Statute Details
- Title: Income Tax (Remission of Tax for Shipping Enterprises) Order 2013
- Act Code: ITA1947-S6-2013
- Type: Subsidiary Legislation (sl)
- Authorising Act: Income Tax Act (Cap. 134), specifically section 92(2A)
- Citation: S 6/2013 (as indicated in the legislation timeline)
- Commencement: 9 January 2013
- Status: Current version as at 27 March 2026 (per the extract)
- Key Provisions:
- Section 1: Citation and commencement
- Section 2: Definitions (including “operating”, “ship”, and cross-references to the Income Tax Act)
- Section 3: Remission in relation to sale of ships
- Section 4: Remission in relation to sale of special purpose company
What Is This Legislation About?
The Income Tax (Remission of Tax for Shipping Enterprises) Order 2013 (“the Order”) is a targeted tax relief instrument made under the Income Tax Act. In plain terms, it provides for a remission (i.e., reduction) of tax on certain types of income earned by shipping enterprises—particularly where those enterprises derive gains from selling ships or from selling their interests in a wholly-owned special purpose company (SPC) that owns or operates ships.
The Order is not a general shipping tax regime. Instead, it is a time-bound relief that applies to specific categories of income and specific transaction types. It is designed to encourage or support shipping-related restructuring and asset transactions during defined periods, while also protecting the tax base by excluding certain arrangements (for example, finance lease treated as a sale, and intra-group or related-party situations in specified circumstances).
Practically, the Order matters to shipping groups, ship-owning and ship-operating businesses, and their advisers because it can significantly affect the tax treatment of gains from ship disposals and from share sales of ship-owning vehicles. It also requires careful attention to definitions—especially what counts as “operating” a ship and what qualifies as a “ship” for the purposes of the remission.
What Are the Key Provisions?
1. Commencement and scope of the instrument (Section 1)
Section 1 provides that the Order may be cited as the Income Tax (Remission of Tax for Shipping Enterprises) Order 2013 and that it comes into operation on 9 January 2013. Although the Order commences in 2013, its remission provisions apply to income derived during earlier and later windows (as set out in Sections 3 and 4). This is common in remission orders: the relief is enacted later but is intended to apply to transactions and income within specified historical periods.
2. Definitions and interpretive rules (Section 2)
Section 2 is crucial because it imports key concepts from the Income Tax Act and provides operational definitions that determine eligibility.
First, the Order defines “approved” and “international shipping enterprise” by reference to section 13F(6) of the Income Tax Act. This means eligibility depends on whether the enterprise is “approved” and whether it qualifies as an “international shipping enterprise” under the Act’s framework.
Second, “operating”, in relation to a ship, is defined broadly to include not only carriage of passengers, mail, livestock or goods outside Singapore port limits, but also chartering and certain offshore activities. Specifically, “operating” includes use outside the limits of the port of Singapore as a dredger, seismic ship, or for offshore oil or gas activity, as well as towing or salvage operations outside those limits. This breadth matters because the remission in Section 3 is conditional on the enterprise being “in the business of operating ships”.
Third, “ship” is defined to include dredgers, seismic ships, and vessels used for offshore oil or gas activity. This ensures that the remission is not limited to conventional cargo/passenger vessels.
Finally, Section 2(2) clarifies that a reference to a ship being registered (provisionally or otherwise) under the Merchant Shipping Act does not include a ship whose registry is closed, deemed closed, or suspended at the relevant time. For practitioners, this is a compliance and documentation point: evidence of registration status at the relevant time may be necessary to support eligibility.
3. Remission for gains from sale of ships (Section 3)
Section 3 is the core provision for ship disposals. It provides that there shall be remitted the tax on the income of a shipping enterprise or an approved international shipping enterprise where:
- the enterprise is in the business of operating ships; and
- the income is derived during the period from 1 January 2005 to 31 May 2011 (both inclusive); and
- the income comprises specified gains.
The gains covered differ depending on whether the enterprise is a domestic “shipping enterprise” or an “approved international shipping enterprise”.
(a) Shipping enterprise (Section 3(1)(b)(i))
For a shipping enterprise, the remission applies to gains derived from:
- sale of ships registered (provisionally or otherwise) under the Merchant Shipping Act (Cap. 179); and
- assignment of all rights as a buyer under a contract for construction of any ship that is, at the time of assignment, provisionally registered under the Merchant Shipping Act.
(b) Approved international shipping enterprise (Section 3(1)(b)(ii))
For an approved international shipping enterprise, the remission applies to gains derived from:
- sale of ships registered (provisionally or otherwise) under any shipping registry, including the Merchant Shipping Act; and
- assignment of all rights as a buyer under a contract for construction of any ship that is, at the time of assignment, registered (provisionally or otherwise) under any shipping registry, including the Merchant Shipping Act.
4. Exclusions and anti-avoidance features (Section 3(2) and (3))
Section 3 contains important carve-outs that limit the remission.
(a) Finance lease treated as a sale (Section 3(2)(a))
The remission does not apply to gains derived from the sale of any ship under a finance lease treated as a sale under section 10D of the Income Tax Act and the Income Tax (Income from Finance Leases) Regulations. This reflects a policy choice: where the transaction is already treated as a sale for tax purposes under the finance lease regime, the remission is not intended to apply.
