Earlier this year, Cyprus Shipping Deputy Minister Vassilios Demetriades announced a new piece of legislation that would enable the creation of a limited liability company to be used exclusively for the country’s shipping sector needs
Cyprus 4.0 has since spoken to the Shipping Deputy Minister, as well as two other shipping sector stakeholders, on the details surrounding this initiative, as well as the benefits that it entails for the Cypriot maritime industry as it navigates an increasingly complex and challenging global economic environment.
“The effort to create this limited company is not something new or recent, it has been going on for approximately 6-7 years,” the minister told Cyprus 4.0, noting that the government has been trying to create a new registrar for shipping companies in order to expedite the entire registration process.
“The reason for doing this is because of our overall efforts in Cyprus to make our shipping industry become faster, more efficient and more competitive,” the minister added.
One of the naturally occurring questions during this discussion was about the uniqueness of the shipping sector and why it should have its own company registrar, in contrast with other sectors, who must resort to the Department of Registrar of Companies and Intellectual Property.
“The reason is clear. The shipping industry is taxed differently. Shipping companies are under tonnage law. They are not subject to the same rules as other companies are under the Tax Department,” Demetriades said.
“This new initiative will allow us to create a new framework that will facilitate the creation of a one-stop-shop that will in turn helps us to attract a great deal of new international shipping companies to Cyprus. In addition, with this new framework in place, they will be able to find and receive many services they require under one umbrella,” he added.
What is more, in reference to the Deputy Shipping Ministry’s efforts to improve its services to the industry, Demetriades said that the ministry is digitising all its services with help from the funds provided by Cyprus’ Recovery and Resilience plan.
“We have come to this plan after conducting a plethora of talks with shipping industry stakeholders,” the minister said, who noted that this initiative was also supported by his predecessors, Natasa Pilides, who was Cyprus’ first Shipping Deputy Minister, as well as former Transport Minister Marios Demetriades.
“This has been a burning desire of both the shipping industry, as well as international investors, for quite some time,” the minister added. Moreover, Demetriades explained that the ministry has intensively examined this proposal with various legal bodies, including the Cyprus Bar Association, the state’s legal service, as well as the Institute of Certified Public Accountants of Cyprus (Selk), to increase transparency.
“Our plea to the House of Representatives is for them to examine this as a priority issue, enabling us to enact it before the end of the year, to further boost and develop Cyprus’ shipping industry. I believe that shipping is a sector that is very productive for the Cyprus economy and goes beyond party politics,” Demetriades said.
“I want to say that all parties appreciate the importance of the sector and are trying to help us with their approvals and giving us the ‘green light’ to move forward with our plan. I think the plan, after it passes through the examination process, will be voted through,” the minister concluded.
Commenting on this proposal, Senior Associate at the Elias Neocleous & Co LLC law firm and maritime legal expert Vassilis Psyrras said that there was a demand for more efficiency and promptness in the manner in which the industry was served in Cyprus.
“The Deputy Ministry of Shipping has been very responsive and throughout the years proved a valuable partner and a regulator that understands the needs and requirements of the industry,” Psyrras said.
“It came naturally to reach a point where the ‘one-stop-shop’ idea would expand to include the ship-owning company. We expect that this new piece of legislation will address these concerns and prove a valuable tool for all stakeholders,” he added.
Furthermore, Psyrras echoed the minister’s thoughts that this has been a long-standing demand from the shipping industry and other related stakeholders.
“It has indeed been the subject matter of many discussions, the main issue being that because of the nature and the peculiarities of the industry, and the need for speed and flexibility, a centralised and simpler structure would enable stakeholders to quickly face such challenges and to adapt, but at the same time without any discount in quality or compliance,” he explained.
“The shipping cluster in Cyprus has come a long way and has always been at the forefront of progress and innovation. This piece of legislation is yet another example of why Cyprus does not just talk business but does business. We hope that when this bill passes into law, it will boost shipping even more, providing not only the local but also the global shipping community as a useful tool to conduct its business,” he concluded.
Meanwhile, EY Cyprus Tax Practice Director Eleni Sofocleous told Cyprus 4.0 that the introduction of such a piece of legislation should be considered a step in the right direction, ensuring that Cyprus remains competitive among the rest of the EU shipping jurisdictions, as well as keeping the country in a prominent position on the international shipping map.
Moreover, she explained that it would also demonstrate that shipping has always been very high on the governmental agenda and is an industry that Cyprus traditionally focuses on.
“We should emphasise that companies that will choose to be incorporated and governed under this new legislation will still need to meet the same requirements as the companies incorporated under the Companies Act and be compliant with the same reporting requirements; the main difference here will be that the authority in charge will be the Deputy Ministry of Shipping, under which all compliance aspects of a shipping company will be centralised,” Sofocleous said.
“In this respect, the new legislation should aim to further enhance our competitive position while at the same time ensuring that the new model does not impair in any way our standing as a strong shipping name and robust reputation, which are both outstanding at an international level,” she concluded.