Income Tax Act 1947 - Singapore Statutes Online

Exemption of shipping profits

13A.—(1) There is 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.

(1A) For income derived before 19 February 2020, such exemption in respect of Singapore ships is backdated to the date of provisional registration if the owner has subsequently obtained a permanent certificate of registry in respect of the ship.

[41/2020]

(1B) For the year of assessment 2009 and subsequent years of assessment, the income of a shipping enterprise mentioned in this section includes 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 mentioned in this section includes income derived at any time in the period between 22 February 2010 and 23 February 2015 (both dates inclusive) 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.

[2/2016]

(1CA) The income of a shipping enterprise mentioned in this section includes income derived on or after 1 June 2011 by the shipping enterprise from —

(a)

the sale of a Singapore ship or a provisionally registered ship;

(b)

the assignment to another of all its rights as the buyer under a contract for the construction of a ship that, at the time of the assignment, is intended to be registered or is provisionally registered under the Merchant Shipping Act 1995; or

(c)

the sale of all of the issued ordinary shares in a special purpose company of the shipping enterprise where, at the time of the sale of the shares, the special purpose company —

(i)	owns a Singapore ship or a provisionally registered ship; or
(ii)	is the buyer under a contract for the construction of a ship that, at that time, is intended to be registered or is provisionally registered under the Merchant Shipping Act 1995,

and the special purpose company does not at that time own any foreign ship.

[2/2016; 41/2020]

(1CB) The income referred to in subsection (1CA) does not include —

(a)	income of the shipping enterprise derived before 12 December 2018 as a lessor of a ship under a finance lease that is treated as a sale under section 10C; or
(b)	income of the shipping enterprise that is derived as part of a business of trading in ships or of constructing ships for sale. [41/2020]

(1CC) [Deleted by Act 41 of 2020]

(1CD) The income of a shipping enterprise mentioned in this section includes income derived on or after 24 February 2015 by the shipping enterprise from providing prescribed ship management services to a qualifying company in respect of Singapore ships owned or operated by the qualifying company.

[2/2016]

(1CE) The income of a shipping enterprise mentioned in this section includes income derived on or after 24 February 2015 by the shipping enterprise from —

(a)	any mobilisation or holding of any ship used or to be used for offshore oil or gas activity outside the limits of the port of Singapore; or
(b)	the demobilisation of any ship after it has been so used,

where the mobilisation, holding or demobilisation is undertaken by the shipping enterprise itself using a Singapore ship.

[2/2016]

(1CF) The income of a shipping enterprise mentioned in this section includes income derived on or after 24 February 2015 by the shipping enterprise from —

(a)	any mobilisation or holding of a Singapore ship owned or operated by the shipping enterprise and used or to be used for offshore oil or gas activity outside the limits of the port of Singapore; or
(b)	the demobilisation of a Singapore ship owned or operated by the shipping enterprise after it has been so used. [2/2016]

(1CG) The income of a shipping enterprise mentioned in this section includes income derived on or after 24 February 2015 by the shipping enterprise from the leasing of any container (other than finance leasing) carried out in connection with its operation of Singapore ships and that is incidental to such operation.

[2/2016]

(1CH) The income of a shipping enterprise mentioned in this section includes income derived on or after 25 March 2016 by the shipping enterprise from —

(a)	any mobilisation or holding of any ship used or to be used for offshore renewable energy activity, or offshore mineral activity, outside the limits of the port of Singapore; or
(b)	the demobilisation of any ship after it has been so used,

where the mobilisation, holding or demobilisation is undertaken by the shipping enterprise itself using a Singapore ship.

[34/2016]

(1CI) The income of a shipping enterprise mentioned in this section includes income derived on or after 25 March 2016 by the shipping enterprise from —

(a)	any mobilisation or holding of a Singapore ship owned or operated by the shipping enterprise and used or to be used for offshore renewable energy activity, or offshore mineral activity, outside the limits of the port of Singapore; or
(b)	the demobilisation of a Singapore ship owned or operated by the shipping enterprise after it has been so used. [34/2016]

(1CJ) The income of a shipping enterprise mentioned in this section includes income derived on or after 25 March 2016 from foreign exchange and risk management activities that are carried out in connection with and incidental to any activity mentioned in subsection (1CH) or (1CI).

