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Income Tax Act, 1962 (Act 58 of 1962)

Chapter II: The Taxes

Part I: Normal Tax

12Q. Exemption of income in respect of ships used in international shipping


1)        For the purposes of this section—


‘international shipping’

means the conveyance for compensation of passengers or goods by means of the operation of a South African ship mainly engaged in international traffic;


‘international shipping company’

means a company that is a resident that operates one or more South African ships that are utilised in international shipping;

[Definition amended by section 29 of Act No. 17 of 2017]


‘international shipping income’

means the receipts and accruals of a person derived from international shipping;


‘South African ship’

means a ship which is registered in the Republic in accordance with Part 1 of Chapter 4 of the Ship Registration Act, 1998 (Act No. 58 of 1998).

[Definition amended by section 27 of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015]



a) There must be exempt from normal tax any international shipping income of any international shipping company.
b) Any capital gain or capital loss in respect of any year of assessment of any international shipping company determined in respect of a South African ship engaged in international shipping must be disregarded in determining the aggregate capital gain or aggregate capital loss of that international shipping company.


3) The rate of dividends tax contemplated in section 64E that is paid by an international shipping company on the amount of any dividend derived from international shipping income must not exceed zero per cent of the amount of that dividend.


4) There must be exempt from the withholding tax on interest any amount of interest if that amount is paid to any foreign person, as defined in section 50A, by an international shipping company in respect of debt utilised to fund the acquisition, construction or improvement of a South African ship utilised for international shipping.

[Subsection 4 inserted by section 42 of Act No. 31 of 2013]