Tax Update Shipping & Offshore - March 2025
Dear reader,
Since the latest update, the political landscape in the world has changed significantly. In the fiscal area, we are also seeing the first effects of this in the maritime sector. For example, consider the statement that President Trump made during an address to Congress, to resurrect the US’s shipbuilding industry, both for commercial and military purposes. He announced the creation of a new Office of US Shipbuilding in the White House that offers special tax incentives to bring this industry home to America where it belongs.
Or what about the statement made by Howard Lutnick, the newly confirmed US Secretary of Commerce: “I’ll give you an example: cruise ships. You ever see a cruise ship with an American flag on the back? They have flags of Liberia or Panama. None of them pays taxes. Every supertanker — none of them pays taxes. This is going to end under Donald Trump.”
At the time of writing this update, no further concrete regulations are known, but the question is what the effect of the proposed changes will be on the national exemption (883) in the US, and even more so on the treaties based on Article 8 of the OECD Model Tax Convention aimed at preventing double taxation.
We will, of course, continue to monitor these developments. In this March update, fiscal proposals from various countries are included, which are typically published during this period, concerning the broad maritime sector.
Enjoy reading!
Please reach out if you have any questions/remarks to your KPMG contact. Within KPMG we have a specialist around the world with a focus on this specific industry.
Ernst-Jan Bioch
Content
1. Belgium
2. Singapore
3. India
4. United Kingdom
5. Hong Kong
6. Norway
7. Greece
8. India
9. Reminder EU MRV
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1. Belgium
Proposed maritime tax developments
With the formation of the new Belgian federal government and the unveiling of the Federal Coalition Agreement for 2025-2029, significant tax reforms are on the horizon. These changes are poised to reshape the economic landscape, offering both challenges and opportunities for among other the maritime industry. For example the government states that:
- They will take a proactive role in concluding international agreements to level the playing field for global maritime shipping, both in terms of taxation and carbon, aligned with external costs.
- They are taking measures to ensure that innovative companies with local economic substance in maritime transport can continue to benefit from the tonnage tax system for so-called 'multi-purpose' ships, and they are working on improving and simplifying this specific system. In this way, they intend to create a level playing field within Europe.
- That they are committed to a thorough greening of the Belgian maritime fleet by creating a level playing field for bareboat chartering:
- For payments related to bareboat chartering, the application of a withholding tax exemption is allowed, in line with international standards at the OECD level.
- The withholding tax exemption is subject to conditions that must ensure the greening of the Belgian fleet of sea-going vessels and prevent tax optimization in the case of payments to affiliated companies.
- In implementing the exemption, a solution will be provided that aligns with European state aid rules, without abandoning the intention to create a level playing field.
2. Singapore
2025 budget
Our colleagues from KPMG Singapore are pleased to inform you that Singapore has announced its annual Budget on 18 February 2025, and their Budget 2025 commentary is available for your reading at this link: Singapore Budget 2025 Commentary. For your information, the latest tax changes are set out from page 9 onwards, and the tax updates that may be of relevance to the shipping and offshore industry are on page 14.
A quick summary of our Singapore based colleagues thoughts on the tax updates from the Budget 2025 announcement that is relevant to the shipping and offshore sectors are as follows:
- The extension of the various Maritime Sector Incentive ("MSI") schemes and exemption from withholding tax on qualifying payments till 31 December 2031 comes as no surprise to us as Singapore has always prided itself as an international maritime centre and would therefore not have allowed those schemes and exemption to lapse. As these schemes and exemption were meant to expire between 31 December 2026 to 31 December 2028, it is welcoming that the extension was announced in Budget 2025, giving the shipping and offshore community the certainty of the shipping tax regimes in Singapore despite the uncertainty in the global tax landscape. The Government has also taken the effort in Budget 2025 to align the sunset date of the various schemes and exemption, which serves to minimise any confusion for companies benefiting from such schemes.
- Also, the expansion of the scope of the MSI schemes to include emission management services, activities relating to renewable energy and maritime technology services also serves to reinforce the key direction of this year's budget, which is surrounding sustainability, technology and talent, and also demonstrate the Government's efforts in aligning our shipping tax regimes with industry developments.
- Lastly, a new Approved Shipping Financing Arrangement Award (for Ships and Containers) was introduced to support the ownership and management of ships and sea-containers from Singapore. At the moment, this award may appear to allow more players in the shipping community to benefit from the withholding tax exemption on qualifying payments made to non-resident lenders and lessors. However, we will have to wait for further details to be released by the relevant Government agency at a later date to better understand how the new scheme is meant to work (e.g. profile of companies that can benefit from the new scheme, qualifying conditions).
3. India
Charges for bareboat chartering is not taxable as royalty under the India-Belgium tax treaty
The taxation of cross-border equipment leasing remains a contentious issue, with tax implications varying based on the relevant treaty provisions and the type of lease, such as a time-charter or bareboat arrangement.
In the case of Baggerwerken Decloedt, the Chennai Bench of the Tribunal ruled that payments for the bareboat chartering of a dredger are not taxable as royalties under the India-Belgium tax treaty, as the treaty's definition of 'royalties' does not include payments for the use or right to use industrial, commercial or scientific equipment.
The Tribunal also noted that the term 'plant' in the treaty definition was a typographical error meant to be 'plan.'
