Enhancement of Maritime Sector Incentive - Maritime Leasing (Container) Award 

 
Present Position

Under the Maritime Sector Incentive – Maritime Leasing (Container) [MSI-ML (Container)] award, income derived from the leasing of qualifying containers is subject to concessionary rate of tax of 5% or 10% (applicable rate depends on level of local business spending and headcount commitment). The MSI-ML (Container) award also allows for withholding tax exemption on interest and related payments arising from loans taken to finance qualifying containers on a case-by-case basis.

Qualifying containers refer to containers that adhere to the standards defined by the International Organisation for Standardisation (ISO) or the Institute of International Container Lessors (IICL).


Proposed Change

The MSI-ML (Container) award is enhanced as follows:

  • Automatic withholding tax exemption on interest and related payments arising from loans entered into on or before 31 May 2016, to finance the purchase of qualifying containers and intermodal equipment (e.g. trailers), subject to certain conditions being met. Businesses would be required to submit a self-declaration form for each loan obtained to inform the MPA that the qualifying conditions have been met.
  • Income derived from the leasing of intermodal equipment which is incidental to the leasing of qualifying containers would also enjoy the concessionary tax rate of 5% or 10%.
  • The definition of qualifying containers has been expanded to include containers that adhere to the standards defined by any other organisation equivalent to ISO or IICL.



Effective

Automatic withholding tax exemption on interest and related payments would apply to payments made on or after 17 February 2012 while the remaining proposed changes would be effective from YA 2013.


Comments

The enhancement of the MSI-ML (Container) award aims at promoting the growth of container leasing in Singapore. This is done through the expansion of the definitions of qualifying income and qualifying containers.

The automatic withholding tax exemption on qualifying payments made in relation to loans obtained to finance qualifying containers and intermodal equipment would bring tax certainty to costs of financing.