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Tax exemptions for shipping organisations
Shipping organisations are entities, which include Malta registered limited liability companies, whether private or public, partnerships, trusts, foundations, foreign corporate bodies or other entities which have established a place of business in Malta, and which are licensed by the Registrar-General of Shipping and Seamen to carry out one or more of the following activities:
- the ownership, operation, administration and management of a ship or ships registered as a Maltese ship and the carrying on of all ancillary financial, security and commercial activities in connection therewith;
- the ownership, operation, administration and management of a ship or ships registered under the flag of another state and the carrying on of all ancillary financial security and commercial activities in connection therewith;
- the holding of shares or other equity interests in entities, whether Maltese or otherwise, established for any of the purposes mentioned above and the carrying on of all ancillary financial, security and commercial activities in connection therewith;
- the raising of capital through loans, the issue of guarantees or the issue of securities by the company when the purpose of such activity is to achieve the objects mentioned above for the organisation itself or for other shipping organisations within the same group;
- the carrying on of such other activities within the maritime sector which may be prescribed by the Minister responsible for shipping.
Exemption from Income Tax
A number of tax exemptions are listed hereunder, as follows:
- no further income tax shall be charged or payable on the income, to the extent that such income is derived from shipping activities of a licensed organisation; or
- no further income tax shall be charged or payable on any gain arising on the liquidation, redemption, cancellation, or any other disposal of shares, securities or any other interest, including goodwill, held in any licensed shipping organisation owning, operating, administering or managing a tonnage tax ship.
The above exemptions apply as long as all relevant registration and tonnage taxes are paid by the owner and that in respect of which such exemption of tax is applied, separate accounts were kept, clearly distinguishing the payments and receipts by the shipping organisation concerned in respect of shipping activities.
Moreover, no income tax shall be payable by any person on interest or other income payable to him in relation to any financing of shipping operations or the financing of any tonnage tax ship. With respect to persons resident in Malta, this exemption is applicable only to persons who are licensed banks, credit or financial institutions.
In the case where a licensed shipping organisation, has no income whatsoever or has no income other than income from shipping activities, a declaration in this regard is to be submitted to the Commissioner of Inland Revenue.
Other exemptions:
- the regulations on exchange control shall not apply to any licensed shipping organisation, in relation to any transaction connected with the ownership, operation, administration, management, purchase or financing of a tonnage tax ship, or any other shipping activity, or transaction ancillary thereto;
- persons not resident in Malta who are officers or employees of a licensed shipping organisation, and the organisation in respect of such officers and employees, shall be entitled to be exempt from Social Security;
- exemption from duty with respect to:
- the registration of a tonnage ship;
- the issue or allotment of any security or interest of a licensed shipping organisation or the purchase, transfer assignment, or negotiation of any security or interest of any licensed shipping organisation or other company;
- the sale or other transfer of a tonnage tax ship or any share thereof;
- the registration of any mortgage or other charge over or in relation to any ship or licensed shipping organisation, any transfer or discharge thereof, and receipt relative thereto, and any assignments granted in connection therewith; or
- the assignment of any rights and interests, or the assumption of obligations in respect of any ship or share thereof.
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