A year of growth and reforms for Cyprus flag

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This year promises to be one of major change at the Deputy Ministry of Shipping, as major restructuring is underway to make the government’s maritime arm more efficient, while tax incentives are about to come into effect, making the Cyprus flag more attractive.

Deputy Shipping Minister Natasa Pilides, briefing journalists upon completing two years at the helm of the new junior ministry, said the aim is twofold, to promote Cyprus as a registry and also as a maritime cluster.

“We have received feedback from shipowners and ship managers during our many road trips to Europe and Asia, and we are considering appointing a ‘maritime ambassador’ probably in Hong Kong,” Pilides said.

She said that maintaining the competitiveness of the Cyprus flag is of primary importance, especially after the approval by the European Commission of the Cyprus tonnage tax system for a further 10 years, up to 2030.

“We are looking to add more types of vessels and to expand the description of the activities of shipping entities, as well as providing discounts for eco-friendly vessels.”

Pilides said that parliament is expected to review the new tax regime at the House Finance Committee on Monday, with one proposal including a discount of up to 30% for the registration of hybrid or even electric-driven vessels under the Cyprus flag.

“We expect easy sailing through the parliamentary committee and the House plenary because all political parties support the maritime sector, so we should see the new tax system applied well within this year.”

Pilides said that structural improvements include an increase of inspections of Cyprus-flag vessels, which were up 14% in 2019 with an all-clear for all inspections.

“This will maintain the Cyprus registry on the Paris and Tokyo MoU ‘white lists’ and the European Maritime Safety Agency (EMSA) is considering using Cyprus as a ‘test case’ for best practices in inspections.”

She said that the average age of the Cyprus fleet had been seven years, but this may have increased somewhat after the registration of cruise ships under the Cyprus flag, which rose from 40 in 2018 to 90 last year.

At the same time, the Deputy Minister said that compliance with the low-sulphur environment had been successful with all Cyprus-flag ships now running on 0.5% SOx sulphur content fuel, compared to 3.5% before the introduction of the sulphur cap.

“Of course, there will be some exceptions, where ships may not find the right fuel at all ports, whereby they will have to inform us, and some sort of exemption will be granted.”

Fully-fledged shipping companies based in Cyprus have increased to 220, with the number of ship-management operators rising to 50, placing Cyprus at the top of this category.

Internally, the DMS is also rapidly embracing the use of new technology, including the digitisation of many service and offering them online to allow for ship owners and operators to save time, while also not wasting the inspectors’ time for paperwork that could be better utilised for comprehensive inspections of the vessels, its equipment and crews.

Some new services will be introduced over the next few months that will enhance data entry, cut red tape and reduce human error.

The junior ministry will be moving into new premises, with all services under one roof, for which the Cabinet recently approved the tender process for the purchase of a building.