Brussels approves Cyprus shipping tax system for 10 years

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Cyprus shipping achieved a boost after the European Commission approved its tonnage taxation system for another 10 years, deemed a top priority of the industry.

The Cyprus Shipping Chamber hailed it as a “great achievement” and an example of the close cooperation and the coordinated efforts between the Shipping Deputy Ministry, the chamber and the Cyprus Union of Shipowners.

The Cyprus Taxation System covers the three basic shipping activities that are offered today in International Shipping, namely Shipowning, Shipmanagement and the Chartering of vessels, establishing Cyprus as a major Shipping Centre.

“This important approval is therefore expected to tangibly contribute towards the further upgrade and reinforcement of the Cyprus Shipping Industry, as well as to serve as convincing leverage for attracting additional quality shipowners and shipping companies in Cyprus, with a positive chain effect on the economy,” the Chamber said.

As regards the tonnage tax schemes in Estonia and Cyprus, the Commission found that the schemes comply with the rules limiting tonnage taxation to eligible activities and vessels.

Furthermore, on taxation of dividends of shareholders, the Commission found that both the Estonian and the Cypriot tonnage tax schemes ensure that shareholders in shipping companies are treated in the same way as shareholders in any other sector.

Under the tonnage tax system shipping companies can apply to be taxed based on a notional profit or the tonnage they operate, instead of being taxed under the normal corporate tax system.

This can reduce the overall level of taxes paid and increase their predictability for the companies.