singapore ship” means a ship in respect of which a certificate of registry, other than provisionally, has been issued under the Merchant Shipping Act (Cap. 179) and its registry is not closed or deemed to be closed or suspended.

[26/73; 20/91; 31/98; 37/2002; 21/2003; 7/2007]

[This section is amended by section 7 of the Income Tax (Amendment) Act 2017 (Act 39 of 2017) wef 22/02/2010]

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