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Politics

Cyprus Wants Tonnage Tax Automatic Renewals to Benefit Shipowners

NICOSIA – European Union sanctions against Russia for the invasion of Ukraine has hurt the bloc’s shipping industry, especially on Cyprus, where the government wants a change in how it is taxed.

The recommendation is for automatic renewals of tonnage tax systems to keep ships operating from the island, Deputy Shipping Minister Vassilios Demetriades telling Reuters that, “Imposing sanctions is the right thing, but at the same time we need to support a sector that inevitably faces some harmful effects.”

Tonnage tax is a system where ship owners or operators can opt to pay an annual tax calculated on the basis of the carrying capacity of a ship rather than profit, subject to European Commission review, in 2019 extended on Cyprus for 10 years.
The government has proposed other ideas to benefit its shipping industry as part of a sector-wide support package for the oil price cap which came into effect on Dec. 5, the report noted.

That was imposed by the Group of Seven nations, Australia and the 27 European Union countries against Russian crude to take away war financing and have some stability in the global oil market.

Cyprus has the third largest ship register in the EU, after Malta and Greece and while oil tankers are only about 10 percent of the fleet, the sector lose about 20 percent of them when the price cap began, said the news agency.

The EU Commission has committed to adopting supportive measures for the sector by Feb. 5 and Cyprus said none of its proposals would affect the budget but instead show support to the critical industry there.

“The issue is not (about) compensating Cyprus or any EU member state for losing business. The issue is to keepshipping in the EU, to bring back any ships which de-flag,” Demetriades also told Reuters.

“One of the measures of Brussels could be, for those member states that already have EU tonnage tax approved systems, (that they) could be automatically prolonged for another 10 years, for instance,” he also said.

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