|Elias Neocleous||Costas Stamatiou|
The Cyprus government's proposal to reduce the tax burden on companies engaged in international maritime transport by introducing a special tax regime for them has received approval from the European Commission.
The Cyprus maritime industry is one of the largest in the EU and the tenth largest worldwide, and Cyprus is the biggest third-party ship management centre in the EU. Cyprus already imposes a reduced rate of tax on shipping activities, but the new tax regime will allow companies engaged in international maritime transport to opt for a tax calculated on the net tonnage of the fleet that they operate (tonnage tax) instead of being taxed on the actual profits of their maritime transport activities.
The European Commission found that the scheme complies with EU Guidelines on state aid and that adequate safeguards have been put in place to avoid abuse of the scheme for tax evasion or spillover of its benefits of the scheme to non-shipping activities. The Commission authorised the scheme until December 31 2019.