— Maritime Cyprus Conference 2009 gets underway in Limassol —
The Cyprus government is about to announce some improvements to its current tax regime for the shipping sector, in an effort to maintain business here and to attract new companies to the Cyprus flag.
The revised tax law will be submitted by the end of this month and is expected to have EU approval before the end of the year, according to the Director General of the Ministry of Communications and Works, Michael Constantinides.
However, speaking at a press conference prior to the 11th biannual Maritime Cyprus conference on “A Changing Climate: Emerging Opportunities” to be held in Limassol on September 27-30, he did not elaborate on the revisions of the new tax law and the anticipated new incentives. He sufficed to say that it will be compatible with the guidelines on state aid in the shipping sector as defined by the new European directive announced in June.
Constantinides said that the government’s maritime policy is based on three main pillars: quality, reliability and competitiveness.
He emphasised that the quality and safety of the Cyprus fleet as well as the protection of the marine environment are of paramount importance for the Cyprus government.
He added that the maritime safety policy adopted by Cyprus focuses on the effective control of ships and the improvement of the quality of the fleet.
This policy proved to be prudent and is evidenced by the fact that Cyprus is now permanently on the White List of both the Paris and Tokyo MoUs and is excluded from the “List of Targeted Flag States” of the US Coast Guard.
Constantinides added that Cyprus offers a range of fiscal and economic incentives, including competitive ship registration costs and annual tonnage taxes, ensuring the fleets worldwide competitiveness.
Also, it maintains its favourable tax regime for ship owning and ship management companies, he concluded.
On the conference, Constantinides said that this year’s focus will be on the economy, climate change and opportunities in merging markets, with 800 delegates registered to take part, the same number as the previous conference.
FAVOURABLE
Serghios Serghiou, Director of the Department of Merchant Shipping, said that Cyprus has few weaknesses compared to other maritime jurisdictions, and is regarded one of the most favourable countries as regards low taxation.
The selection of tonnage taxis also beneficial for the state and the ship owners, added Serghiou, explaining that as the tonnage of a vessel is fixed, so is the tax it pays, resulting in stability as regards revenues for the state and an ease of mind for ship owners planning ahead.
The DMS earns some 7-8 mln euros a year from taxes and fees alone, with an equal amount earned by Company House, generating some 20-30 mln for the state each year, while the shipping industry earns about 500 mln for the Cyprus economy and accounts for 2% of GDP according to the DMS and 4% of GDP according to the industry.
Thomas Kazakos, Director General of the Cyprus Shipping Chamber that celebrates its 20th anniversary this year, said that aim of the new tax revision is to “upgrade the whole shipping industry, clearly defined by the three sectors of ship owning, ship management and chartering,” especially as the majority of companies in Cyprus opt for the benchmark tonnage tax.
“With the introduction of the new tax law on shipping, Cyprus would probably become the most competitive registry,” Kazakos said.
WORLD CRISIS
As regards the ongoing economic crisis that is affecting world trade and subsequently shipping, Kazakos said that “the crisis has affected the world maritime sector as well. Our members are not cutting back on new ship orders or laying off staff, however they are consolidating their businesses to ensure there are no delays in these orders and fleets are operating as efficiently as possible.”
“We estimate that 87% of world trade is carried by sea, with some markets seeing a rise in demand for shipping transport as many countries have depleted their national supplies or essential stocks such as grains, foods and fuel.”