[34/2016]

(1CK) The income of a shipping enterprise mentioned in this section includes income derived on or after 29 December 2016, from foreign exchange and risk management activities that are carried out in connection with and incidental to any activity mentioned in subsection (1CD), (1CE) or (1CF).

[34/2016]

(1CL) The income of a shipping enterprise mentioned in this section includes income derived on or after 12 December 2018 by the shipping enterprise from foreign exchange and risk management activities that are carried out in connection with or incidental to the finance leasing of a Singapore ship for use outside the limits of the port of Singapore.

[32/2019]

(1CM) A reference to a Singapore ship in subsection (1), (1B), (1CD), (1CE), (1CF), (1CG), (1CH), (1CI) or (1CL) includes a provisionally registered ship.

[41/2020]

(1CN) Subsection (1CM) only applies to income derived in relation to the provisionally registered ship on or after 19 February 2020.

[41/2020]

(1D) This section does not apply to income of a shipping enterprise, being an international shipping enterprise approved under section 13E, derived in the basis period for the year of assessment 2012 or any subsequent year of assessment from the operation of foreign ships.

(2) A shipping enterprise must maintain separate accounts for the income derived or deemed to be derived from the operation of each ship.

[41/2020]

(2A) Where expenses have been incurred by a shipping enterprise which are not directly attributable to a 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.

[41/2020]

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

(a)

the capital allowances provided under sections 16, 17, 18, 18B, 18C, 19, 19A, 20, 21 and 22 may only be made against the income exempt under this section, and the balance of such allowances is not available as a deduction against any other income; and

(b)

a loss incurred by a shipping enterprise in respect of any activity referred to in subsection (1), (1B), (1C), (1CD), (1CE), (1CF), (1CG), (1CH), (1CI), (1CJ) or (1CK) for any basis period may only be deducted against the income from any activity referred to in any of those subsections, and the balance of such loss is not available as a deduction against any other income.

[2/2016; 34/2016; 41/2020]

(3A) Where a shipping enterprise incurs a loss on any sale or assignment mentioned in subsection (1CA) in any basis period, that loss may only be deducted against the gains derived from another sale or assignment mentioned in subsection (1CA) in that same basis period, and the balance of the loss is not available as a deduction against any other income.

(4) The Comptroller must 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 ships by the shipping enterprise; and Parts 17 and 18 (relating to assessments, objections and appeals) and any rules made under this Act apply, with the necessary modifications, as if such statement were a notice of assessment.

[41/2020]

(5) Subject to subsection (8) where any statement issued under subsection (4) has become final and conclusive, the amount of income shown in the statement does not form part of the statutory income of a shipping enterprise for the year of assessment to which the statement relates and is exempt from tax.

(5A) [Deleted by Act 19 of 2013]

(6) [Deleted by Act 19 of 2013]

(7) A shipping enterprise must deliver to the Comptroller a copy of the accounts mentioned in subsection (2) made up to any date specified by the Comptroller whenever called upon to do so by written notice.

(8) Despite subsections (1) to (7), where it appears to the Comptroller that any income of a shipping enterprise which has been exempted from tax ought not to have been so exempted for any year of assessment, the Comptroller may, at any time within 4 years after the expiry of that year of assessment, make such assessment or additional assessment upon the shipping enterprise as may appear to be necessary in order to make good any loss of tax.

(9) Parts 17 and 18 (relating to assessments, objections and appeals) and any rules made under this Act apply, with the necessary modifications, as if an assessment under subsection (8) were a notice of assessment.

(10) This section does not affect the operation of section 27 in ascertaining the income of a non‑resident person owning or operating ships.

[41/2020]

(11) Where —

(a)	income derived in the basis period for a year of assessment from the operation of a ship is exempt from tax under this section; and
(b)	in that or a subsequent basis period, the registry of the ship under the Merchant Shipping Act 1995 is closed, deemed closed or suspended,

then the capital allowances in respect of that ship for the year of assessment of the basis period mentioned in paragraph (b) and subsequent years of assessment are to 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 under this section, even if no claim for such allowances was made.

