Statute Details
- Title: Income Tax (Remission of Tax for Shipping Enterprises) Order 2013
- Act Code: ITA1947-S6-2013
- Legislative Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Cap. 134), section 92(2A)
- Enacting Formula / Maker: Minister for Finance
- Date Made: 3 January 2013
- Commencement: 9 January 2013
- Status: Current version (as at 27 Mar 2026)
- Key Provisions: Section 1 (citation and commencement); Section 2 (definitions); 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 measure within Singapore’s broader shipping and maritime tax framework. In plain terms, it provides for the remission (i.e., reduction or elimination) of tax on certain types of income derived by qualifying shipping enterprises when they dispose of ships—or, in certain cases, sell their interests in a special purpose company that holds ships.
The Order is not a general shipping tax incentive for all years and all transactions. Instead, it is time-bound and transaction-specific. It focuses on gains derived during defined historical periods (spanning parts of 2005 to 2011, and a separate window from 2008 to 2011) and limits the remission to particular categories of gains, such as profits from selling ships and certain assignments of ship construction contracts.
From a practitioner’s perspective, the Order operates as a “qualifying transaction filter.” Even where a company is a shipping enterprise, remission depends on whether (i) the enterprise is operating ships (as defined), (ii) the income falls within the specified categories, (iii) the transaction occurs within the specified period, and (iv) exclusions and anti-avoidance-like conditions are satisfied—particularly around finance leases and related-party structures.
What Are the Key Provisions?
Section 1 (Citation and commencement) confirms that the Order may be cited as the Income Tax (Remission of Tax for Shipping Enterprises) Order 2013 and that it came into operation on 9 January 2013. This matters for procedural and interpretive purposes, but the substantive remission provisions relate to earlier “basis period” or income windows.
Section 2 (Definitions) sets the interpretive foundation. Two definitions are crucial for eligibility: “approved” and “international shipping enterprise” are imported by reference to the Income Tax Act (specifically section 13F(6)). The Order also defines “operating” in relation to a ship, which is central because the remission applies only where the enterprise is “in the business of operating ships.” “Operating” includes not only carriage of passengers, mail, livestock or goods outside Singapore port limits, but also chartering outside those limits, offshore oil and gas activity, dredging/seismic work outside port limits, and towing or salvage outside port limits. The definition of “ship” is similarly broad, expressly including dredgers, seismic ships, and vessels used for offshore oil or gas activity.
Section 2(2) clarifies a registry point: when determining whether a ship is “registered” under the Merchant Shipping Act, a reference to registration does not include ships whose registry is closed, deemed closed, or suspended at the relevant time. This is a technical but potentially decisive condition for transactions involving ships with interrupted or suspended registries.
Section 3 (Remission in relation to sale of ships) is the core provision for direct ship disposals. It provides that tax shall be remitted 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 1st day of the basis period for Year of Assessment 2005 to 31 May 2011 (both inclusive); and
- the income comprises specified gains.
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 a ship that is, at the time of assignment, provisionally registered under the Merchant Shipping Act.
For an approved international shipping enterprise, the remission is broader geographically in terms of registries: it covers gains from sale of ships registered under any shipping registry (including the Merchant Shipping Act) and assignment of construction contract rights where the ship is registered (provisionally or otherwise) under any shipping registry.
Section 3(2) sets important exclusions. Remission does not apply to gains from:
- sale of a 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; where the enterprise is the lessor; or
- in the case of a shipping enterprise, sale of a ship before delivery to the enterprise, where (i) the ship is the enterprise’s only asset and (ii) the enterprise is not related to another shipping enterprise (or approved international shipping enterprise) that carries on the business in Singapore of operating ships.
The second exclusion is nuanced: it prevents remission in a particular pre-delivery sale scenario, but only where the “only asset” and “not related” conditions are met. In other words, the exclusion is not simply “pre-delivery sales are excluded”; it is conditional and depends on the enterprise’s asset concentration and related-party relationship.
Section 3(3) defines “related” for the purposes of the exclusion in section 3(2)(b)(ii). The test is a 25% beneficial ownership threshold, assessed through direct or indirect shareholding links between the shipping enterprises (or approved international shipping enterprises) and also via a third person who beneficially owns 25% or more in both entities.
Section 4 (Remission in relation to sale of special purpose company) extends remission beyond direct ship sales to certain equity disposals. It provides that tax shall be remitted on income derived by a shipping enterprise or 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 turns on the special purpose company’s ship holdings and/or its status as buyer under a ship construction contract at the time of the share sale.
For a shipping enterprise, the special purpose company must, at the time of sale, 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 construction contract for a ship provisionally registered under the Merchant Shipping Act and not own any ship registered under a foreign registry.
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 under any shipping registry.
Practically, section 4 is designed to treat certain corporate restructurings or disposals (selling the ship-owning vehicle rather than the ships directly) in a similar manner to direct ship sales, but only where the special purpose company is “clean” (wholly-owned, only business is operating ships, and with specified registry characteristics).
How Is This Legislation Structured?
The Order is structured as a short, four-section instrument:
- Section 1 provides the citation and commencement date.
- Section 2 contains definitions, including key terms imported from the Income Tax Act and operational definitions such as “operating” and “ship,” plus a registry-status clarification.
- Section 3 sets out remission for income derived from the sale of ships and certain assignments of ship construction contract rights, including exclusions and a related-party ownership test.
- Section 4 provides remission for gains derived from the sale of the entire ordinary shareholding in a wholly-owned special purpose company that operates ships, with 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. “Approved” and “international shipping enterprise” are defined by reference to the Income Tax Act, so eligibility depends on meeting the approval and status requirements under the primary legislation.
In both cases, the enterprise must be in the business of operating ships as defined by the Order. The remission is then limited to specified income types and time windows, and it is further constrained by exclusions (notably finance lease treatment and certain pre-delivery sale circumstances) and by the special purpose company conditions in section 4.
Why Is This Legislation Important?
This Order is important because it provides a targeted remission mechanism for shipping-related gains that would otherwise be taxable under Singapore’s income tax regime. For shipping groups, the practical impact is that certain disposal strategies—selling ships directly, assigning construction contract rights, or selling the equity of a ship-owning special purpose vehicle—may qualify for tax remission if the statutory conditions are met.
From an enforcement and compliance standpoint, the Order’s drafting highlights where disputes are likely to arise: (i) whether the enterprise is genuinely “operating” ships (as opposed to merely holding assets), (ii) whether the ship is properly registered (and not suspended/closed), (iii) whether the transaction falls within the specified historical income windows, and (iv) whether exclusions apply (especially finance lease structures and the “only asset” / related-party conditions).
For practitioners advising on structuring, due diligence, and tax positions, the Order also underscores the value of documenting factual and legal elements: ship registry status at the relevant times, the nature of the transaction (sale vs assignment vs equity sale), the identity and ownership structure of related entities, and the business scope of special purpose companies.
Related Legislation
- Income Tax Act (Cap. 134) — including sections 10D, 13A(16), 13F(6), and section 92(2A) (authorising power)
- Merchant Shipping Act (Cap. 179) — governing ship registration under the Singapore registry
- Income Tax (Income from Finance Leases) Regulations (Rg 13) — referenced for finance lease treatment
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.