Clause 4

(a) There shall be exempt from tax the income of a shipping enterprise derived or deemed to be derived on or after the first day of January, 1969, from the operation of Singapore ships as hereinafter provided.(b)Such exemption shall be backdated to the date of provisional registration if the owner has subsequently obtained a permanent certificate of registration in respect of the ship.(2) A shipping enterprise shall maintain separate accounts for the income derived or deemed to be derived from the operation of each Singapore ship:Provided that where expenses have been incurred by a shipping enterprise which are not directly attributable to a Singapore ship the Comptroller may allocate as expenses such amounts which might reasonably and properly have been incurred in the normal course of its business in respect of such ship:And provided further that in determining the income of a shipping enterprise the capital allowances provided for in sections 16, 17, 18, 19, 20, 21 and 22 of this Ordinance shall be duly taken into account notwithstanding that no claim for such allowances has been made.(3) Where a shipping enterprise has in respect of the operation of Singapore ships incurred a loss for any year such loss shall be available as a deduction as provided for in subsection (2) of section 37 of this Ordinance.(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 by the shipping enterprise; and Parts XI and XII of this Ordinance (relating to objections and appeals) and any rules made under this Ordinance shall apply mutatis mutandis as if such statement were a notice of assessment.(5) Subject to subsection (8) of this section where any statement issued under subsection (4) of this section 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:Provided that 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: —

as soon as any amount of income of the shipping enterprise is exempted under subsection (5) of this section, such amount shall be credited to an account to be kept by the shipping enterprise for the purpose of this section;

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 lesser, shall be debited to such account;

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;

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;

section 44 of this Ordinance shall not apply to any dividends or part thereof debited to such account;

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 of this Ordinance shall not apply to any such dividend or part thereof.(7) A shipping enterprise shall deliver to the Comptroller a copy of the accounts referred to in subsections (2) and (6) of this section made up to any date specified by him whenever called upon to do so by notice in writing.(8) Notwithstanding the foregoing provisions of this section, where it appears to the Comptroller that —

any income of a shipping enterprise which has been exempt; or

any dividend (including a dividend paid by a holding company to which paragraph (f) of subsection (6) of this section applies) exempted in the hands of any shareholder,ought not to have been so exempt, the Comptroller may at any time within twelve years from the date of the statement referred to in subsection (4) of this section —

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

direct the shipping enterprise to debit its account kept in accordance with subsection (6) of this section with such amount as the circumstances may require.(9) Parts XI and XII of this Ordinance (relating to objections and appeals) and any rules made under this Ordinance shall apply mutatis mutandis as if an assessment or a direction under subsection (8) of this section were a notice of assessment.(10) For the purposes of this section —“holding company” means a company which holds not less than fifty per cent beneficial interest in the issued shares of a shipping enterprise;“shipping enterprise” means any company owning or operating Singapore ships;“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.(11) Nothing in this section shall affect the operation of section 27 of this Ordinance in ascertaining the income of a non-resident person owning or operating Singapore ships.”.