The Singapore government has set forth measures aimed at strengthening the competitiveness of its maritime sector in its new state budget for 2015, released on Monday by the country’s Finance Ministry.
The measures include extending and enhancing the Maritime Sector Incentive (MSI) thus offering a wider scope of tax benefits to ship operators, maritime lessors and providers of certain shipping related support services.
The automatic WHT exemption regime will now cover finance leases, hire-purchase arrangements, and loans used to finance equity injection into wholly-owned SPVs or inter-company loans to wholly-owned SPVs for the SPVs’ purchase/construction of vessels, containers and intermodal equipment.
In line with the budget, the definition of qualifying ship management activities for the purpose of the MSI-SRS, MSI-AIS award and MSI-SSS award will be updated to keep pace with industry changes.
The budget also stipulated for MSI-SRS and MSI-AIS award to cover mobilisation fees, demobilisation fees, holding fees, and incidental container rental income that are derived in the course of qualifying shipping operations. In addition, qualifying profits remitted from approved foreign branches by MSIAIS entities will also be exempted.
For those under the MSI the 10% or 5% concessionary tax rate will cover income from finance leases treated as a sale, the government explained.
Existing MSI-SSS award recipients can renew their award tenure for another five years, subject to qualifying conditions and higher economic commitments.
“The approval window to award MSI-AIS for qualifying entry players, MSIML (Ship), MSI-ML (Container) and MSI-SSS will be extended till 31 May 2021. In addition, the automatic withholding tax exemption regime will be extended to qualifying payments made on qualifying loans taken on or before 31 May 2021,” the budget document reads.
The enhancements to the MSI took effect on 24 February 2015, the government said.