G.—Provisions of this
Chapter not to apply in certain cases
Avoidance of tax.
115VZB. (1) Subject to the provisions of
this Chapter, the tonnage tax scheme shall not apply where a tonnage tax
company is a party to any transaction or arrangement which amounts to an abuse
of the tonnage tax scheme.
(2) For the purposes of sub-section (1), a
transaction or arrangement shall be considered an abuse if the entering into or
the application of such transaction or arrangement results, or would but for
this section have resulted, in a tax advantage being obtained for—
(i)a person other than a tonnage tax company;
(ii)a tonnage tax company
in respect of its non-tonnage tax activities.
the purposes of this section, “tax advantage” include,—
(i)the determination of the allowance for any expense or interest, or
the determination of any cost or expense allocated or apportioned, or, as the
case may be, which has the effect of reducing the income or increasing the
loss, as the case may be, from activities other than tonnage tax activities
chargeable to tax, computed on the basis of entries made in the books of
account in respect of the previous year in which the transaction was entered
(ii)a transaction or arrangement which produces to
the tonnage tax company more than ordinary profits which might be expected to
arise from tonnage tax activities.