(b) Pre-delivery sale where the enterprise is effectively a single-asset vehicle (Section 3(2)(b))
For a shipping enterprise, the remission also does not apply to gains from selling a ship before its delivery to the enterprise, where:
- the ship is the only asset owned by the enterprise; and
- the enterprise is not related to any other shipping enterprise or approved international shipping enterprise that carries on the business in Singapore of operating ships.
This is a nuanced limitation. It targets situations where a shipping enterprise is essentially a single-asset vehicle and disposes of the ship before delivery, but without a related-party Singapore operating group. The “related” concept is then defined in Section 3(3) by reference to 25% or more beneficial ownership of issued shares, either directly or indirectly, including through a third person.
For practitioners, the key takeaway is that eligibility can turn on corporate structure and beneficial ownership thresholds. Where groups are involved, a shareholding analysis is often necessary to determine whether the exclusion applies.
5. Remission for sale of shares in a wholly-owned special purpose company (Section 4)
Section 4 extends remission beyond ship sales to certain share sales. It provides that tax shall be remitted on income derived by a shipping enterprise or an approved international shipping enterprise where:
- the income is derived during the period from 16 February 2008 to 31 May 2011 (both inclusive); and
- the income comprises gains derived from the sale of the entire ordinary shareholding of the enterprise in a wholly-owned special purpose company whose only business is operating ships.
Eligibility then depends on what the special purpose company owns or is involved in at the time of the share sale.
(a) Shipping enterprise case (Section 4(b)(i))
At the time of sale, the special purpose company must either:
- own one or more ships registered (provisionally or otherwise) under the Merchant Shipping Act and not own any ship registered under a foreign registry; or
- be the buyer under a contract for construction of a ship that is, at that time, provisionally registered under the Merchant Shipping Act, and not own any ship registered under a foreign registry.
(b) Approved international shipping enterprise case (Section 4(b)(ii))
For an approved international shipping enterprise, the special purpose company may own ships registered under any shipping registry (including the Merchant Shipping Act) or be the buyer under a construction contract for a ship registered (provisionally or otherwise) under any shipping registry.
In effect, Section 4 is designed to allow tax remission where the shipping enterprise exits or restructures by selling its entire interest in a ship-operating vehicle, provided the vehicle’s business is limited to operating ships and the ship registry profile matches the enterprise type.
How Is This Legislation Structured?
The Order is short and consists of four operative provisions:
- Section 1 sets the citation and commencement date.
- Section 2 provides definitions and interpretive rules, including cross-references to the Income Tax Act and definitions of “operating” and “ship”.
- Section 3 sets out remission for gains from the sale (or assignment of buyer rights) of ships, with detailed eligibility conditions and exclusions.
- Section 4 sets out remission for gains from the sale of the entire ordinary shareholding in a wholly-owned special purpose company that operates ships, again with time windows and registry-based conditions.
Who Does This Legislation Apply To?
The Order applies to two categories of taxpayers: (1) a shipping enterprise and (2) an approved international shipping enterprise. The definitions are not self-contained; they rely on the Income Tax Act’s framework (notably sections 13A(16) and 13F(6)).
In both cases, the enterprise must be in the business of operating ships as defined in Section 2, and the relevant income must fall within the specified time periods. Additionally, the nature of the transaction (ship sale/assignment under construction contracts, or sale of shares in a wholly-owned ship-operating SPC) and the ship registry profile (Singapore registry only versus any registry) determine whether the remission is available.
Why Is This Legislation Important?
This Order is important because it can materially reduce tax on gains from shipping-related transactions—particularly where enterprises dispose of vessels or restructure ownership through special purpose companies. For shipping groups, the ability to obtain remission can influence deal structuring, timing, and the choice between asset sales and share sales.
From an enforcement and compliance perspective, the Order’s eligibility depends on detailed factual and legal elements: the enterprise’s status (shipping enterprise versus approved international shipping enterprise), the “operating” activity, the registration status of ships under the Merchant Shipping Act (including whether a registry is suspended or closed), and whether exclusions apply (such as finance lease treated as a sale, or the pre-delivery sale exclusion tied to single-asset vehicles and related-party status).
For practitioners, the most practical work usually involves (i) confirming the taxpayer’s classification under the Income Tax Act, (ii) mapping the transaction to the specific gain categories in Sections 3 and 4, (iii) verifying the relevant dates (basis periods and the income derivation windows), and (iv) conducting a beneficial ownership analysis where “related” status is relevant under Section 3(3). Done correctly, these steps can support a remission claim and reduce the risk of disputes with tax authorities.
Related Legislation
- Income Tax Act (Cap. 134) — including sections 92(2A), 13A(16), 13F(6), and section 10D
- Merchant Shipping Act (Cap. 179)
- Income Tax (Income from Finance Leases) Regulations (as referenced in Section 3(2)(a))
Source Documents
This article provides an overview of the Income Tax (Remission of Tax for Shipping Enterprises) Order 2013 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.