Please click on the following link for the details: Charges for bareboat chartering is not taxable as royalty under the India-Belgium tax treaty
4. United Kingdom
Oil and gas price mechanism consultation
At Autumn Budget 2024, the UK government confirmed that the Energy Profits Levy (EPL) will end in 2030 or earlier if the EPL’s price floor— the Energy Security Investment Mechanism— is triggered. Once the EPL ends, the government is committed to ensuring that there is a new permanent mechanism in place to respond to future oil and gas price shocks. This new mechanism will form an integral part of the permanent regime but will respond only when there are unusually high prices, helping to protect jobs now and in the future.
The consultation sets out the government’s policymaking objectives and design options for a new mechanism inviting stakeholder feedback. The government will work together with the oil and gas sector and others to ensure we take account of as wide a range of views as possible during this consultation.
The Department for Energy Security and Net Zero has launched a separate consultation, ‘Building the North Sea’s Energy Future’, which sets out the framework for the future of energy in the North Sea to support our mission to become a clean energy superpower.
The consultation closes at 11:59pm on 28 May 2025 and you can find it here
5. Hong Kong
Budget 2025/26
The Financial Secretary presented the Budget for 2025/26 to the Legislative Council on 26 February 2025. The proposed tax measures are subject to legislative amendments before implementation and among others include an enhancement of the existing concessionary tax regimes for ship lessors, ship leasing managers and shipping commercial principals.
KPMG Hong Kong has released their commentary on the Hong Kong Budget Summary 2025-2026. This report includes the Government’s adoption of KPMG’s recommendations of enhancing certain tax policies and regulations. Moreover, this insightful analysis delves into critical fiscal and economic developments and outlines variety measures to boost the city’s economy and uphold Hong Kong’s competitiveness for sustainable growth.
A summary of the Budget proposals, together with our comments on the expected impact of these measures, can be accessed through this link. This website also includes links to a range of tax-related topics and other useful tax information.
6. Norway
Pausing offshore wind
The Advisory Committee for Fiscal Policy Analysis provides independent advice on fiscal policy, focusing on ensuring the long-term sustainability of Norway's public finances. The Committee has issued its annual statement for 2025 (Finanspolitikkutvalgets Uttalelse), next to the relevant tax recommendations the statement also advises pausing investments in offshore wind. This as it is argued that the development of offshore wind, particularly floating offshore wind, is not economically viable for society. Several of the designated areas for offshore wind in Norway are far from land and in deep water. This will likely make offshore wind in Norway more expensive than in the rest of the Nordic region and Europe. Rådgivende utvalg for finanspolitiske analyser
7. Greece
Foreign exchange contribution declaration
The Independent Authority for Public Revenue (AADE) has launched the application for the Foreign Exchange Contribution Declaration, as required by Law 4111/2013. The foreign exchange contribution declaration should be submitted by offices or branches of foreign enterprises of any type or form established in Greece, based on the provisions of paragraphs 1 and 2 of Article 25 of Law 27/1975, as well as by domestic enterprises that have been subjected to Article 25 of Law 27/1975 with paragraph 5 of this article, with business activities in chartering, insurance, settlement of averages, brokerage of sales or shipbuilding or charters or insurance of ships with Greek or foreign flags, over five hundred (500) gross tonnage, excluding passenger coastal ships and commercial ships performing domestic voyages, as well as with the representation of ship-owning companies, and enterprises with business activities in the same aforementioned activities.
8. India
Union Budget 2025-26 highlights
In the Union Budget 2025, the finance minister outlined a series of key proposals aimed at shaping India’s economic future. From tax reforms to investment in infrastructure, digitalisation, and social welfare, the budget highlights several transformative initiatives designed to stimulate growth, enhance inclusivity, and drive sustainability.
The domestic taxation proposals include inclusion of the inland vessels in the existing tonnage tax regime! This next to other proposal, see also here.
9. Reminder EU MRV
The European Union’s Monitoring, Reporting and Verification Regulation (EU MRV regulation) was revised in 2023 to allow shipping to be included in the EU Emissions Trading System (EU ETS). This revision included the provision that offshore ships of 400GT and above, and general cargo ships of 400GT and above, but less than 5,000GT, will be included within the scope of EU MRV from 1 January 2025. Delegated regulation - EU - 2024/3214 - EN - EUR-Lex
Clarification on the inclusion of offshore ships in MRV has been provided by the European Commission in a delegated act. Based on the delegated act the following ships – other than icebreakers – designated or certified to perform service activities offshore or at offshore installations, are considered as an offshore ship:
(a) anchor handling tug supply vessel;
(b) offshore supply ship;
(c) crew/supply vessel;
(d) pipe carrier;
(e) platform supply ship;
(f) drilling ship;
(g) floating production storage and offloading (FPSO), oil;
(h) gas processing vessel;
(i) floating storage and offloading (FSO), gas;
(j) FSO, oil;
(k) accommodation ship;
(l) diving support vessel;
(m) offshore construction vessel;
(n) offshore support vessel;
(o) pipe burying vessel;
(p) pipe layer;
(q) pipe layer crane vessel;
(r) production testing vessel;
(s) standby safety vessel;
(t) trenching support vessel;
(u) well stimulation vessel;
(v) cable layer;
(w) cable repair ship;
(x) mining vessel;
(y) wind turbine installation vessel;
(z) commissioning service operation vessel;
(aa) service operation vessel;
(ab) work/repair vessel;
(ac) research survey vessel;
(ad) dredger;
(ae) hopper dredger.
From 1 January 2027, offshore ships of 5,000GT and above will also fall in scope of the EU ETS requirements. As such, by 20 September 2028, sufficient EU emissions allowances (EUAs) must be surrendered to cover the 2027 emissions at the company level.
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