Singapore legislation
Regulation 25
Regulation 25
Exclusion of international shipping income and ancillary international shipping income
Subregulation 1
Where the FANIL of a constituent entity of an MNE group for a financial year includes any international shipping income or ancillary international shipping income, its FANIL for that financial year must be adjusted as follows:
if its international shipping income or its ancillary international shipping income is less than nil — each of such amount is excluded from its FANIL;
if its international shipping income is a positive amount — that amount is excluded from its FANIL;
if its ancillary international shipping income is a positive amount — the specified amount of such income is excluded from its FANIL.
Subregulation 2
Paragraph (1) only applies if, in the financial year, the strategic or commercial management of any ship used in international shipping giving rise to the income in question is effectively carried on within the jurisdiction where the constituent entity is located.
Subregulation 3
In this regulation, the international shipping income of a constituent entity for a financial year is its net income (or loss) from international shipping activities for the financial year after taking into account —
costs incurred in that financial year by the constituent entity directly attributable to those international shipping activities; and
the relevant proportion of the indirect costs incurred in that financial year by the constituent entity that is attributable to those international shipping activities.
Subregulation 4
In this regulation, the ancillary international shipping income of a constituent entity for a financial year is its net income (or loss) from ancillary international shipping activities for the financial year after taking into account —
costs incurred in that financial year by the constituent entity directly attributable to those ancillary international shipping activities; and
the relevant proportion of the indirect costs incurred in that financial year by the constituent entity that is attributable to those ancillary international shipping activities.
Subregulation 5
In paragraphs (3)(b) and (4)(b), the relevant proportion for a financial year is the revenue of the constituent entity from international shipping activities or ancillary international shipping activities (as the case may be) for that financial year divided by its total revenue for that financial year.
Subregulation 6
In paragraph (1)(c), the specified amount of ancillary international shipping income for a constituent entity of an MNE group located in a jurisdiction for a financial year is —where —
A is the lower of C and the ancillary international shipping income cap for the MNE group for that jurisdiction for that financial year;
B is the ancillary international shipping income for that financial year of the constituent entity if such amount is a positive amount, otherwise B is nil; and
C is the sum of any positive amount of ancillary international shipping income for that financial year of each of the constituent entities of the MNE group located in the same jurisdiction.
Subregulation 7
In this regulation —
Definition
“ancillary international shipping activities” means the following activities performed by a constituent entity of an MNE group primarily in connection with international shipping:
leasing as lessor a ship to be used for international shipping, where the ship is leased on a bareboat charter to a lessee which is a shipping enterprise, and which is not a constituent entity of the same MNE group for a period not exceeding 3 years;
selling tickets for a domestic leg of an international voyage carried out by another shipping enterprise;
leasing as lessor a container used for international shipping;
storing a container used for international shipping temporarily;
providing engineering, maintenance, cargo handling, catering and customer relations services to shipping enterprises;
ancillary investment activities carried on as an integral part of international shipping operations;
Definition
“ancillary international shipping income cap”, in relation to an MNE group for a jurisdiction for a financial year, is —
50% of the sum of the international shipping income for that financial year of the constituent entities of the MNE group located in the same jurisdiction as the constituent entity (including that constituent entity), if such sum is a positive amount; and
nil, if such sum is nil or less;
Definition
“international shipping” means any transportation of passengers or cargo by ship, except where the ship is operated solely between places within a single jurisdiction, but does not include towing or dredging;
Definition
“international shipping activities” means the following activities performed by a constituent entity of an MNE group:
carrying out international shipping, whether alone or in conjunction with another person;
leasing as lessor a ship to be used for international shipping, where —
the ship is leased fully equipped, crewed and supplied; or
the ship is leased on a bareboat charter to another constituent entity of the same MNE group for international shipping;
transportation of passengers or cargo by ship in international shipping under a slot-chartering arrangement;
the sale of a ship used in international shipping, where the ship has been held for use by the constituent entity for at least one year.