Singapore legislation
Section 43U
Section 43U
Concessionary rate of tax for shipping‑related support services
(1)
Despite section 43, tax at the rate of 10% is to be levied and paid for each year of assessment upon the amount of income in subsection (1A) of an approved company derived on or after the service approval date and during the period of its approval under subsection (2) (but not any extended period of its approval under subsection (5A)), from providing in or from Singapore any shipping‑related support service approved for it under subsection (2A).
(1A)
In subsection (1), the amount of the income is that which exceeds the base amount calculated in accordance with subsection (4).
(2)
Approval may be granted under this section between 1 June 2011 and 31 December 2026 (both dates inclusive) to a company for a period of 5 years; and may be given subject to such conditions as the Minister may impose.
(2A)
The Minister or appointed person must approve for the company one or more shipping‑related support services for the purposes of subsection (1) at the time of granting the approval, and may approve for the company additional shipping‑related support services during the period it is approved.
(3)
A company that is deemed an approved company on 1 June 2011 by virtue of regulations made under subsection (7), is deemed to have been approved for such period not exceeding 10 years from that date as the Minister may specify in the regulations.
(4)
The base amount mentioned in subsection (1A) or (5E) is calculated in accordance with the following provisions:
where the approved company had provided one or more of the shipping‑related support services approved for it at any time during the period of 3 years immediately before the date of its approval, the base amount is ascertained by dividing the aggregate net profit before tax as shown in its audited accounts (or such other accounts as the Minister or appointed person may approve for the company) that is derived from providing all of those services during that period by the actual number of months (a period of less than a month being reckoned as one month) during that period in which those services were provided and multiplying by 12;
where the company had not provided any of the shipping‑related support services approved for it at any time during the period of 3 years immediately before the date of its approval, the base amount is zero; or
such amount as the Minister may specify in substitution for the amount mentioned in paragraph (a) or (b).
(5)
The base amount determined in accordance with subsection (4) applies to the approved company for the entire duration of the period of its approval (but not any extended period of its approval under subsection (5A)), unless the Minister otherwise decides.
(5A)
The Minister or appointed person may extend the period of any approval under subsection (2) for further periods of 5 years at any one time, and the extension is subject to the company satisfying such conditions as the Minister or appointed person has imposed on it at the time of granting the extension.
(5B)
The Minister or appointed person must approve for the company one or more shipping‑related support services for the purposes of subsection (5C) or (5CA) at the time of granting the extension, and may approve for the company additional shipping‑related support services during any extended period of its approval.
(5C)
Despite section 43, where an approved company whose period of approval is extended under subsection (5A) did not make an election under subsection (5F) for the extended period, then tax at the rate of A% is levied and must be paid for each year of assessment upon the amount of its income in subsection (5D) that is derived on or after the service approval date and during the extended period, from providing in or from Singapore any shipping‑related support service approved for it under subsection (5B).
(5CA)
5CA
Despite section 43, where an approved company whose period of approval is extended under subsection (5A) made an election under subsection (5F) for the extended period, then tax at the rate of (0.5 + A)% is levied and must be paid for each year of assessment upon the amount of its income in subsection (5E) that is derived on or after the service approval date and during the extended period, from providing in or from Singapore any shipping‑related support service approved for it under subsection (5B).
(5CB)
5CB
In subsections (5C) and (5CA), “A” is the concessionary rate of tax applicable to the income of the approved company from providing in or from Singapore any shipping‑related support service approved for it under subsection (2A) or (5B) (as the case may be) immediately before the commencement of the extended period concerned of its approval under subsection (5A).
(5D)
In subsection (5C), the amount of the income is that which exceeds the base amount calculated in accordance with subsection (5I).
(5E)
In subsection (5CA), the amount of the income is that which exceeds the base amount immediately before the commencement of the extended period concerned of its approval under subsection (5A), which is calculated in accordance with subsection (4) or (5I), as the case may be.
(5F)
An approved company whose period of approval is extended under subsection (5A) may make an election for an amount of its income mentioned in subsection (5CA) that is derived on or after the service approval date and during the extended period, from providing in or from Singapore any shipping‑related support service approved for it under subsection (5B), to be taxed in accordance with subsection (5CA).
(5G)
An election under subsection (5F) must be made in such form and manner and within such reasonable time as the Minister or appointed person may allow, and must be accompanied by such particulars as the Minister or appointed person determines.
