Shipping Organisations) (Amendment) Regulations, 2010

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 18,550, 16 ta’ Frar, 2010

L.N. 83 of 2010

MERCHANT SHIPPING ACT

(CAP. 234)

Merchant Shipping (Taxation and Other Matters relating to

Shipping Organisations) (Amendment) Regulations, 2010

IN exercise of the powers conferred by Articles 84Z(9) and

374 of the Merchant Shipping Act, the Minister for Infrastructure,

Transport and Communications with the concurrence of the

Minister of Finance, the Economy and Investment has made the

following regulations–

(1) The title of these regulations is the Merchant Citation and scope.

Shipping (Taxation and Other Matters relating to Shipping

Organisations) (Amendment) Regulations, 2010 and they shall be

read and construed as one with the Merchant Shipping (Taxation L.N. 224 of 2004

and Other Matters relating to Shipping Organisations) Regulations,

2004, hereinafter referred to as the “principal regulations”.

(2) These regulations shall be deemed to have come

into force on the 1st January, 2009 and to the extent that they affect

the imposition of any tax liability, they shall apply in respect of

income which is brought to charge in the year of assessment 2010

and thereafter.

Regulation 3(5)

Declaration in lieu of Tax Return in respect of a Licensed Shipping

Organisation

Name of Licensed Shipping Organisation

Income Tax Registration Number

Name of Ship(s)

Official Number(s)

Declaration made by

Year of assessment

( 1 ) I the undersigned do solemnly declare that I have ascertained to the best of

my ability that the above mentioned licensed shipping organisation is the owner/

operator/manager/administrator (1) of the above mentioned tonnage tax ship(s)

under the provisions of the Merchant Shipping (Taxation and Other Matters relating

to Shipping Organisations) Regulations, 2004, and that the objects of the licensed

shipping organisation limit its operations to shipping activities as listed in article

84Z (1) of the Merchant Shipping Act, and for this year of assessment the licensed

shipping organisation qualifies for the concessions granted by the said regulations

and has not had any income which would not be exempted under the said

regulations, and that the relative registration fees and tonnage taxes as applicable

for this period have been paid.

( 1 ) I the undersigned solemnly declare that the above mentioned licensed

shipping organisation is not yet/no longer ( 1 ) an owner/operator/manager/

administrator ( 1 ) of a tonnage tax ship pursuant to the Merchant Shipping (Taxation

and Other Matters relating to Shipping Organisations) Regulations, 2004 but the

objects of the licensed shipping organisation limit its operations to the shipping

activities mentioned in article 84Z(1) of the Merchant Shipping Act, and for this

year of assessment the licensed shipping organisation qualifies for the concessions

granted by the said regulations and has not had any income which would not be

B

exempted under the said regulations, and that the relative registration fees and

tonnage taxes for this period have been paid.

I finally declare that to the best of my knowledge the licensed shipping

organisation does not stand to lose any of the concessions granted nor has it waived

any of the said concessions under the regulations and the Act.

I make this declaration in full knowledge of the consequence of false

declarations under Maltese law.

Signature

Identity No

Status

Date

(1) Delete as necessary.

B

€0.56

In the proviso to sub-regulation (2) of regulation 1 of the Amends regulation

principal regulations, for the words from “enter into force” to the regulations.

words “may prescribe.” there shall be substituted the words “enter

into force on the 1st January, 2009.”.

By virtue of subarticle (9) of Article 84Z of the Merchant

Shipping Act, the said Act and regulation 2 of the principal

regulations shall be amended as follows

(a) paragraph (a) thereof, inserting article 85 of the

Act, shall be amended as follows

(i) in the definition “tonnage tax ship” for the

words “ship registered under Part II or IIA of the Act”

there shall be substituted the words “Community ship”;

(ii) in the definition “shipping activities” for the

words “or as otherwise may be prescribed” there shall

be substituted the words “including the ownership,

chartering or any other operation of a ship engaged in

all or any of the above activities or as otherwise may be

prescribed”;

(iii) in the definition “shipping organisation” for

the words “of this Act.” there shall be substituted the

words “of this Act;” and immediately thereafter there

shall be added the following new definitions

“Community” means a Member State of the

European Union (including, for the avoidance of

doubt, Malta) or of the European Economic Area;

“Community ship” means a ship registered

under the laws of a Member State of the European

Union (including, for the avoidance of doubt,

Malta) or of the European Economic Area and the

terms “Community flag” and “Community-flagged”

shall refer to a ship registered in any such State

Provided that in the case of a ship registered

in any Community jurisdiction other than Malta,

the ship shall only qualify as a “Community ship”

for the purpose of these regulations if an amount

equivalent to the annual tonnage tax calculated by

reference to rates stipulated in the First Schedule to

the Act is paid to the Registrar-General, with relief

being granted for any tonnage tax or registration

fees or their equivalent imposed under the laws

of a territory outside Malta in respect of the said

tonnage tax ship subject to an amount of minimum

tonnage tax equivalent to twenty five per centum

(25%) of the annual tonnage tax that would have

been payable had the ship been registered under

Part II or IIA of the Act;

