Tonnage Tax Order Provides Incentives For Environmentally Friendly Ships

The shipping industry has for many years proved to be one of the most successful sectors of the Cyprus economy. It is the longest serving generator of foreign direct investment and contributes approximately 7% of GDP. An important element of this success is the Cyprus merchant fleet, which is the third largest in Europe and the 11th largest in the world. 

Among the various factors that have rendered the Cyprus flag attractive to ship owners, a key pull has been the existence of a specialised shipping taxation system based on the tonnage of a vessel (the tonnage tax). The advantage of such a system is that the tax burden in relation to the vessel is known, and does not fluctuate with profit or income levels. The Cyprus tonnage system is detailed in the EU approved Cyprus Tonnage Tax System Law 44(I)/2010 (the tonnage law).