The recent amendments to Merchant Shipping Law, as announced by the Cyprus Shipping Deputy Ministry (SDM), aim to reward shipowners who contribute to the sustainable future of the industry.
Specifically, as from fiscal year 2021, the annual tonnage tax will be reduced up to 30% for Cyprus and Community flagged ships which use mechanisms for the environmental preservation.
B. ENVIRONMENTAL INCENTIVES
Cyprus will provide a ‘discount’ on its Tonnage Tax System by comparing what emissions reductions are required of a vessel, with what it actually achieves. The incentives are the following:
EEDI (Energy Efficiency Design Index) - vessels that have achieved further reduction of their attained EEDI compared to the required EEDI (Regulation 20 / MARPOL ANNEX VI) will obtain the respective annual tonnage tax rebate of between 5% - 25%.
IMO DCS (International Maritime Organisation Data Collection System) - the environmental incentive relating to the IMO DCS applies to ships of 5,000 GT and above that comply with Regulation 22A of MARPOL ANNEX VI. Ships which demonstrate reduction of the total fuel oil consumption in relation to the distance travelled, compared to the immediately previous reporting period will obtain an annual tonnage tax rebate of between 10% – 20%.
Alternative fuels - vessels using an alternative fuel and achieving CO2 emissions reductions of at least 20% in comparison with traditional fuels will receive a rebate on annual tonnage tax of between 15% - 30%. This will be reviewed on a case-by-case basis, following review of documents submitted from a class society.
The environmental incentives apply on an aggregate basis as per by the new provisions and the maximum percentage of 30% of Annual Tonnage Tax rebate can be claimed by each vessel.
Additional provisions apply with regards to whether a ship is qualified to claim the abovementioned environmental incentives.
Cyprus is a worldwide shipping hub and such measures will help to achieve emissions reduction for a sustainable environment.
For a more detailed information regarding the environmental incentives please visit Shipping Deputy Ministry’s official publication.