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Author: Anna Mantoyiannakou, Advisory Manager, RSM Cyprus
The shipping industry is considered “the lifeblood of the worldwide economy”.
Internationally, after the recovery of the maritime trade in 2021, the busiest ports have seen a decline in 2022 due to inflation-driven price increases, economic downturn risks, and political unrest. The global commercial fleet increased by 2.95% in dwt terms but is ageing due to uncertainty about fuel and carbon prices, regulations, green investments and technological advancements.
For 2023-2027, an annual average expansion of 2.1% is expected.
Cyprus has evolved into a modern, efficient and integrated shipping complex combining an internationally recognised registry of high standards and a developed on-site shipping industry active in a wide range of shipping activities. Cyprus’ flag has become one of the most well-known in the world, mainly due to its geographic location and favourable tax laws. A legal system based on the English model, an effective civil service, excellent cooperation between the public and private sector, good labour relations, an exceptionally high level of professionalism in the legal and accounting sectors, banking system, telecommunications, and air links to all key locations are all present in Cyprus, providing a solid framework for business establishment for entrepreneurs.
Shipping represents one of the main pillars of the Cypriot economy, contributing to income reaching over €1.2 billion in 2022, equating to over 7% of GDP.
The merchant shipping in Cyprus is included among the largest ship management centres in the world, placing the island today as a global naval power classified as 3rd largest merchant fleet in the EU and the 11th largest in the world, despite the difficulties confronted by the Turkish embargo.
The Cyprus flag is a sovereign flag, adhering to security standards in Paris and Tokyo MoUs. It ranks 8th in the Paris MoU Whitelist and maintains a “Flag of Progress and Quality” status through continuous service upgrades and 24/7 maritime specialist support offered by the Shipping Deputy Ministry’s offices in Limassol, Hamburg, New York, London, Piraeus, Rotterdam, and Brussels.
The island has partnered with over 25 nations, offering preferential treatment in foreign ports and specific employment terms for seafarers, and actively participates in international maritime industry decisions by organisations like IMO, ILO, and EU.
The Cyprus Tonnage Tax System (TTS) offers a stable tax regime, expanding tax benefits previously limited to profits from vessel operation in shipping activities to include profits from vessel sales, interest earned on funds not used for investment purposes, and dividends paid directly or indirectly from profits related to shipping.
Cyprus is implementing the “SEA Change 2030” Strategy supported by 35 specific actions to address digitisation and greener future issues in shipping, ensuring industry competitiveness. The Cyprus Registry has laid a solid foundation for the provision of “One-Stop Shipping-Centre” and the establishment of the Limited Liability Shipping Company (LLSC) governed by the “Limited Liability Shipping Company Law of 2022” centralising maritime matters under the control of a single organisation. Moreover, in the framework of the EU “Fit for 55” legislative proposals to achieve climate neutrality by 2050 and reduce net emissions by 55% by 2030, Cyprus supports decarbonisation in the shipping industry through green tax incentives (tonnage tax system reductions of up to 30% if proactively demonstrated measures to reduce environmental footprint) and encouraging alternative fuels, like biofuels and hydrogen.
Our team of Advisors and Consultants have researched and collected the most important information surrounding Cyprus’ shipping environment and provided insights about the shipping industry by identifying and demonstrating the distinctive qualities, features, and competitive advantages pertaining to the island’s shipping industry.
Follow the link to view and download “Cyprus Shipping Insights.”
