TONNAGE TAX REDUCTIONS OF UP TO 30% WITH NEW CYPRUS GREEN INCENTIVES PROGRAMME

The Cyprus Shipping Deputy Ministry (SDM) has announced a new range of green incentives to reward vessels that demonstrate effective emissions reductions. From fiscal year 2021, annual tonnage tax will be reduced by up to 30% for each vessel that demonstrates proactive measures to reduce its environmental impact, ensuring shipowners are rewarded for sustainable shipping efforts. 

The Cyprus SDM is a leading advocate for sustainable shipping. It believes broad and diverse measures are needed at both a global and regional level to achieve emissions reduction targets and a sustainable future for the industry. This includes the use of cleaner fuels, the deployment of the relevant fuel infrastructure, the electrification of ships, and the use of energy efficiency technologies. A combination of all of these options has the potential to improve the commercial and environmental sustainability of the sector, but shipowners need to be rewarded for investment in sustainable practices to accelerate uptake. 

The Cyprus flag will provide a ‘discount’ on its Tonnage Tax System by comparing what emissions reductions are required of a vessel, with what it actually achieves.

For example: 

·        EEDI – vessels that have achieved further reduction of their attained EEDI compared to the required EEDI (Regulation 20 / MARPOL ANNEX VI) will obtain the respective annual tonnage tax rebate of between 5 – 25%. 

·        IMO DCS – the environmental incentive relating to the IMO Data Collection System (DCS) applies to ships of 5,000 GT and above that comply with Regulation 22A of MARPOL ANNEX VI. Ships which demonstrate reduction of the total fuel oil consumption in relation to the distance travelled, compared to the immediately previous reporting period will obtain an annual tonnage tax rebate of between 10 – 20%

·        Alternative fuels – vessels using an alternative fuel and achieving CO2 emissions reductions of at least 20% in comparison with traditional fuels will receive a rebate on annual tonnage tax of between 15 – 30%. This will be reviewed on a case by case basis, following review of documents submitted from a class society. 

Any vessel detained for any reason during PSC inspection, that violates any regulation of European Commission related to the environmental protection, or in laid-up condition (warm or cold) during the calendar year will not be eligible for the incentive. 

Vassilios Demetriades, Cyprus Shipping Deputy Minister, commented: 

“As a leading maritime nation, we have an obligation to support efforts in reducing GHG emissions. We believe that flag states are well positioned to support ship owners in making sustainable shipping choices which they can benefit from both operationally and financially. Striking the right balance between the green transformation and competitiveness is a challenge but also presents opportunities“

Cyprus believes incentives such as this will encourage greater environmental sustainability across the global industry while also enhancing Maritime Europe’s competitive advantage in new green technologies. This creates opportunities for jobs and growth, providing a first-mover advantage to the EU shipping industry. Clear objectives for 2030 and 2050 have been set by the IMO and all industry stakeholders must unite to create a clear pathway to achieve and exceed these goals.

Ranking amongst the top international fleets, Cyprus flags over 1,000 oceangoing vessels with a total gross tonnage exceeding 24 million. Cyprus is also in the process of formulating a long-term strategic vision for shipping, maritime and marine related activities, addressing the current challenges and opportunities and setting a vision, mission and objectives for the next two decades (2021-2040). 

Source: Invest Cyprus