(5H)
An election under subsection (5F) is irrevocable for the extended period of its approval in which the election is made.
(5I)
The base amount mentioned in subsection (5D) or (5E) is determined as follows:
where the approved company had provided one or more of the shipping‑related support services approved for it under subsection (5B) at any time during the period of 3 years immediately before the date the extension is granted under subsection (5A), the base amount is ascertained by the formulawhere Ais the total net profit before tax as shown in the company’s audited accounts (or such other accounts as the Minister or appointed person may approve for the company) that is derived from providing all of those services during that period of 3 years; andBis the actual number of months (a period of less than a month being reckoned as one month) during that period in which those services were provided;
where the company had not provided any of the shipping‑related support services approved for it under subsection (5B) at any time during the period mentioned in paragraph (a), the base amount is zero;
the Minister may in a particular case specify an amount in substitution for the amount mentioned in paragraph (a) or (b).
(5J)
The base amount determined in accordance with subsection (5I) applies to the approved company for the entire duration of the extended period concerned of its approval under subsection (5A), unless the Minister otherwise decides.
(6)
In determining the income of an approved company from the provision of shipping‑related support services approved for it —
the allowances under section 19, 19A, 20, 21, 22 or 23 must be taken into account even if no claim for such allowances has been made; and
the Comptroller must determine the manner and extent to which —
allowances under section 19, 19A, 20, 21, 22 or 23 and any expenses and donations allowable under this Act are to be deducted; and
any loss may be deducted under section 37.
(7)
For the purposes of this section, the Minister may make regulations —
to deem a company which, immediately before 1 June 2011, was —
a development and expansion company within the meaning of section 20 of the Economic Expansion Incentives (Relief from Income Tax) Act 1967 engaged in ship management services, ship agency, logistics or freight forwarding, being activities prescribed as qualifying activities within the meaning of that section, and which, in the case of a company engaged in logistics or freight forwarding, is a company —
whose operations are or can be controlled, directly or indirectly, by another company, being one that owns or operates ships;
which controls or can control, directly or indirectly, the operations of such other company; or
whose operations are or can be controlled, directly or indirectly, by a person or persons who control or can control, directly or indirectly, the operations of such other company; or
an approved company under section 43T,as an approved company for the purpose of this section from that date;
to provide for such transitional, supplementary and consequential matters as the Minister may consider necessary or expedient in relation to a company mentioned in paragraph (a), including providing a different base amount for the purposes of subsection (1); and
generally to give effect to or to carry out the purposes of this section.
(8)
In this section —
Definition
“approved” means approved by the Minister or such person as the Minister may appoint;
Definition
“approved company” means a company which —
is incorporated and resident in Singapore;
carries on the business of providing shipping‑related support services; and
is approved for the purpose of this section;
Definition
“approved related company”, in relation to an approved company, means a related company approved at any time for the approved company for the purpose of the definition of “corporate service”;
Definition
“container” has the meaning given by section 43P(7);
Definition
“corporate service” means any of the following services provided by an approved company to an approved related company:
sourcing, procurement and distribution of materials and components, products or services for use in the business of the approved related company (excluding marketing control, planning and brand management);
training of crew and staff;
crew management (such as recruitment and selection of qualified and trained seafarers, budgeting and strategic planning in relation to crew requirements, overseeing crew welfare, managing relations with labour unions, handling insurance matters relating to crew, and maintaining personnel data to facilitate searches, planning and analysis);
business planning, development and co‑ordination (including the performance of economic or investment research and analysis) of information and processes to improve standards of services or products;
[Deleted by Act 39 of 2017](f)general management and administration (such as risk management, internal audit, budgeting and forecasting, but excluding intellectual property management);
technical support services (such as marine and offshore engineering technical support, accounting and tax consultancy services and actuary services);
human resource services;
financial and treasury services (such as providing credit administration and control, arranging credit facilities, managing funds, and providing guarantees, performance bonds, standby letters of credit and services relating to remittances, arranging interest and currency swaps);
legal services;
corporate finance advisory services;
information technology support services,and only services provided to an approved related company of that company are treated as “corporate service” in determining if the approved company has provided shipping‑related support service which is corporate service for the purposes of subsections (4) and (5I);
