CYPRUS SHIPPING CYPRUS SHIPPING “TAX & OTHER ADVANTAGES” “TAX & OTHER ADVANTAGES” ANTHONY ASHIOTIS FCCA ANTHONY ASHIOTIS FCCA “CYPRUS SHIPPING” “CYPRUS SHIPPING” HAMBURG - 22 ND MARCH 20 12 HAMBURG - 22 ND MARCH 20 12 MANAGING PARTNER MANAGING PARTNER
CYPRUS: “THE IDEAL INTERNATIONAL SHIPPING CENTRE” Member of the EU Ideally positioned for business ----------------------------------- Europe Europe Europe Ideally located to serve 3 continents ----------------------------------- Middle Middle Middle East East East & Asia & Asia & Asia A strategic choice, allowing to reach new, highly promising markets Africa Africa Africa ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
THE CYPRUS FLEET FACTS: It is estimated that the Cypriot fleet accounts for a quarter of all the ships registered in the EU and the Cyprus shipping registry is the tenth-largest in the world. As a result, the sector makes a substantial contribution to the Cyprus is not only Cypriot economy, with recent figures indicating that shipping accounts for about 5% of gross domestic product. famous for its donkeys! As of December 31, 2010, there were 1,862 ocean-going vessels exceeding 22 million gross tons on the jurisdiction's registry. Cyprus is the third biggest party ship management centre in the EU, with about 60 ship management companies operating in the territory. A substantial number of major ship management companies have chosen Cyprus in which to locate their headquarters. Other maritime-related activities which take place in Cyprus include bunkering, chartering, crewing, ship surveying, ship-broking, salvaging and marine insurance. ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
WHY OPT FOR THE “CYPRUS” FLAG? ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
SOME OF THE MAIN ADVANTAGES CYPRUS HAS TO OFFER AS AN INTERNATIONAL SHIPPING CENTRE � Mem ber of the European Union � Dem ocratic country with a free market economy. � Strategic location at the crossroads of three continents. � Double Tax Treaties with over 40 countries. � No tax on profits from the operation or management of a Cypriot registered vessel or on dividends received from a ship- owning company. � No capital gains tax on the sale or transfer of a Cypriot registered vessel or the shares of a ship-owning company. � No estate duty on the inheritance of shares in a ship-owning company. � No incom e tax on the emoluments of officers and crew. � No stam p duty on ship mortgage deeds or other security documents. � Com petitive ship registration costs and annual tonnage taxes as well a low company set up and operational expenses. � Highly qualified managerial, clerical and technical staff available. � Liberal Foreign Direct I nvestm ent regime allowing up to 100% foreign participation in most sectors of the economy. � No exchange control and freedom of movement of foreign currency . � Signatory to numerous international maritime conventions. � Bilateral agreem ents with around 30 countries, through which Cyprus ships receive either national or favoured nation treatment in the ports of other countries. � Full protection for financiers and mortgagees. � Excellent telecom m unications and easy access by air and sea. � Modern and efficient legal, accounting and banking services based on English practices. ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
TAX ISSUES… Albert Einstein: “The hardest thing in the world to understand is the Incom e Tax”. Ev ery one w ill tell y ou: Ev ery one w ill tell y ou: “In Cyprus …... its one of the sim plest!” ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
TAX IS 'SIMPLE' & 'LOW'! Cyprus ship owning companies, ship management companies and charterers pay taxes either under: “Incom e Ta x” 10% on net taxable profits (after expenses, tax exemptions, credits and allowances) OR “Tonna g e Ta x” A small amount is payable annually based on the net tonnage of the ship ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
TONNAGE TAX SYSTEM (TTS) � The new Tonnage Tax System (TTS) for Cyprus merchant shipping was approved by the European Commission on 24th March 2010. � Under the new TTS, qualifying owners of Cyprus and foreign ships, charterers and ship managers who opted and are accepted to be taxed under the TTS are subject to an annual tax referred to as tonnage tax, which is calculated on the basis of the net tonnage of the qualifying ships they own, charter or manage . ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
EXAMPLE OF HOW TONNAGE TAX IS CALCULATED ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
TAX EXEMPTIONS! In accordance with the Merchant Shipping (fees and Taxing Provisions) Law the following are exempt from taxation and subject to tonnage tax : � Income of a qualifying owner or charterer derived from the operation of a qualifying Cyprus, Community and / or foreign (under certain conditions) ship in a qualifying shipping activity; � Income of a qualifying ship manager from the rendering of crew and/ or technical management services (ship management) to a qualifying ship; � Salaries or other benefits paid to officers, masters and the crew of a qualifying Cyprus ship in a qualified shipping activity; ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
TAX EXEMPTIONS! � Dividends paid to shareholders directly or indirectly resulting from profits � from the operation/ ship management of a qualifying ship, or � from the sale of a qualifying ship (only for owners); � Bank interest earned on working capital or shipping revenue provided that the said working capital or shipping revenue is used by a qualifying ship owner or charterer or ship manager � Income or Profit made by a qualifying owner from the sale of a qualifying ship or from the sale of any shares in a qualifying owner entity that is the owner of a qualifying ship. ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
0 % VAT! Shipping activities are subject to 0 % VAT (no VAT charged) such as: � Supply, modification, repair, maintenance, chartering and hiring of sea-going vessels, which are used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial or other activities. � Supply of services to meet the direct needs of sea going vessels. � Transportation of passengers from the Republic to a place outside the Republic and vice versa using a seagoing vessel. ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
HOW TO ENTER THE “TTS”? � OWNERS OF CYPRUS SHIPS � Qualifying ow ners of Cyprus ships fall automatically within the scope of the TTS and therefore do not need to exercise the option to be taxed under the TTS. They are automatically subject to tonnage tax due to their registration under the Cyprus flag unless the qualifying ships are sold, lost or broken up. � In case of re-flagging of the Cyprus qualifying ship to a foreign flag and the owner is still a tax resident of Cyprus, then this owner is considered as an owner of a foreign ship and continues to remain in the TTS until the expiration of the 10 years period (no corporate tax option). ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
HOW TO ENTER THE “TTS”? � OWNERS OF FOREIGN SHIPS Eligible for the TTS is an Owner of a foreign ship, who: � is a tax resident of the Republic of Cyprus, � has opted to be taxed under the TTS and � owns a ship that is a qualifying ship, which is � engaged in a qualifying shipping activity Furthermore the owner of foreign ships must comply with the following requirements: � “Community – Flagged Share” Requirement – 60% of the ships have EU flag � (In case the Community ships are less than sixty per cent (60%) of the fleet in terms of tonnage, the commercial and strategic management of the fleet must be carried out from the territory of the European Union/ EEA). Note : The option, which will be valid for ten years , may be exercised by a written Application for Approval of the Option to be taxed under the Cyprus TTS ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
WHAT IS A QUALIFYING SHIP? Qualifying ship is any seagoing vessel certificated under the applicable international or national rules and regulations and registered in the ship register of any member of the International Maritime Organization (IMO) and the International Labour Organization (ILO) which is recognized by the Republic of Cyprus. The new TTS specifically excludes certain types of ships such as: � Fishing and fish factory vessels; � Vessels used primarily for sport or recreation; � Inland waterway navigation vessels; � Harbour, estuary and river ferries and tug boats; � Fixed offshore installations (not used for maritime transport); � Non self-propelled floating cranes; � Non-ocean going tug boats; � Floating hotels, restaurants, casinos. ANTHONY ASHIOTIS & CO Auditors ● Accountants ● Consultants
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