Tax Update Shipping & Offshore - November 2026
In this edition of our Shipping & Offshore Tax Update, we cover a range of recent tax developments relevant to the international shipNoping and offshore industry, including changes to tonnage tax regimes, shipping incentives and the taxation of offshore activities.
We are also introducing a new section: “Also on our radar”. Here, we flag developments that have caught our attention and may be relevant to the sector, including developments that are still emerging and have not yet resulted in final legislation, published guidance or definitive case law.
This edition also puts a special spotlight on Employment Tax & Social Security. With maritime and offshore personnel frequently working across borders, determining where employment income is taxable and which social security system applies can be particularly complex. Our Spotlight considers some of these recurring issues and their practical relevance for employers operating internationally.
Enjoy reading!
Table of Contents
- 1. France proposes exceptional contribution for shipping companies for 2026
- 2. India: Commissioner of Service Tax v. Schlumberger Asia Services Ltd.
- 3. Latvia significantly revises its tonnage tax regime
- 4. Malaysia extends tax incentive for shipping companies
- 5. Also on our radar: developments reported in the maritime and offshore press
- 6. Spotlight: Employment Tax & Social Security in Shipping & Offshore
1. France proposes exceptional contribution for shipping companies for 2026
As part of its 2027 Finance Bill, France has proposed to renew the specific exceptional contribution for large shipping companies benefiting from the French tonnage tax regime. The contribution would apply again in 2026, following the similar exceptional contribution imposed for 2025.
The shipping contribution is separate from the broader exceptional corporate income tax contribution applicable to France’s largest companies.
For large shipping groups, the proposal is particularly relevant because it would continue an additional tax charge specifically alongside the French tonnage tax regime.
Source: KPMG Avocats – French Finance Bill 2027
2. India: Commissioner of Service Tax v. Schlumberger Asia Services Ltd.
In Service Tax Appeal No. 59448 of 2013, Final Order No. 51622/2026, decided on 21 October 2026, the Customs, Excise and Service Tax Appellate Tribuna (CESTAT) considered, among other matters, the Indian service tax treatment of offshore services provided by Schlumberger Asia Services Ltd. in connection with oil and gas activities.
The relevant services were provided to SEDCO, Triton and Transocean, which operated mobile drilling units for ONGC. Schlumberger, acting as a subcontractor, provided cementing and well-stimulation services, together with cementing equipment and additives used in drilling operations.
The key issue was where those services were physically performed. Schlumberger maintained that the relevant wells were located in non-designated offshore areas beyond 12 nautical miles and that the services therefore fell outside the scope of Indian service tax. The Revenue disagreed and argued that the relevant ONGC installations were located within “designated areas” in India's Continental Shelf and Exclusive Economic Zone (EEZ).
Under the rules relied upon by the Revenue, designated areas included areas of the Continental Shelf or EEZ in which specified installations, structures or platforms were situated, together with an area extending 500 metres around them. On that basis, the Revenue argued that services performed at such designated offshore installations could be subject to Indian service tax even where the installation was situated more than 12 nautical miles from the coast.
The CESTAT did not ultimately determine that the Schlumberger services were taxable. Rather, it found that the actual location of the services had not been sufficiently established. Schlumberger's assertion that the services were performed outside the designated areas was not supported by adequate evidence, while the underlying service agreements had also not been properly examined. The matter therefore required further factual verification.
Offshore relevance: the case confirms that, under the service tax regime applicable at the time, the relevant question was not simply whether activities took place beyond 12 nautical miles. For offshore oil and gas activities, it was necessary to establish whether the services were performed at or within a designated area around an offshore installation on India's Continental Shelf or in its EEZ. The precise location of the vessel, rig, platform or other installation, and the location where the services were actually performed, could therefore be decisive for Indian service tax purposes.
3. Latvia significantly revises its tonnage tax regime
Latvia has adopted a significant revision of its tonnage tax regime, introducing more detailed rules for qualifying vessels and maritime activities. The changes are particularly relevant for specialized and offshore shipping.
In addition to conventional cargo and passenger vessels, the revised rules expressly address specialized vessels such as tugs, dredgers, icebreakers, salvage vessels, training and research vessels and cable-laying vessels. Specific tests apply to dredgers and tugs, similar as with other EU/EEA based regimes.
The revised regime also contains rules for chartering. Bareboat charter-out is subject to specific conditions and a 50% fleet limitation, while time and voyage chartering are subject to a separate 75% limitation. Ship-management activities are also expressly addressed.
Finally, the legislation differentiates between core, ancillary and non-qualifying activities, with qualifying ancillary income limited to 50% of income from core maritime activities. The amendments are therefore particularly noteworthy for offshore contractors operating specialized vessels that perform a combination of qualifying and non-qualifying activities.
Official source: Latvian legislation amending the Corporate Income Tax Law
4. Malaysia extends tax incentive for shipping companies
Malaysia’s Budget 2027 proposes a continuation of the existing income tax incentive for qualifying shipping companies.