Definition
“finance leasing” has the meaning given by section 13P(20) or 43P(7);
Definition
“forward freight agreement trading” means the undertaking of a position under a forward freight agreement trade where such trade is in connection with shipping freight rates;
Definition
“freight forwarding and logistics service” means managing a customer’s freight, supply chain or logistics process flow;
Definition
“prescribed ship management services” has the meaning given by section 13A(16);
Definition
“related company”, in relation to an approved company, means a company that is carrying on a shipping‑related business and —
whose operations are or can be controlled, directly or indirectly, by the approved company;
which controls or can control, directly or indirectly, the operations of the approved company; or
whose operations are or can be controlled, directly or indirectly, by a person or persons who control or can control, directly or indirectly, the operations of the approved company;
Definition
“service approval date”, in relation to any shipping‑related support service approved for an approved company under subsection (2A) or (5B), means the date the service is approved for that company under that subsection or, in the case of corporate service to be provided by the company to its approved related company, the date the related company is approved as such;
Definition
“ship” has the meaning given by section 2(1) of the Merchant Shipping Act 1995;
Definition
“ship agency” means the activities performed on behalf of a shipping enterprise in relation to their vessels, masters and crews, cargoes and customers;
Definition
“ship broking” means —
the broking of sale and purchase of vessels (including the activity of valuing the vessels);
the matching of vessel owners (which intend to build new vessels) to shipyards based on the vessel owners’ requirements;
the matching of vessels to —
cargoes; or
vessel owners and vessel charterers;
the valuation of vessels; or
the matching of forward freight agreement traders where the forward freight agreement trade is in connection with shipping freight rates,and includes the services mentioned in subsection (9);
Definition
“shipping‑related business” means any of the following:
carriage of passengers, mail, livestock or goods by any ship;
charter or finance leasing of any ship to any person;
use of any ship as a dredger, seismic ship or ship used for offshore oil and gas activity;
use of any ship for towing or salvage operations;
leasing (including finance leasing) of any container used for the international transportation of goods;
managing an entity which is in the business of carrying on the charter or leasing (including finance leasing) of containers used for the international transportation of goods, or ships;
ship broking;
forward freight agreement trading;
ship agency;
prescribed ship management services;
freight and logistics services in respect of a ship;
marine insurance;
offshore and marine engineering (including ship repair and conversion, ship building and offshore engineering);
maritime law and arbitration;
shipping finance;
maritime research and development;
use of any ship for offshore renewable energy activity or offshore mineral activity;
Definition
“shipping‑related support service” means any of the following:
ship broking;
forward freight agreement trading;
prescribed ship management services;
ship agency;
freight forwarding and logistics service;
corporate service.
(9)
In this section, “ship broking” includes —
for the purpose of subsections (1), (2A), (5B), (5C) and (5CA), the provision of research, consultancy or advisory services using information derived from the business of carrying on any of the activities referred to in paragraphs (a) to (e) of the definition of “ship broking” in subsection (8), where the total sum of the fees derived by the approved company from the research, consultancy and advisory services in the basis period for the year of assessment concerned (called in this paragraph the said sum) is not more than 20% of the sum of —
the total fees and commissions derived by the approved company from all of those other activities in the basis period for that year of assessment; and
the said sum,or where the Minister otherwise allows such services to be considered “ship broking”; and
for the purpose of subsections (4) and (5I), the provision, within any financial year or part thereof of the approved company that falls within the period of 3 years immediately before the date of its approval, of research, consultancy or advisory services using information derived from the business of carrying on any of the activities referred to in paragraphs (a) to (e) of the definition of “ship broking” in subsection (8), where the total sum of the fees derived by the approved company from the research, consultancy and advisory services in that financial year or part thereof (called in this paragraph the said sum) is not more than 20% of the sum of —
the total fees and commissions derived by the approved company from all of those other activities in that financial year or part thereof; and
the said sum,or where the Minister otherwise allows such services to be considered “ship broking”.
(10)
For the purposes of the definition of “related company” in subsection (8), a company (called in this subsection the first company) is deemed to be a related company of another company if —
at least 25% of the total number of its issued shares are beneficially owned, directly or indirectly, by the other company;
at least 25% of the total number of the issued shares of the other company are beneficially owned, directly or indirectly, by the first company; or
at least 25% of the total number of issued shares in each of the 2 companies are beneficially owned, directly or indirectly, by a third company.[43ZF