("ais") incentive - Watson, Farley & Williams

WATSON, FARLEY & WILLIAMS LLP
Annex A
THE BLOCK TRANSFER SCHEME
INTRODUCTION
1. On 7 January 2004 the Permanent Secretary of the Ministry of Finance, Singapore,
published the Income Tax (Exemption of Interest and Other Payments on Economic and
Technological Development Loans) Notification 2004 (the “Notification”).
2. The Notification introduced a Block Transfer Scheme (the “BTS”), which provided that
the interest payable under a loan by a shipping enterprise to a lender outside Singapore
would be exempt from withholding tax in respect of any ship registered by the shipping
enterprise as a Singapore ship if:
(a) the purpose of the loan is to finance the acquisition of the ship; and
(b) the shipping enterprise satisfied certain requirements specified in the
Schedule under the Block Transfer Scheme administered by the Maritime and
Port Authority of Singapore (the “Authority”) and such terms and conditions as
the Authority may choose to impose.
RECENT CHANGES
3. In February 2009 it was announced in the Singapore Budget 2009 that the BTS would
be extended for a further five years until 31 December 2013.
4. From 1 January 2009, the BTS has been enhanced to allow a waiver of withholding tax
on interest payable on a loan taken by a shipping enterprise from an overseas lender for
the purpose of acquiring 100 per cent of the shares in a Special Purpose Company
(“SPC”) that wholly-owns a Singapore-flagged vessel. The main caveat is that the vessel
must be a new entrant to the Singapore Registry of Ships which was registered between 1
January 2009 and 31 December 2013 (inclusive).
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