The Cyprus flag has had unprecedented success in the last few years, rising to a position of prominence in world shipping. The main reasons for the success of Cyprus have been the following:
It has concluded double tax treaties with 27 countries.
It imposes no tax on profits from the operation of a Cypriot registered vessel or on dividends received from a ship owning company.
It imposes no capital gains tax on the sale or transfer of a Cypriot registered vessel or the shares of a ship owning company.
It imposes no estate duty on the inheritance of shares in a ship owning company. It imposes no income tax on the emoluments of officers and crew. It imposes no stamp duty on ship mortgage deeds or other security documents. It is a signatory to numerous international maritime conventions.
It has concluded an extensive network of bilateral agreements through which Cypriot ships receive either national or favoured nation treatment in the ports of other countries.
Cyprus Ship registration costs and annual tonnage taxes are at competitive rates.
There is full protection for financiers and mortgages.
It has a favourable tax regime for ship management and other offshore enterprises.
It has low set up and operating costs.
It has excellent telecommunications and easy access by air and sea.
Highly qualified managerial, clerical and technical staff are available.
Responsibility for the development of maritime activities lies with the Ministry of Communications and Works whose authority and jurisdictions are exercised through the Department of Merchant Shipping.
The administration of the Register of Cyprus ships is governed by the Merchant Shipping (Registration of Ships, Sales and Mortgages) Laws, 1963 to 1996, which are based on the British Merchant Shipping Acts, 1894 to 1954. The Merchant Shipping (Masters and Seamen) Laws, 1963 to 1984 and the Merchant Shipping (Fees and Taxing Provisions) Laws, 1992 to1995 are the other principal merchant shipping laws.
Cyprus has ratified the major international conventions on maritime safety, prevention of pollution of the sea, training, certification and watch keeping of seafarers, limitation of ship owners’ civil liability in case of oil pollution damage and conventions on maritime labour.
Cyprus has also concluded a number of bilateral agreements on the avoidance of double taxation and on co-operation in the field of merchant shipping, which provide, inter alia, fiscal advantages and incentives for effective tax planning and advantages in the engagement of foreign seafarers on board Cypriot ships.