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of <h1>Tonnage tax company excluded for abusing scheme when transactions give others tax advantage or non-tonnage benefits</h1> Where a tonnage tax company participates in a transaction or arrangement that constitutes an abuse of the tonnage tax scheme, the scheme will not apply to that company. An abuse arises if the arrangement yields a tax advantage for someone other than the tonnage tax company or for the company in respect of non-tonnage activities; examples include allocation of expenses or interest that reduce taxable income or arrangements producing more than ordinary profits from tonnage activities. The Assessing Officer may exclude the company by written order after serving a show-cause notice and obtaining prior approval from the Principal Chief Commissioner or Chief Commissioner. The company can avoid exclusion by proving the transaction was a bona fide commercial transaction; exclusion takes effect from the first day of the tax year in which the transaction was entered into.
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