Matters of taxation continue to be a complicated field that shipping must tackle as an on-going task. In present economic times governments remain keen to maximise revenue and pursue perceived defaulters.
The development
The Cypriot authorities are conducting a tax review exercise with respect to the observance of the tonnage tax system.
The purpose of the exercise is to identify whether the requirements of the tonnage tax system are being complied with by owners, operators and managers.
Affected will be those persons and / or corporate entities that are tax resident in Cyprus and one of the key issues will be the % of non-EU flagged ships in the fleet as compared to EU flagged vessels.
Should non-EU flagged vessel be added then a 10% surcharge in the tonnage tax may be imposed, and for the fiscal year of 2015 this option will only be available to charterers.
Commercial risk management
The effects of the financial crisis of 2008 continue to be felt directly and indirectly across the globe.
Not only is shipping still facing challenging market conditions, but home jurisdiction governments may be keen to maximise tax revenue and / or ensure proper observance of tax regimes.
As such it will be necessary for owners, operators and managers to stay abreast of developments and government initiatives that may affect them.
These developments can be significant, yet not always very clear in their application and ambit, not least the 2014 developments with respect to Chinese taxes applicable to shipping.
It is likely that shipping will face a continued development with respect to both tax and regulations which will directly impact operational matters as well as the bottom line.
It will pay to be well versed in these matters and well prepared.
For further information, members are asked to contact the Association.
The Association is grateful to Messrs. Andreas Neocleous & Co. LLC for permission to republish their article on tonnage tax matters in Cyprus which first appeared via the International Law Office.