Statute Details
- Title: Income Tax (Remission of Tax for Shipping Enterprises) Order 2013
- Act Code: ITA1947-S6-2013
- Legislation Type: Subsidiary Legislation (SL)
- Authorising Act: Income Tax Act (Cap. 134), section 92(2A)
- Citation: Income Tax (Remission of Tax for Shipping Enterprises) Order 2013
- Commencement: 9 January 2013
- Status: Current version as at 27 March 2026
- Key Provisions: Section 2 (definitions); Section 3 (remission for sale of ships); Section 4 (remission for sale of shares in a 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 for Singapore shipping businesses. In plain terms, it provides a remission (i.e., reduction) of tax on certain types of income derived from ship-related transactions—specifically, gains from selling ships and, in certain cases, gains from selling the shares of a wholly-owned “special purpose company” (SPC) that owns or contracts for ships.
The Order operates as a subsidiary instrument under the Income Tax Act. It does not create a general shipping tax regime from scratch; rather, it remits tax on specified categories of gains for specified time windows. The relief is carefully bounded by definitions (including what counts as “operating” a ship and what qualifies as a “shipping enterprise” or “approved international shipping enterprise”), by transaction type (sale of ships vs sale of shares in an SPC), and by exclusions (notably, certain finance lease treated sales and anti-avoidance/related-party conditions).
Practically, the Order is designed to support Singapore’s maritime sector by encouraging ship disposals and restructuring transactions during defined periods. It also aims to prevent the remission from being used in arrangements that do not reflect genuine operational shipping activity in Singapore or that fall within specific tax characterisations (such as finance lease structures).
What Are the Key Provisions?
1. Citation and commencement (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 came into operation on 9 January 2013. Although the Order’s commencement is in 2013, the remission provisions refer to income derived during earlier periods (e.g., from 1 January 2005 and from 16 February 2008). This is a common feature of remission orders: the relief is framed prospectively in legal form but applied to specified historical transaction windows.
2. Definitions and interpretive rules (Section 2)
Section 2 is critical because it controls eligibility. The Order imports key meanings from the Income Tax Act by reference. In particular, “approved” and “international shipping enterprise” take their meanings from section 13F(6) of the Income Tax Act. Likewise, “shipping enterprise” takes its meaning from section 13A(16) of the Act. This cross-referencing means practitioners must read the Order together with the underlying Income Tax Act provisions governing shipping tax status and approvals.
The Order also defines “operating” in relation to a ship. “Operating” includes not only carriage of passengers, mail, livestock or goods outside the port limits of Singapore, but also chartering for use outside Singapore port limits, offshore oil and gas activity (including use as a dredger or seismic ship), and towing or salvage operations outside the port limits. This broad definition is important: it ensures that the remission is linked to operational maritime activities rather than merely holding ships.
Finally, Section 2(2) clarifies a registry issue: a reference to a ship being registered under the Merchant Shipping Act does not include a ship whose registry is closed or deemed closed or suspended at the relevant time. This prevents eligibility from being based on dormant or suspended registrations.
3. Remission for sale of ships (Section 3)
Section 3 is the core relief provision for ship disposals. It provides that there shall be remitted the tax on 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.
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 rights as a buyer under a contract for construction of a ship that is provisionally registered under the Merchant Shipping Act at the time of assignment.
For an approved international shipping enterprise, the remission applies to gains derived from:
- sale of ships registered under any shipping registry (including the Merchant Shipping Act); and
- assignment of construction contract buyer rights where the ship is registered (provisionally or otherwise) under any shipping registry at the time of assignment.
Exclusions (Section 3(2))
Section 3(2) contains two important carve-outs where remission does not apply:
- Finance lease treated sales: remission does not apply to gains from the 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. The enterprise is a lessor in that scenario.
- Pre-delivery sale where the enterprise is a single-asset owner and not related to other operators: for a shipping enterprise, remission does not apply to gains from sale of a ship before its delivery where (i) the ship is the only asset owned by the enterprise, and (ii) 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.
