Legal Notice 83 of 2010 entitled “Merchant Shipping (Taxation and Other Matters relating to Shipping Organisations) (Amendment) Regulations 2010” (the “amending regulations) was published on the 16th February 2010 and it amends the “Merchant Shipping (Taxation and Other Matters relating to Shipping Organisations) Regulations 2004”.
The amending regulations are deemed to come into force on the 1st January 2009 and thus begin to apply to shipping organisations carrying out activities beyond the ownership or chartering of a tonnage tax ship as from year of assessment 2010 and thereafter.
One of the main highlights of the amending regulations is an extension of the benefits which were already enjoyed by shipping organisations owning and operating a tonnage tax ship to shipping organisations established in a Member State of the European Union (including Malta) or of the European Economic Area, carrying on ship management activities. Such ship management activities include technical management and crew management activities. Subject to certain conditions being satisfied, any income derived by a ship manager from such ship management activities will be deemed to constitute income derived from shipping activities and will thus be exempt from tax under the Maltese Income Tax Act.
Other highlights include a widening of the definition of “tonnage tax ship” to include a “Community ship”, being a ship registered under the laws of a Member State of the European Union (including Malta) or of the European Economic Area and the possibility of a ship not being a Community ship to be declared a tonnage tax ship upon the fulfillment of certain conditions.
By widening the definition of “tonnage tax ship” the exemption from tax under the Income Tax Act in respect of any interest or other income payable to any person in relation to financing of Maltese ships has been extended to Community ships and ships not being Community ships but declared to be tonnage tax ships.
Undoubtedly these amendments present new opportunities especially in the ship management sector by making available various advantages to ship managers who intend using Maltese based structures for the operation of their business.
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