BUDGET 2006 Incentive

BT
Published February 18, 2006
By DONALD URQUHART

SINGAPORE'S shipping sector got a boost in yesterday's Budget, with new incentives to attract ship-owning and operating companies, as well as a new move aimed at growing ship financing activities here.

"SMa strongly welcomes initiatives that will boost the export competitiveness of manufacturing SMEs... However, SMa is disappointed that there is no reduction in the present level of corporate taxes. SMa would like more incentives in the area of taxation. For example, an SME could be exempted from paying taxes in the first few years of its start-up.'

While noting that Singapore's business infrastructure and connectivity are key strengths for the maritime and logistics industries here, Prime Minister and Finance Minister Lee Hsien Loong said: 'We must attract more international ship-owning and ship-operating companies to set up operations in Singapore.'

To do this requires support from a range of services that cover the entire maritime and logistics value chain, including financing, he said. To encourage the development of ship financing activities in Singapore, the government is introducing a Maritime Finance Incentive (MFI).

Under this, tax exemption will be granted on qualifying income of ship investment vehicles and a 10 per cent concessionary tax rate will apply to qualifying income of ship investment managers.

MFI status will be granted from March 1, 2006 to Feb 28, 2011 for a period of not more than 10 years. The Maritime & Port Authority of Singapore will announce further details by June 2006.


The existing Approved International Shipping (AIS) incentive has also been given a boost to 'entrench' shipping companies in Singapore, by allowing them to renew their incentives for a third period of 10 years, lengthening the maximum period of incentive from 20 to 30 years.

AIS gives approved shipping firms tax exemption status on certain income.

To lower the compliance cost for traders enjoying the 10 per cent concessionary rate under the Global Trader Programme, the government will remove the need for companies to show that the derivative trades are incidental to physical trades before such income can be considered as qualifying.

Lastly, an automatic GST suspension will be granted for goods removed from zero-GST warehouses by companies qualifying under the Major Exporter Scheme and Approved Third Party Logistics Company Scheme.