“reference date” means the date on which the

shipping organisation was established or the 17

B

January 2004, whichever is the later;

“ship manager” means a licensed shipping

o rg a n i s a t i o n w h i c h i s e s t a b l i s h e d i n t h e

Community, which has assumed responsibility for

either or both of the technical or crew management

of a ship or ships referred to in sub-paragraph (b)

of paragraph (i) of sub-regulation (6) of regulation

3 of the Merchant Shipping (Taxation and Other

Matters relating to Shipping Organisations)

Regulations, 2004 and which complies with

international standards and fulfils requirements

established under the law of the European Union,

satisfies such conditions as may be laid down by

the Registrar-General who shall be guided in

this respect by such guidelines, communications,

circulars, clarifications, codes, decisions, directives,

instruments, interpretations, manuals, notices,

publications, recommendations, regulations,

resolutions, rules or any other similar medium

of any competent institution of the European

Union, specifically includes such activities

among the objects contained in its Memorandum

of Association, and registers with the Minister

responsible for finance by submitting to him in

writing the following particulars

(a) the name of the organisation;

(b) the address of the registered office of

the organisation;

(c) the name and tonnage of the ship or

ships for which it has assumed responsibility

as set out above

Provided that the particular licensed

shipping organisation shall notify the Minister

in writing every time any alterations in such

particulars occurs.

“ship management activities” means those

activities carried out by a ship manager and

consisting in, but not limited to, the entire crewing

of a ship referred to in sub-paragraph (b) of

B

paragraph (i) of sub-regulation (6) of regulation

3 of the Merchant Shipping (Taxation and Other

Matters relating to Shipping Organisations)

Regulations, 2004 and,or the provision of technical

management thereto.”; and

(b) paragraph (b) thereof, inserting article 85A of the

Act, shall be substituted with the following

“ (b) for article 85A of the Act there shall be

substituted the following

85A (1). The Minister may with the

“Minister may declare

a ship to be a tonnage

concurrence of the Minister responsible for finance

tax ship.

and subject to such conditions as he may deem

appropriate, declare to be a tonnage tax ship, a

ship of any net tonnage, irrespective of operations

or trade in which engaged , which but for such

tonnage, operations or trade would otherwise

satisfy all other requirements of a tonnage tax ship

under article 85(1).

(2) The Minister shall declare a ship not

being a Community ship that is owned, chartered,

managed, administered or otherwise operated by

a licensed shipping organisation to be a tonnage

tax ship where the strategic and commercial

management of all ships owned, managed or

operated by the licensed shipping organisation is

actually carried out from the Community and it is

proved to the satisfaction of the Minister that

(a) the licensed shipping organisation

owns, manages or operates at least sixty

per cent (60%) of its total tonnage under a

Community flag; or

(b) the percentage of the licensed

shipping organisation’s total tonnage which

is Community-flagged immediately after the

shipping organisation begins to operate the

said ship is not less than the percentage of the

shipping organisation’s total tonnage which

was Community-flagged on the reference

date; or

B

(c) the percentage of Community-

flagged tonnage that is owned entirely,

chartered, managed, administered or

otherwise operated by a shipping organisation

that is in possession of a valid licence issued

by the Registrar-General has not decreased

over a period of three years or, where the

said licensed shipping organisation was in

existence for a period of less than three years,

for such lower period in which the licensed

shipping organisation was in existence

Provided that where the requirements of

paragraph (b) or (c) hereof are not fulfilled,

the provisions of the particular paragraph

shall still be deemed to be satisfied where it

is proven to the satisfaction of the Registrar-

General that a commitment exists to

increasing or at least maintaining under the

flag of one of the Member States the share of

tonnage that was being operated under such

flags on the reference date

Provided further that an amount

equivalent to the annual tonnage tax

calculated by reference to rates stipulated

in the First Schedule to the Act is paid to

the Registrar-General in respect of such

tonnage tax ship, with relief being granted

for any tonnage tax or registration fees or

their equivalent imposed under the laws of

a territory outside Malta relative to the said

tonnage tax ship, subject to an amount of

minimum tonnage tax equivalent to twenty

five per centum (25%) of the annual tonnage

tax that would have been payable had the said

tonnage tax ship been registered under Part II

or IIA of the Act.

(3) For the purposes of paragraph (b) of

sub-article(2) hereof, the percentage of a licensed

shipping organisation’s total tonnage which

is Community-flagged shall be determined by

expressing as a percentage the sum obtained by

dividing the aggregate net tonnage of Community-

flagged tonnage tax ships at a particular date by the

aggregate net tonnage of all ships of not less than

1000 net tonnage that are owned entirely, chartered,

managed, administered or otherwise operated by

the shipping organisation at such date.”.

