6. Amendment of section 13E

In the ITA, in section 13E —

in subsection (1), replace “subsections (1A) and (2)” with “subsection (2)”;

in subsection (1), delete paragraph (e);

delete subsection (1A);

after subsection (1AD), insert —“(1AE) Subject to subsection (2), for the year of assessment 2027 and subsequent years of assessment, there is exempt from tax any income of an approved international shipping enterprise described in section 13A(1), (1B), (1CA), (1CE), (1CF), (1CG), (1CH), (1CI), (1CJ), (1CK) and (1CL), being income that would have been exempt from tax under that section but for the operation of subsection (1E) of that section.”;

in subsection (3)(b), replace “subsection (1)” with “subsections (1) and (1AE)”;

replace subsections (4) and (4A) with —“(3A) Subsection (3B) applies if an approved international shipping enterprise (X) —

had previously derived any income described in section 13A(1), (1CE) and (1CH) in respect of a ship during the basis period for one or more years of assessment (each called a section 13A YA) that was exempt from tax under section 13A; and

derives any income in respect of that ship during the basis period for the year of assessment 2027 or a subsequent year of assessment that is exempt from tax under this section, being the first year of assessment in which such income of X is so exempt.

For the purpose of determining under subsection (3) the amount of X’s income that is exempt from tax under this section for the year of assessment mentioned in subsection (3A)(b), the allowances in sections 16, 17, 18, 18B, 18C, 19, 19A, 20, 21, 22 and 23 in respect of that ship that may be made to X for that year of assessment are to be calculated on the residue of expenditure or reducing value of the assets after taking into account those allowances for each section 13A YA, even if no claim for such allowances was made by X for that section 13A YA.

Where an approved international shipping enterprise incurs a loss during the tax exempt period in respect of —

any operation, activity or service mentioned in paragraphs (a) to (d), (f), (h) to (lb) and (n) to (v) of subsection (1); or

any operation, activity or service mentioned in section 13A(1), (1B), (1CE), (1CF), (1CG), (1CH), (1CI), (1CJ), (1CK) and (1CL), that loss —

must be deducted in accordance with section 37; and

may only be deducted against the income mentioned in any of those paragraphs of subsection (1) or section 13A(1), (1B), (1CE), (1CF), (1CG), (1CH), (1CI), (1CJ), (1CK) and (1CL) (as applied by subsection (1AE)), and the balance of such loss is not available as a deduction against any other income, except that any balance remaining unabsorbed at the end of the tax exempt period is available as a deduction against any other income for the year of assessment which relates to the basis period in which the tax exemption ceases and for any subsequent year of assessment in accordance with section 37.

Where an approved international shipping enterprise incurs a loss on —

any sale or assignment mentioned in subsection (1)(g), (m), (ma) or (mb); or

any sale or assignment mentioned in section 13A(1CA),in any basis period falling, in whole or in part, within the tax exempt period, that loss may only be deducted against the gains derived from another sale or assignment mentioned in subsection (1)(g), (m), (ma) or (mb) or section 13A(1CA) (as applied by subsection (1AE)) in that basis period, and the balance of the loss is not available as a deduction against any other income.”; and

in subsection (6), delete the definition of “ship management services”.