01 Feb, 2021

Up to 30% Tonnage Tax Reductions: Cyprus Green Incentives

Categories: Uncategorized

Cyprus Shipping Deputy Ministry (SDM) has announced a new range of environmental incentives to support shipowners on pathway to decarbonisation, under the Cyprus Green Incentives Programme, to reward vessels that demonstrate effective emissions reductions. From fiscal year 2021, annual tonnage tax will be reduced by up to 30% for each vessel that demonstrates proactive measures to reduce its environmental impact, ensuring shipowners are rewarded for sustainable shipping efforts.

The Cyprus SDM is a leading advocate for sustainable shipping. It believes broad and diverse measures are needed at both a global and regional level to achieve emissions reduction targets and a sustainable future for the industry. This includes the use of cleaner fuels, the deployment of the relevant fuel infrastructure, the electrification of ships, and the use of energy efficiency technologies. A combination of all of these options has the potential to improve the commercial and environmental sustainability of the sector, but shipowners need to be rewarded for investment in sustainable practices to accelerate uptake.

The Cyprus flag will provide a ‘discount’ on its Tonnage Tax System by comparing what emissions reductions are required of a vessel, with what it actually achieves. For example:

  • EEDI– 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– the environmental incentive relating to the IMO Data Collection System (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.

Any vessel detained for any reason during PSC inspection, that violates any regulation of European Commission related to the environmental protection, or in laid-up condition (warm or cold) during the calendar year will not be eligible for the incentive.

For more information and/or advice, please contact us via email at info@finexpertiza.cy