12 April 2024

2024 Update: Cyprus Shipping changes in the Tonnage Tax System

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The Shipping Deputy Ministry of Cyprus has issued the Circular No.12/2024 that outlines significant amendments in the Tonnage Tax System.

Companies meeting the qualifying standards will be substantially affected with these changes leading to the following key changes:

  • The Global Share for Owners of foreign ships has risen from 30.76% to 31.93%;
  • The Global Share for Charterers has increased from 21.07% to 21.80%; and
  • The Global Share for Ship Managers has decreased from 32.79% to 32.61%.

Owners of foreign ships and Charterers whose Community-flagged Share falls below their Reference Share (unless exceeding 60% as of December 31, 2023) are required to include additional non-Community ships in the Tonnage Tax System. In such cases, a 10% increase in tonnage tax on all non-Community ships will be implemented.

Ship Managers whose Community-flagged Share falls below their Reference Share (unless exceeding 60% as of December 31, 2024) are not permitted to include additional non-Community ships in the Tonnage Tax System for the fiscal year 2024. These ships are deemed ineligible as qualifying vessels and will be subject to corporate-income tax by the Department of Taxation.

Action

  • Ship owners and Charterers: Assess whether your Community-flagged Share meets the Reference Share requirement. If not, consider the financial implications of incorporating additional ships, taking into account the 10% tonnage tax increase on non-Community vessels.
  • Ship Managers: Analyse your Community-flagged Share. If it falls below the Reference Share, you won't be able to include additional non-Community ships in the 2024 Tonnage Tax System. Prepare for these excluded ships to be subject to corporate income tax.

For further information and/or assistance, please do not hesitate to contact us directly.

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