Statute Details
- Title: Income Tax (Exemption of Interest and Other Payments on Economic and Technological Development Loans) (No. 5) Notification 2004
- Act Code: ITA1947-S475-2004
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Chapter 134)
- Authorising Provision: Section 13(4) of the Income Tax Act
- Notification Number: SL 475/2004
- Date Made: 5 August 2004
- Commencement: Not expressly stated in the extract; the notification is “made” on 5 August 2004 and is cited as the 2004 Notification
- Status: Current version as at 27 March 2026 (per the provided extract)
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Exemption)
What Is This Legislation About?
The Income Tax (Exemption of Interest and Other Payments on Economic and Technological Development Loans) (No. 5) Notification 2004 is a targeted tax exemption instrument made under the Income Tax Act. In plain terms, it provides that certain “swap payments” made by a specified company to a specified bank are exempt from tax, but only for defined periods and only in relation to defined underlying transactions.
Although the Notification is framed around “economic and technological development loans”, the operative effect in this particular Notification is narrower: it concerns swap payments connected to bareboat charters of two named vessels. The Notification therefore functions as a bespoke relief measure, rather than a general rule applicable to all taxpayers.
For practitioners, the key point is that this is not a standalone tax code. It is a statutory notification that operates within the Income Tax Act’s framework, using the Minister’s power under section 13(4) to grant exemptions from tax for specified payments. The exemption is time-bound and transaction-specific, which is typical of development-related tax incentives and structured finance arrangements.
What Are the Key Provisions?
Section 1 (Citation and commencement). Section 1 provides the short title and citation. It states that the Notification may be cited as the “Income Tax (Exemption of Interest and Other Payments on Economic and Technological Development Loans) (No. 5) Notification 2004”. The extract does not set out a detailed commencement mechanism; however, the notification is clearly a formal instrument “made” on 5 August 2004. In practice, the operative date will matter mainly for determining whether payments fall within the exempt periods specified in section 2.
Section 2 (Exemption). Section 2 is the heart of the Notification. It provides that there “shall be exempt from tax” the swap payments made by Shell Tankers (Singapore) Pte Ltd to National Australia Bank Limited. The exemption applies to swap payments made during two separate time windows, each bounded by inclusive start and end dates.
The Notification specifies that the exempt swap payments are those made:
- Between 27 January 2004 and 14 January 2036 (both dates inclusive); and
- Between 11 December 2003 and 14 January 2036 (both dates inclusive).
These two windows overlap and extend to the same long end date (14 January 2036). The presence of two start dates suggests that the underlying swap arrangements (or their effective periods) may have commenced at different times, or that there are two relevant legs/periods within the overall hedging structure. From a compliance perspective, the practitioner should treat the exemption as applying only to swap payments falling within the stated date ranges, and should ensure that payment records and contract effective dates align with the Notification’s wording.
Link to the underlying transaction: two Swap Master Agreements and bareboat charters. Section 2 further limits the exemption by tying it to swap payments “under 2 Swap Master Agreements dated 8 December 2003”. It specifies that these swap master agreements relate to bareboat charters of two named vessels: “Gemmata” and “Granatina”, respectively.
Accordingly, the exemption is not a general exemption for all swap payments made by Shell Tankers (Singapore) Pte Ltd to National Australia Bank Limited. It is confined to swap payments made “under” the specified Swap Master Agreements dated 8 December 2003, and those agreements are described as being in respect of the bareboat charters of the two vessels. This means that if swap payments were made outside the scope of those agreements, or under different master agreements, the exemption would likely not apply.
Practical implications of the “under” language. The phrase “under 2 Swap Master Agreements” is legally significant. It indicates that the tax treatment depends on the contractual basis for the payments. Practitioners should therefore review the swap documentation to confirm: (i) the existence and exact date of the master agreements; (ii) the schedule/confirmation that links each swap payment to the relevant master agreement; and (iii) the contractual linkage to the bareboat charter arrangements for the named vessels.
How Is This Legislation Structured?
This Notification is structured in a minimal, two-section format typical of subsidiary tax notifications:
- Section 1: Citation and commencement (short title and identification).
- Section 2: Substantive provision granting the exemption, including the parties, payment type, relevant date ranges, and the contractual instruments (Swap Master Agreements) and underlying transactions (bareboat charters of specified vessels).
There are no additional parts, schedules, or definitions in the extract. The operative scope is therefore entirely contained in section 2, which is drafted with specificity: it names the taxpayer and recipient, identifies the payment type (swap payments), sets out the exempt periods, and anchors the exemption to particular swap master agreements and vessel charters.
Who Does This Legislation Apply To?
The Notification applies to Shell Tankers (Singapore) Pte Ltd in respect of swap payments it makes to National Australia Bank Limited. The exemption is therefore not “class-based” (e.g., not “all companies” or “all loans”). It is person-specific and transaction-specific.
In practical terms, the exemption is relevant to the Singapore tax position of the payer and, depending on how the tax rules treat the nature of swap payments, may also be relevant to the recipient’s tax exposure. However, the Notification’s text is directed to payments “made by” the payer to the recipient and states that those payments “shall be exempt from tax”. A practitioner should interpret the exemption in light of the Income Tax Act’s general provisions on how such payments are assessed, and should confirm whether the exemption affects withholding tax, income inclusion, or both—bearing in mind that the Notification is made under section 13(4) of the Income Tax Act.
Why Is This Legislation Important?
Although the Notification is short, it can be highly significant for structured finance and shipping-related tax planning. Swap arrangements are commonly used to hedge interest rate or currency risks associated with financing and chartering structures. Without an exemption, swap payments may be subject to tax treatment that could increase the effective cost of hedging and financing.
This Notification provides certainty for a long horizon: the exempt periods run until 14 January 2036. That long duration indicates that the exemption is intended to support the economic viability of the underlying shipping and financing structure over many years. For practitioners, this is a reminder that tax relief may be granted not only for short-term incentives but also for long-term contractual arrangements, provided the statutory conditions are met.
From an enforcement and compliance perspective, the specificity of the Notification means that careful documentation is essential. The exemption depends on: (i) the identity of the parties; (ii) the payment type (swap payments); (iii) the payment dates; and (iv) the contractual basis (the two Swap Master Agreements dated 8 December 2003) and the underlying bareboat charters for the two named vessels. If any of these elements are not satisfied, the exemption may not apply, potentially exposing payments to tax.
Finally, the Notification illustrates how Singapore’s tax system uses subsidiary legislation to implement targeted relief measures. Even where the underlying commercial transaction is complex, the legal instrument can be drafted in a way that is highly precise. Practitioners should therefore treat such notifications as primary legal sources for the tax treatment of the specified payments, rather than relying solely on general policy statements.
Related Legislation
- Income Tax Act (Chapter 134) — in particular, section 13(4) (the authorising provision for making this Notification)
- Income Tax Act (Timeline / Legislation timeline) — to confirm the correct version and any subsequent amendments affecting the operation of section 13(4)
Source Documents
This article provides an overview of the Income Tax (Exemption of Interest and Other Payments on Economic and Technological Development Loans) (No. 5) Notification 2004 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.