Singapore: Mixed response to shipping tax breaks

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

25 Feb 2010

The various tax incentives for the maritime sector were met with a mixed response from industry players, however the consensus was that it was a positive signal to encourage the development of Singapore as a maritime hub. The key changes announced in the Budget are the inclusion of ship management fees as tax exempt under the Approved International Shipping Enterprise (AIS) Scheme and a concessionary tax rate of 10 per cent, down from the usual 17 per cent corporate tax rate for companies solely carrying out ship broking and/or forward freight agreement (FFA) trading.
Among the concerns raised was how much of an effect the tax exemptions would have, which would depend on the size of the fleet under management from the Singapore offices of the various ship managers. 'It will not affect us much as our fleet managed from Singapore is not that large,' said one prominent Norwegian ship manager.
On the other hand, other managers were grateful enough for whatever tax breaks were offered as 'it's still money saved', and will help give some relief from the thin margins the segment suffers from.
'We welcome the announced tax initiatives related to the maritime industry. Singapore is an important part of the Maersk global business, and it continues to be a destination where we look to increase our investment,' said AP Moller Singapore managing director Bjarne Foldager.
'The local government and Maritime Port Authority of Singapore have developed Singapore into a vibrant international maritime hub. I am certain that the new measures will further benefit the industry and support AP Moller Singapore's growth,' he added.
The ship brokers and FFA traders welcomed the moves and the recognition the maritime sector is receiving. 'It's good and shows the government is interested and helps to create a hub for the industry,' said Visa Bulk Shipping assistant general manager Shouvik Chatterjee.
The announcements caught some by surprise with the industry not expecting the concessions and the conciliatory tone of many suggested that they were ambivalent about how much they would actually benefit since many were already enjoying tax incentives under the AIS and other schemes.
'Of course it would be a good incentive to attract more people to Singapore,' said Imarex senior vice-president of freight derivatives Ron Wilson.
'It's quite a welcome move for the development of a complete maritime cluster and will have a multiplier effect,' said Drewry Maritime Services (Asia) director and head of Asia operations Divay Goel.
He cited how the big brokers are moving key officers to Singapore, while major Japanese ship managers have also been seen to be moving more personnel here in recent months. 'It's a positive signal to international players to shift here,' he added.

Source: Business Times Singapore