Ten years’ of coordinated effort and close collaboration between industry and government has resulted in Cyprus finally winning European Commission approval for a tonnage tax system aimed at boosting the island’s maritime cluster.
“The model here will try to attract European companies who have set up [operations] outside Europe and tempt them back to Cyprus. The more owners and manager who come, the more will follow,” Serghiou Serghiou, Director at the Cyprus Department of Merchant Shipping told SMI last week, ahead of the announcement.
The commission said the new system, authorised for an initial 10 years, would enhance the competitiveness of the Cypriot fleet without unduly distorting competition. It allows the tonnage tax option to be extended to crew management companies who otherwise would have been exposed to 10% corporate tax.
The new system allows the tonnage tax option to be extended most importantly to bona fide crew management companies, which are part of the backbone of the island based shipping community. Otherwise they would have been exposed to 10% corporate tax.
It also extends the tonnage tax to companies with foreign flagged ships, as long as a certain percentage of the overall fleet is flagged within the EU, and also to operating charterers.