COVID19: Cyprus shipping delays tonnage tax

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The Deputy Ministry for Shipping is extending the deadline for payment of the Cyprus Registry Maintenance Annual Fee and the tonnage tax of Cyprus ships by two months due to the health emergency.

“This is to support shipping companies and owners of Cyprus ships and to enable them to address the difficulties encountered due to the spread of the coronavirus outbreak”.

The junior ministry said notification will be published in the Official Gazette of the Republic, informing all interested parties that the deadline for payment of the dues for the tax year 2020, will be extended from March 31 to May 31.

The DMS has already suspended all public contacts and urged the industry to submit all requests electronically and make enquiries according to its SDM Circular 6/2020 memo from March 17.

These include the Register of Cyprus Ships, the Small Vessels Registry, the Civil Liabilities Certification (CLC, Bunkers, Wreck Removal and Athens PLR), safety and security, seafarers’ and maritime labour issues, coastal navigation and inspections, maritime surveillance and anti-pollution, port state control and accidents and tonnage tax system.

Deputy Minister of Shipping Natasa Pilides said on Thursday that the financial impact of the coronavirus pandemic on Cyprus shipping is “unavoidable”.

Noting that the maritime cluster, which accounts for about 7% of GDP, will continue operating, the Deputy Minister said: “We hope that we will overcome the crisis and we will recover.”

Pilides cautioned that “we cannot know the extent of the impact as we cannot forecast how long the crisis will last.”

She said, so far, there have been no isolation of Cypriot-flagged ships but some delays in deliveries and in crew changes due to the measures to prevent the spread of coronavirus.

“Shipments of goods are continuing,” Pilides said.

Moreover, she said that the cruise sector will be affected the most and will bear longer-term damage compared with commercial shipping.

Maritime industry observers said developments could also be seen as a blessing in disguise for the Cyprus shipping cluster that will have to fast-track reforms and speed up the introduction of advanced communications services.

Maritime reforms

Pilides recently said that although maritime service will be affected by the coronavirus outbreak, it will continue to implement reforms, both in the restructuring of the junior ministry, as well as the attractive tonnage tax system to ensure the Cyprus flag’s viability in the future.

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 10 more 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, with one proposal including a discount of up to 30% for the registration of hybrid or even electric-driven vessels under the Cyprus flag.

She said that structural improvements include an increase of inspections on 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.”

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

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.