Related-party test (Section 3(3))
The “related” concept in Section 3(2)(b)(ii) is defined by a 25% beneficial ownership threshold. A shipping enterprise is related to another shipping enterprise (or approved international shipping enterprise) if 25% or more of the issued shares are beneficially owned (directly or indirectly) between the entities, or if 25% or more of the issued shares of both are beneficially owned by a third person. This is a classic anti-avoidance safeguard: it distinguishes between genuine operational groups and stand-alone entities that might otherwise qualify for remission without substantive Singapore shipping operations.
4. Remission for sale of shares in a special purpose company (Section 4)
Section 4 extends remission beyond direct ship sales to certain share 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 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.
The eligibility then depends on the status of the shipping enterprise (domestic vs approved international) and on what the SPC owns or is contracted to acquire at the time of the share sale.
For a shipping enterprise, at the time of sale of the shares, the SPC 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 construction contract for a ship provisionally registered under the Merchant Shipping Act and not own any foreign-registered ship.
For an approved international shipping enterprise, the SPC may own or contract for ships registered under any shipping registry (including the Merchant Shipping Act). This reflects the broader international scope of approved international shipping enterprises.
How Is This Legislation Structured?
The Order is structured as a short instrument with four operative provisions:
- Section 1 sets out the citation and commencement.
- Section 2 provides definitions and interpretive rules, including cross-references to the Income Tax Act and a definition of “operating”.
- Section 3 governs remission in relation to the sale of ships, including eligibility criteria, transaction types, time window, and exclusions (finance lease and certain pre-delivery single-asset scenarios), plus a related-party test.
- Section 4 governs remission in relation to the sale of shares in a wholly-owned SPC that operates ships, including time window and asset/registry conditions.
Notably, the Order is concise and relies heavily on the definitions and shipping status concepts in the Income Tax Act, meaning practitioners must read it as part of a broader statutory framework.
Who Does This Legislation Apply To?
The remission is available to two categories of taxpayers: (1) a shipping enterprise and (2) an approved international shipping enterprise. Both must be in the business of operating ships as defined in Section 2. The “operating” requirement ties the relief to real maritime operations outside the port limits of Singapore, including carriage, chartering, offshore oil and gas activities, and towing/salvage.
In addition, the Order’s relief is transaction-specific. Eligibility depends on whether the income arises from (a) sale/assignment connected to ships registered under specified registries and during specified periods, or (b) sale of the entire ordinary shareholding in a wholly-owned SPC that only operates ships and meets the registry/ownership conditions at the time of the share sale.
Why Is This Legislation Important?
For practitioners, the Order is important because it provides a time-bounded remission that can materially affect tax outcomes for shipping groups engaged in ship disposals and corporate restructuring. The relief can apply to both direct ship sales and certain share sales, which is particularly relevant where ship assets are held through SPVs or special purpose structures.
Equally important are the limitations and exclusions. The finance lease carve-out prevents remission from being claimed where the transaction is characterised as a finance lease treated sale under the Income Tax Act and related regulations. The pre-delivery single-asset exclusion (for shipping enterprises) and the 25% beneficial ownership related-party test are designed to ensure that remission aligns with substantive shipping operations in Singapore and is not used for transactions involving entities that do not form part of a broader shipping operating group.
From an enforcement and compliance perspective, the Order’s reliance on ship registration status (including the exclusion of closed/deemed closed/suspended registries) means that documentation and factual verification—such as registry status at relevant times, contract assignment timing, and the composition of beneficial ownership—are likely to be critical in any tax computation or dispute.
Related Legislation
- Income Tax Act (Cap. 134) — including sections 13A(16), 13F(6), 92(2A), and section 10D (finance lease treated as sale)
- Merchant Shipping Act (Cap. 179)
- Income Tax (Income from Finance Leases) Regulations (referred to as Rg 13)
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.