Net Tonnage Tax Option for Shipping Entities

by | Nov 25, 2024 | Accounting, Income Tax, Tech News

Qualifying shipping entities (QSEs) operating under key Singapore maritime incentive schemes now have the option to be taxed under a newly introduced Alternative Net Tonnage Tax (NTT) regime. This significant tax policy shift, initially announced in Tax Budget 2024, takes effect from the Year of Assessment (YA) 2024.

Key Details of the NTT Regime:

  1. Effective Scope: The NTT basis applies to qualifying income derived by QSEs approved under the following Maritime Sector Incentive (MSI) schemes:
    • MSI-Shipping Enterprise (Singapore Registry of Ships)
    • MSI-Approved International Shipping Enterprise
    • MSI-Maritime Leasing (Ship)
  2. Taxation Method: Instead of standard corporate income tax on actual profits, qualifying income will be calculated based on the net tonnage of the ships operated or leased by the QSE.
  3. Election Required: QSEs must proactively elect to apply the NTT basis. This election is not automatic.
  4. Critical Deadline for YA 2024: To apply the NTT basis starting from YA 2024 (covering income earned in 2023), QSEs must submit their election via the dedicated online form on the IRAS website by 30 November 2024.

IRAS Issues Administrative Guidelines for NTT Filings:

The Inland Revenue Authority of Singapore (IRAS) has outlined specific reporting procedures for QSEs adopting the NTT basis:

  • For YA 2024 Only:
    • The deemed income calculated under the NTT regime must be excluded from the main Form C-S/Form C tax return.
    • However, the full computation of the NTT deemed income, including all supporting schedules, must be submitted alongside the YA 2024 income tax computation filed with IRAS.
  • For YA 2025 and Subsequent Years:
    • The NTT deemed income must be declared within the Form C-S/Form C.
    • The NTT computation and supporting schedules must also be included in the income tax computation submitted to IRAS.

Next Steps for Shipping Entities:

QSEs considering the NTT basis for YA 2024 are urged to review the eligibility criteria and operational details of the scheme immediately. The online election form is currently available on the IRAS website. Entities must ensure their election is submitted before the 30 November 2024 deadline to benefit from the NTT regime for the current assessment year.

Source: IRAS, 23 October 2024.