Tax Exemptions for Singapore Shipping Companies
Updated: Dec 7, 2022
Tax Treatment of Shipping Income
Shipping Income under Section 13A
Shipping income of shipping businesses is exempt from tax under sections 13A and 13E of the Income Tax Act 1947.
Under Section 13A of the Income Tax Act 1947, shipping businesses operating Singapore-registered and foreign ships are exempt from tax on certain types of shipping income. See Section 13A(16) for definitions of shipping business, qualifying company, ship management services, etc.
Under Section 13A, there is no need to apply to IRAS for these exemptions. If your company derives income that qualifies for the exemption, you only need to report the amount and nature of the income when you file your company's annual corporate income tax return (Form C) and the tax calculation.
Tax Exemption for Singapore Registered Ships
Your shipping company operating a Singapore-registered ship enjoys tax-free treatment on income derived from operating a Singapore ship outside the port of Singapore:
1. Transportation of passengers, mail, livestock or goods;
2. Towing or salvage operations;
3. Ship chartering;
4. Use of the vessel as a dredger, seismic vessel or vessel for offshore oil or gas activities;
5. Foreign exchange and risk management activities related to and incidental to Singapore vessel operations;
6. Gain from the sale of Singapore ships;
7. Income from the transfer of rights under the shipbuilding contract. At the time of transfer, the vessel intends to be registered or provisionally registered under the Merchant Shipping Act 1995;
8. Gain from the sale of 100% of the issued ordinary shares of a special purpose company (“SPC”) which does not own any foreign vessels at the time of sale of shares and SPC:
a. Owns a Singapore ship or ship provisionally registered under the Merchant Shipping Act 1995; or
b. Is the buyer under the shipbuilding contract. At the time of sale the vessel was intended to be registered or provisionally registered under the Merchant Shipping Act 1995.
The exemptions mentioned in paragraphs (6) to (8) above do not include:
- the income of a shipping company as lessor of a ship under finance lease, deemed a sale under section 10C; or
- income obtained by shipping enterprises engaged in the business of buying and selling ships or the business of building and selling ships.
9. Income from the provision of ship management services [as defined in section 13A(16)] to any qualifying company between 22 February 2010 and 23 February 2015 in relation to a Singapore ship owned or operated by the qualifying company;
10. Any container leasing (other than finance leasing) income related to or incidental to the operation of a vessel in Singapore;
11. Income from:
a. provision of prescribed ship management services to qualifying companies in relation to Singapore ships owned or operated by qualifying companies [Income Tax (Required Ship Management Services) Rules 2017];
b. shipping companies themselves using Singapore vessels to mobilize, own or demobilise any vessels used or to be used in offshore oil or gas activities;
c. any mobilization, holding or demobilization of a Singapore vessel owned or operated by a shipping company and used or to be used in offshore oil or gas activities.
12. Income from foreign exchange and risk management activities related to or incidental to any of the activities mentioned in paragraph (11) above;
13. Income from:
a. any mobilization, possession or demobilization of any vessel used or to be used in offshore renewable energy activities or offshore mining activities which are carried out by the shipping enterprise itself using Singaporean vessels;
b. the mobilization, holding or demobilization of any Singapore vessel owned or operated by a shipping enterprise and used or to be used in offshore renewable energy activities or offshore mining activities;
c. foreign exchange and risk management activities related to or incidental to any of the activities referred to in paragraphs (a) and (c) above;
d. using Singapore vessels to engage in offshore renewable energy activities or offshore mining activities.
14. Income from Singapore ship finance leasing.
Tax Exemption for Foreign Registered Ships
For foreign ships, the exemption applies to revenue derived from the carriage of passengers, mail, livestock or cargo from Singapore, unless such carriage originates only in Singapore transshipment or only within Singapore port boundaries.