Cyprus’ shipping industry has a prominent role as a leading global shipping and ship management centre
Our fourth issue of Cyprus 4.0 for 2023, centres on Cyprus’ shipping industry and the islands competitive advantages to shipping market participants, while continuing to play a prominent role as a leading global shipping and ship management centre and forming global shipping policies with a strong presence and a powerful voice in all maritime forums and international organisations such as the IMO, the ILO, and the European Union.
Since 1963, Cyprus has created a well-established maritime centre with well-founded infrastructure and services able to successfully meet the growing demands of a globalised shipping business.
Today, the Cypriot maritime registry is one of the largest in the European Union (EU) and worldwide, and the biggest third-party ship management centre in the EU. More than 20 per cent of the worlds’ third party management fleet is managed by companies based in Cyprus.
Limassol, the heart of Cyprus’ maritime cluster, is home to over 200 companies that provide shipping and shipping-related services ranging from ship ownership and management to shipping insurance, shipping finance, brokerage, bunkering, ballast water system production, marine training, maritime technology in satellite and radio systems, and many more.
The benefits Cyprus has to offer for individuals that register a shipping company under its sovereign flag are numerous. Competitive registration and financial incentives, a favourable tax regime under the tonnage tax system – which is the main force behind the exceptional growth of the shipping registry over the past decades – ensures that shipping companies which possess, or charter vessels are exempted from income tax on their profits and are automatically taxed based on the tonnage of the Cypriot flag ships they own or charter.
Cyprus also offers fiscal benefits to those who wish to register on the island, by boasting a broad spectrum of double tax treaties with more than 40 countries, aimed at avoiding double taxation of income earned in any of the countries concerned, highly developed maritime infrastructure and professional services, committed in satisfying the demands of shipping entrepreneurs, including high levels of safety and security are amongst the wide range of benefits and opportunities the island has to offer.
The Cyprus flag is a top-quality sovereign flag that complies with all safety and security standards derived from the Paris and Tokyo MoUs and is on both MoUs’ “White List.” The Shipping Deputy Ministry’s more than 150 professional maritime specialists provide tailored, 24/7 service from offices in seven different countries.
In this issue, we are particularly honoured to feature the new Shipping Deputy Minister to the President of the Republic of Cyprus, Marina Hadjimanolis, who will continue to play an instrumental role in safeguarding and further developing Cyprus shipping as a safe, socially responsible, and sustainable industry.
In the feature, Hadjimanolis highlights the island’s comprehensive package, which includes economic and various other incentives that are directly or indirectly addressed to the shipping industry. “The ultimate goal of all the incentives is to create a competitive and stable fiscal regime for the shipping entrepreneurs,” Hadjimanolis said.
Hadjimanolis also mentioned the main challenges in meeting the emerging issues arising from the transition to a green and digital shipping. According the to the Shipping Deputy Minister, Cyprus’ marine ecosystem is a valuable resource, which is why emphasis has been placed on the protection of the environment. “As a leading maritime nation, we feel that we have a duty to accelerate the transition of shipping to a low carbon and climate resilient industry,” she said.
“We fully recognise that the maritime sector should contribute its fair share to the decarbonisation and energy transition of the shipping sector, while at the same time safeguarding the competitiveness of the maritime sector,” Hadjimanolis told Cyprus 4.0. “As a member of the European Union, Cyprus is actively involved in the formation of the legislation related to the ambitious proposal of EC named Fit for 55 and has recently signed a Declaration on Zero Emission Shipping by 2050.”
On 21 June 2023, the EU Delegation to the UN, together with Denmark, Palau and Samoa, and with the participation of Special Adviser to the UN Secretary-General and ASG of the Climate Action Selwin Hart, hosted a meeting in New York on climate and shipping, outlining the EU’s proposals for a new climate targets for the shipping sector.
The EU’s proposals:
For the EU and its Member States, it is logical that if the ultimate aim is a net-zero world in 2050, there is also a need a net-zero shipping sector by 2050, at the latest; the current IMO target of minus 50% until 2050 is clearly insufficient.
The EU believes that international shipping needs to peak its emissions as soon as possible. Accordingly, minus 29 per cent emissions until 2030, and minus 83 per cent until 2040 would be good interim targets.
To reach net zero by mid-century, the EU will propose a technical measure of a greenhouse gas fuel standard. This would mandate a gradual reduction in the GHG intensity of marine fuels used on ships.
As an economic measure, the EU will propose a levy on the shipping sector’s greenhouse gas emissions. The amount of the levy would be proportionate to the amount of GHG emitted by the ship concerned. The EU is open to discuss the use of the revenues from the levy, including for countries vulnerable to climate change.
The one decisive step for now, is to achieve agreement on a net zero target for the shipping for 2050. This would show that the international community is serious about decarbonisation.
Otherwise, the shipping industry will not have enough incentives to provide alternative shipping fuels, be they ammonia, methanol or green hydrogen, and to invest in ships which can use them. The targets, milestones and measures proposed by the EU would guarantee the achievement of a green transition for the sector, which is compatible with the Paris Agreement and the objective of limiting global temperature rise to less than 1.5°C, but at the same time would keep the costs for States and businesses as low as possible.
On the home front, Cyprus is constantly taking actions, which reveal it intends to play a lead role in shipping’s transition to a greener and digital future. It believes that broad and diverse measures are needed at both a global and regional level to achieve emissions reductions 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 measures has the potential to improve the commercial and environmental sustainability of the industry.
The Maritime Cyprus 2023 conference taking place in Limassol this month, organised by the Shipping Deputy Ministry in cooperation with the Cyprus Shipping Chamber and the Cyprus Union of Shipowners has evolved into one of the world’s most significant shipping conferences since its inception in 1989.
The event will be bringing together more than one thousand participants, including shipowners, shipping executives, regulators and state officials from all over the world, including high-calibre speakers. The Maritime Cyprus 2023 conference, with the theme ‘Shipping in Action: An agenda for Change’, will provide the opportunity to participants to become familiar with the island’s strong maritime tradition, and the buzzing maritime cluster in Limassol.
The event aims to maintain and enhance its role as an advanced, proactive, competitive maritime nation with a positive contribution both in Europe and internationally.
Cyprus, without a doubt, has a rich maritime history and a promising future. The efforts of the Cyprus Government, in collaboration with the Shipping Deputy Ministry, the Cyprus Shipping Chamber, the Cyprus Union of Shipowners, various financial institutions, shipping and ship management companies, and a multitude of other organisations, is maintaining and strengthening the island’s role as an advanced, proactive, and competitive maritime nation, contributing positively both in Europe and internationally.