[41/2020]

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

(13) Despite 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 and provisionally registered ships be taxed at the rate prescribed by section 43(1)(a).

[41/2020]

(14) An election under subsection (13) must be made by a shipping enterprise by written notice to the Comptroller and is irrevocable.

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

(a)	subsections (1) to (10) do not apply to the income derived or deemed to be derived from the operation of Singapore ships and provisionally registered 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 are not 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 or a provisionally registered 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 is not 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 a Singapore ship or a provisionally registered ship 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, are to be calculated in accordance with subsection (11) as if the registry of the ship under the Merchant Shipping Act 1995 is closed, deemed closed or suspended. [41/2020]

(16) In this section —

“container” has the meaning given by section 43P(7);

“demobilisation”, in relation to a ship, means the standing down and restoration of the ship to the state it was in before mobilisation;

“finance leasing” means —

(a)	in relation to a container, a lease of the container (including any arrangement or agreement made in connection with the lease) that has the effect of transferring substantially the obsolescence, risks or rewards incidental to ownership of the container to the lessee; and
(b)	in relation to a ship, a lease of the ship (including any arrangement or agreement made in connection with the lease) that has the effect of transferring substantially the obsolescence, risks or rewards incidental to ownership of the ship to the lessee;

“foreign ship” means a seagoing ship other than a Singapore ship or provisionally registered ship;

“holding”, in relation to a ship, means keeping the ship on a standby mode for use in offshore oil or gas activity, offshore renewable energy activity or offshore mineral activity;

“mobilisation”, in relation to a ship, means bringing the ship to a state of readiness for use in offshore oil or gas activity, offshore renewable energy activity or offshore mineral activity, and includes moving the ship to the deployment site, and outfitting and re‑engineering the ship to bring it to a state of readiness for use in such activity;

“operation” means —

(a)

in relation to a Singapore ship or provisionally registered ship —

(i)

the carriage of passengers, mail, 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;

(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 ship used for offshore oil or gas activity;

(v)

the use, on or after 25 March 2016, outside the limits of the port of Singapore of the ship for offshore renewable energy activity or offshore mineral activity; or

(vi)

the finance leasing of the ship for use outside the limits of the port of Singapore, but only where the income in question —

(A)	is derived from the finance leasing on or after 12 December 2018; and
(B)	is not derived by the shipping enterprise as part of a business of trading in ships or constructing ships for sale; and

(b)

in relation to a foreign ship, the carriage of passengers, mail, livestock or goods shipped in Singapore, except where such carriage arises solely from transhipment from Singapore, or is only within the limits of the port of Singapore;

“prescribed ship management services” means activities that support or are incidental to owning or operating a ship, and which are prescribed as prescribed ship management services under section 7;

“provisionally registered ship” means a ship that is provisionally registered under the Merchant Shipping Act 1995, but excludes one whose registry is closed, deemed closed or suspended;

“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” has the meaning given by section 2(1) of the Merchant Shipping Act 1995;

“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, including the issuance of voyage instructions;
(g)	appointing a ship manager, ship agent or stevedore for it;
(h)	collecting or arranging for the collection of freight, charter hire, or other payment in exchange for its use;
(i)	arranging insurance for it;
(j)	undertaking crew‑related matters for it, including the provision of qualified crew, the appointment of a crew manager, the provision of crew training or the arrangement of crew insurance;
(k)	arranging or supervising dry‑docking, repair, overhaul, alteration, maintenance or lay‑up of it;
(l)	ensuring that it is adequately equipped with supplies, provisions, spares, stores and lubricating oil;
(m)	supervising its construction, conversion or registration;
(n)	liaising with the relevant competent authorities or bodies on safety and manning requirements for it and any other similar matters;

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

“Singapore ship” means a ship in respect of which a certificate of registry (other than a provisional certificate of registry) has been issued under the Merchant Shipping Act 1995 and its registry is not closed or deemed to be closed or suspended;

“special purpose company”, in relation to a shipping enterprise, means a company that is wholly‑owned by the shipping enterprise and whose only business or intended business is the operation of Singapore ships.

[2/2016; 34/2016; 39/2017; 32/2019; 41/2020]

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