Shipping Aviation Tonnage Tax

Shipping & Aviation Sector Tax v0.1

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

What this file is

A sector overlay for shipping companies and aviation lessors / airlines.

Section 1 — Tonnage tax regimes

[T1] Tonnage tax is a presumptive tax based on a vessel's net tonnage, replacing regular corporate income tax on qualifying shipping activities. EU regimes operate under the Community Guidelines on State Aid to Maritime Transport (2004, updated 2024).

Key EU regimes

Asia-Pacific tonnage regimes

US — special exemptions

[T1] §883 IRC: foreign corporations operating ships / aircraft in international transport may be exempt from US corporate income tax on shipping/aviation income if home country provides reciprocal exemption (treaty or equivalent regime).

Section 2 — Eligibility tests

[T1] Standard tests across regimes:

1. Vessel type — typically excludes fishing vessels, dredgers (some included), ferries below threshold, leisure
2. Strategic and commercial management — must be carried out in the regime jurisdiction (EU State Aid guidelines)
3. Flag minimum — vessels under EU/EEA flag must constitute a minimum % of the qualifying fleet (typically 60% for fleet extensions; relief if increasing tonnage)
4. Activity scope — international transport (some regimes include cabotage)
5. Lock-in — 10-year minimum tenure in tonnage tax regime; exit penalty for early withdrawal

Section 3 — Aviation lessor regimes

3.1 Ireland — global aircraft leasing hub

[T1]

• Standard 12.5% trading rate applicable to leasing activity if commercial substance
• Section 110 SPV (TCA 1997 s.110): securitisation vehicle for aircraft lease finance; effectively neutral CIT but profit-extraction via interest
• 8% accelerated depreciation on aircraft (TCA s.284) until disposal
• Lessor activity is a trade for CIT and treaty purposes
• Pillar Two QDMTT in force from 2024 — affects in-scope groups

3.2 Singapore — Aircraft Leasing Scheme

[T1]

• ALS reduced rate (~8%) on qualifying aircraft leasing income; ALSI for aircraft investment manager
• Maritime Sector Incentive equivalent in scope and benefit

3.3 Hong Kong — Aircraft Leasing Incentive

[T1]

• 8.25% concessionary rate on qualifying aircraft leasing
• 50% gross income basis for asset depreciation

3.4 Bermuda

[T1]

• Aircraft Securitisation; flagging of aircraft via Cape Town Convention
• New 15% CIT from 2025 for in-scope MNE groups

Section 4 — Cape Town Convention

[T1] The Convention on International Interests in Mobile Equipment (Cape Town, 2001) + Aircraft Protocol provides a unified framework for security interests in aircraft. Most major aviation finance jurisdictions are signatories. Affects creditor priority in lessee insolvency, not tax directly, but interacts with sale-leaseback structures.

Section 5 — IFRS 16 Lessor (aircraft and ships)

[T1] Lessor accounting under IFRS 16 substantially preserved IAS 17 — finance lease vs operating lease distinction at lessor. Most aircraft / vessel leases are operating leases for lessor, with rental income recognised straight-line.

US GAAP ASC 842: substantially same lessor model.

Section 6 — Self-checks

• Tonnage tax regime entry conditions met (vessel type, strategic management, flag minimum)
• Qualifying vs non-qualifying activities separated (only qualifying gets tonnage; rest at regular CIT)
• 10-year regime tenure tracked
• EU State Aid Guidelines compliance (where applicable)
• Ship management vs ship owner status distinct (each may have own regime)
• Aircraft lessor activity meets commercial substance for treaty access
• Section 110 SPV substance documented (Irish lessors)
• Pillar Two ETR analysis — tonnage tax presumptive amounts produce ETRs well below 15%; top-up tax exposure
• Cape Town Convention security interest considered for finance lease structuring
• Output flags every [T2]/[T3] item for reviewer judgement

Section 7 — Disclaimer

Maritime and aviation sector taxation is highly specialised. Outputs must be reviewed by credentialed shipping/aviation tax practitioners. The most up-to-date version is at openaccountants.com.

Source: OpenAccountants — open tax Guides for AI, reviewed by named CPAs/CAs/EAs. Quality: source-cited draft. For always-current figures and named-accountant backing, connect the OpenAccountants MCP server (openaccountants-mcp).