Cyprus, located at the crossroads of three continents, recognised as early as 1963 the political, economic and social importance of shipping. Since then, successive governments implementing the correct policy, managed to develop the island into a fully-fledged shipping centre, combining both a sovereign flag and a resident shipping industry, which is renowned for its high quality services and standards of safety.
Responsibility for the development of maritime activities lies with the Ministry of Communications and Works. Its authority and jurisdiction are exercised through the Department of Merchant Shipping, whose activities include: Registration of ships, administration and enforcement of the Merchant Shipping Laws, control of ships and enforcement of international conventions ratified by the Government of Cyprus, protection of the marine environment, vessel traffic monitoring in the sea around Cyprus and information system implementation, monitoring the conditions of living and work on board Cyprus Ships, registration, training and certification of seafarers, control of Coastal passenger vessels and small craft, investigation of marine accidents, continuous updating of the merchant shipping legislation and its harmonization with that of the European Union, coordination of the EU Integrated Maritime Policy, administration of the State Aid Scheme for Maritime Transport and the Tonnage Tax System and promotion of Cyprus as an International Registry and a base for international maritime operations.
The Cyprus flag is a high quality flag, offering numerous advantages to ship-owners who register their vessels in the Cyprus registry such as:
Quality and service:
- An EU flag classified in the White Lists of the Paris and Tokyo Memoranda of understanding (MoUs) and excluded from the "List of Targeted Flag States" of the US Coast Guard, resulting in fewer inspections of the ships and less delays at the ports of both MOUs and of the US.
- Maritime offices in New York, London, Rotterdam, Piraeus, Brussels and Hamburg offering services to Cyprus ships.
- Bilateral agreements of cooperation in Merchant Shipping with 23 countries, through which Cypriot ships receive either national or favoured nation treatment in the ports of other countries. Those agreements with labour supplying countries provide for specific terms of employment and resolution of labour disputes, which are beneficial to both the ship-owners and the seafarers.
- Efficient provision of services by the Department of Merchant Shipping at all times.
- Economic benefits:
- The new tonnage tax system that extends the benefits applicable to owners of Cyprus flag vessels and ship managers, to owners of foreign flag vessels and charterers.
- No tax on profits from the operation or management of a Cyprus-registered vessel or on dividends received from a vessel owning company or on capital gains from the sale of a vessel.
- No income tax on the wages of officers and crew.
- Low registration costs.
- Favourable tonnage tax scheme based on ship's net tonnage.
- No stamp duty on ship mortgage deeds or other security documents.
- Treaties on the avoidance of double taxation with 43 countries.
- Cyprus is a member of the Eurozone.
- Full protection for financiers and mortgagees.
- Low set up and operating costs for companies.
Cyprus is today a fully fledged maritime centre, combining both a sovereign flag and a resident shipping industry, which is renowned for its high quality services and standards of safety. Cyprus is considered as one of the leading third-party shipmanagement centres in the world. A significant number of shipmanagement companies have been established in Cyprus and manage a sizeable proportion of the Cyprus merchant fleet as well as a large number of vessels under foreign flags. Among the shipmanagement companies established and operating from the Republic of Cyprus, 87% are controlled by Cypriot and EU interests. Such companies employ almost 40.000 seafarers out of whom 5.000 are EU nationals. Furthermore, several of the shipmanagement companies, which operate in Cyprus, rank among the largest of their kind in the world.
The Cyprus Registry ranks tenth among international fleets and third within the European Union. The government's maritime policy is established on three pillars QUALITY, COMPETITIVENESS and RELIABILITY. The maintenance of a high quality fleet and the effective implementation of the internationally applicable safety, security and environmental protection standards, is the foundation on which Cyprus builds its reputation as a serious maritime flag and as a base of international operations.
The new Cyprus Tonnage Tax System was approved by the European Commission on 24th March 2010, as compatible with the requirements of the EU Acquis, in accordance with the relevant guidelines on State Aid to Maritime Transport. The Merchant Shipping (Fees Taxing Provisions) Law, which incorporates the new system in the national legislation, was enacted on the 14th May 2010 and it is applicable as from the 1st January 2010.
The new tonnage tax system secures a stable fiscal environment for Cyprus Shipping in the long term. This, in fact, provides new impetus for the whole shipping industry of the island and creates great prospects for future growth. The new tonnage tax system provides Cyprus with a competitive advantage and is expected to improve the already strong position of the country in the shipping world and to promote it both as an international ships' registry and a high quality maritime centre.
The Cyprus Government has adopted a series of measures in order to maintain high safety standards for the Cyprus merchant fleet and to minimize the number of marine accidents. Age limits have been set for the registration of certain categories of ships and strict requirements have to be fulfilled at the time of registration. Furthermore, a network of independent inspectors has been set up to provide adequate coverage of inspections globally. The effective implementation of these measures enabled Cyprus to achieve and maintain a 'White List' status in the flag assessment system maintained by the Paris and the Tokyo MoUs on port state control and to be removed from the "List of Targeted Flag States" of the U.S. Coast Guard.
The shipping industry and the seafaring community are increasingly concerned as a result of the continuing activities of pirates. The Department of Merchant Shipping has issued a number of circulars providing advice to ships on how to avoid, as far as possible, piracy attacks. However, in view of the continuous deterioration of the situation, new legislation has been drafted regulating, inter alia, the use of armed guards onboard Cyprus Flag ships in high risk areas. The bill has already undergone legal vetting by the Legal Service of the Republic and is expected to be enacted into a law soon.
The Cyprus Government attaches considerable importance to the improvement of living and working conditions of seafarers on board Cyprus ships in accordance with international conventions currently in force.
At the same time, action is taken for the continuous improvement of the existing infrastructure, of the incentives available to both residents and non-residents and the enhancement of the international reputation of the Cyprus flag as a flag of progress.
Cyprus is, today, an active member of all international organizations regulating shipping, such as the International Maritime Organisation, the International Labour Organisation, the European Council and the Commission. Representatives of the Department of Merchant Shipping have been elected to significant positions in these organizations and this is a fact that reflects the key role of Cyprus in international shipping. The presence of Cyprus in these International Maritime Fora strengthens the entity and the image of the Republic of Cyprus and at the same time ensures that Cyprus maintains a strong voice internationally.
For further information and updates please refer to:
Department of Merchant Shipping