The underlying regime applies subject to specific conditions concerning qualifying Malaysian ships and shipping income. The Malaysian tax authorities’ guidance addresses, among other things, the definition of a Malaysian ship, eligible shipping income, verification requirements, separate accounts and the treatment of exempt shipping income.
Budget 2027 provides for a continuation of the shipping incentive beyond its existing period. For shipping groups considering the regime, it therefore remains important to establish whether the relevant vessels, activities and income meet the applicable qualification requirements.
The longer continuation of the incentive provides additional certainty for qualifying businesses operating in the Malaysian maritime sector.
Official source: Malaysian Ministry of Finance – Budget 2027 Tax Measures
5. Also on our radar: developments reported in the maritime and offshore press
The following items caught our attention in recent industry and media coverage. They concern developments that may be relevant from a tax or regulatory perspective, but may not yet be reflected in final legislation, published guidance or court decisions.
Aker BP seeks clarification on tax deductions for leased offshore drilling rigs
According to media reports, Aker BP has initiated legal proceedings against the Norwegian tax authorities concerning the tax treatment of lease costs relating to mobile offshore drilling units, including the Maersk Invincible.
The dispute reportedly concerns the interpretation of the rules governing deductions for leased drilling rigs used on the Norwegian continental shelf. Given the importance of leasing arrangements in the offshore drilling sector, the eventual outcome could provide useful clarification on the Norwegian tax treatment of such structures.
According to Aker BP, the proceedings are intended to obtain legal clarification as part of the continuing dialogue between petroleum companies and the Norwegian tax authorities.
US scrutinizes tax implications of Jones Act waivers
In the US, questions have been raised about foreign-flagged vessels transporting cargo between US ports under temporary Jones Act waivers. Congressman Salud Carbajal has asked the Department of Homeland Security for clarification on, among other things, the tax treatment of these voyages. According to his letter, recent IRS guidance treats income earned by foreign corporations from such domestic voyages as US domestic-source income, which would not qualify for the Section 883 international shipping exemption or related treaty benefits.
The development highlights that regulatory permission to perform domestic US voyages does not necessarily result in the tax treatment normally available to international shipping activities.
Belgium plans to abolish social security contribution reduction for maritime employers
As part of its 2027 budget plans, the Flemish Government reportedly intends to abolish reductions in employers’ social security contributions, including the specific reduction available in the maritime sector.
The measure currently provides qualifying maritime employers with a reduction in the social security contributions payable in respect of their employees. Its abolition would therefore increase employment costs for affected employers rather than directly changing the taxation of seafarers themselves.
Although the measure is embedded in the Flemish budget plans, at the time of the initial industry reactions the decision had not yet been formally published in a publicly available government agreement or official decree. The initial confirmation of the proposed change therefore primarily comes from maritime industry sources.
6. Spotlight: Employment Tax & Social Security in Shipping & Offshore
Navigating employment tax and social security in shipping and offshore
The international nature of the shipping and offshore industry can give rise to complex employment tax and social security questions. The position of employees may depend not only on where and how they work, but also on factors such as the flag state, contractual and crewing structure, international deployment of personnel and the type of vessel or offshore installation involved.
These questions arise, for example, in crewing, manning and hoisting activities involving crew and supply vessels, accommodation and survey vessels, jack-ups and FPSOs. Depending on the circumstances, different tax treaties, social security agreements, the Rhine Boatmen Agreement or the EU social security rules may need to be considered.
In practice, we regularly advise on the allocation of taxing rights between jurisdictions, Dutch wage tax and social security obligations, the Dutch seafarers’ wage tax incentive, international payroll structures, the presence of a withholding agent and the treatment of net salary arrangements.
Early consideration of these issues can help shipping and offshore businesses manage tax and social security risks, meet their compliance obligations and identify available incentives.
Would you like to know more about employment tax and social security for internationally operating maritime personnel? Please contact your contact within the Shipping & Offshore team or directly with the specialist vanderSluijs.Lies@kpmg.com or deWit.Robert-Jan@kpmg.com
Wtta may also affect crewing and manning structures
The Dutch Wet toelating terbeschikkingstelling van arbeidskrachten (Wtta) introduces new requirements for businesses that make workers available to third parties. The rules are relevant not only to traditional employment agencies. Depending on how an arrangement operates in practice, crewing, manning and other staffing structures used in the shipping and offshore industry may also need to be considered.
This is particularly relevant in an international maritime environment, where personnel may formally be employed by one entity while performing activities for another business. A key question is whether workers are made available to a third party under that party’s direction and supervision.
Where the Wtta applies, the provider will have to satisfy statutory admission requirements and a compliance framework covering, among other matters, employment, tax and social security obligations. This makes the legislation relevant not only from an employment-law perspective, but also when reviewing international crewing and payroll structures.
Shipping and offshore businesses using Dutch or international crewing and manning models should therefore assess whether their existing arrangements could fall within the scope of the Wtta and, where relevant, whether transitional arrangements are available.