Regulation 3 of the principal regulations shall be

amended as follows

(a) in subregulation (1) thereof -

(i) for the words “subregulation (3)”, there shall

be substituted the words “subregulation (4)”;

(ii) for the words “including an amount”, there

shall be substituted the words “including, in the case of a

ship operated under charter as referred to in the relevant

provisions of the Act, an amount”;

(iii) in paragraph (a) thereof for the words

“organisation, or”, there shall be substituted the words

“organisation, and”; and

(iv) paragraph (b) thereof shall be renumbered as

paragraph (c) and immediately before paragraph (c) as

renumbered, there shall be inserted the following new

paragraph (b)

“(b) no further tax under that Act shall be

charged or payable on any income, profits or gains

of a licensed shipping organisation derived from

the sale or other transfer of a tonnage tax ship or

from the disposal of any rights to acquire a ship

which when delivered or completed would qualify

as a tonnage tax ship, and”;

(b) immediately after subregulation (2) thereof there

shall be added the following new subregulation

“(3) The distribution of profits derived from

shipping activities or from other transactions referred to

in subregulation (1) of this regulation shall be exempt

from tax under the Income Tax Act in the hands of

the shareholders: Provided that where the person in

receipt of such dividend is itself a company (hereinafter

referred to as “the second company”), any dividend

paid to the members of the second company shall, to the

extent that such dividend is paid out of profits derived

from shipping activities or from other transactions

referred to in subregulation (1) of this regulation,

not be charged to tax under that Act and where a

member of the second company is again a company,

the provisions of this proviso shall apply mutatis

mutandis as though references to the licensed shipping

organisation were references to the second company

and as though references therein to the second company

were references to that member, and the principle set

out in this proviso shall continue to be applied for as

long as the profits derived from shipping activities are

distributed by way of dividends.”;

(c) subregulation (3) thereof shall be renumbered as

subregulation (4);

(d) subregulation (4) thereof shall be renumbered

subregulation (5) and for the second proviso thereto there

shall be substituted by the following

“Provided further that the provisions of this

paragraph shall, in regard to licensed shipping

organisations, apply to declarations submitted before

the lapse of three years from the date which may be

prescribed by the Minister responsible for shipping.”;

(e) immediately after subregulation (5) as renumbered

there shall be added the following new subregulation

“(6)(i) Any income derived by a ship manager

from ship management activities shall be deemed to be

income derived from shipping activities and shall be

exempt from tax under the Income Tax Act provided

that

(a) the condition contained in subregulation

(4) hereof is complied with; and

(b)

the ship manager has paid to the

B

Registrar-General an annual tonnage tax to be

determined as follows

1. in respect of any tonnage tax ship

registered under Part II or IIA of the Act, an

amount equivalent to twenty five per centum

(25%) of the annual tonnage tax payable in

respect of the particular ship on the basis of

the rates stipulated in the First Schedule to the

Act;

2. in respect of any other ship not

referred to in paragraph (1) above, an amount

equivalent to twenty five per centum (25%) of

the annual tonnage tax calculated by reference

to the rates stipulated in the First Schedule to

the Act which would have been payable had

the ship been registered under Part II or IIA

of the Act; and

(c) at least two-thirds of the tonnage of

the ships to which the ship manager provides

ship management activities is managed from the

territory of the Community, and

(d) the tonnage of the ships in respect of

which the ship manager provides ship management

activities meets any of the following conditions

1. at least 60% of the said tonnage is

registered under a Community flag, or

2. the percentage of the said tonnage

which is Community-flagged immediately

after the ship manager begins to operate an

additional ship is not less than the percentage

of the ship manager’s tonnage which was

Community-flagged on the later of 11 June

2009 or one year from the day on which the

ship manager began to operate; or

3. the percentage of the said tonnage

w h i c h i s C o m m u n i t y - fl a g g e d h a s n o t

decreased over a period of three years or such

lesser period in which the ship manager was

in existence if the said ship manager was in

existence for a period of less than three years

Provided that where the requirements of

paragraph (2) or (3) above are not fulfilled,

the provisions of the particular paragraph

shall still be deemed to be satisfied where it

is proven to the satisfaction of the Registrar-

General that a commitment exists to

increasing or at least maintaining under the

flag of one of the Member States the share

of tonnage under such flags in respect of

which ship management activities were being

provided on the later of 11 June 2009 or one

year from the day on which the ship manager

began to operate.

(e) For the purposes of sub-paragraph (d)

hereof, the percentage of a ship manager’s total

tonnage which is Community-flagged shall be

determined by expressing as a percentage the sum

obtained by dividing the aggregate net tonnage

of Community-flagged ships in respect of which

the ship manager provides the ship management

activities at a particular date by the aggregate

net tonnage of all ships of not less than 1000 net

tonnage in respect of which the ship manager

provides the ship management activities at such

date.

(ii) The provisions of subregulations (3) and (5)

hereof shall apply mutatatis mutandis to a ship manager

providing ship management activities.

The provisions of the Act relating to the manner of

payment and collection of fees and to penalties imposed

in case of default shall also apply mutatis mutandis

in respect of the annual tonnage tax payable by ship

managers providing ship management activities in terms

of these regulations.”;

(f) the form set out in the Schedule referred

to in sub-regulation (5) thereof as renumbered shall

be substituted by the form set out in the Schedule

to these regulations.

B