Archive for December, 2016

Amendments of 2014 to the Code of the Maritime Labour Convention, 2006

As per Circular no 37/2016, issued by the Department of Merchant Shipping on the 13 December 2016, reference was made to the adoption of the Amendments of 2014 to the Code of the Maritime Labour Convention, 2006 (the “Amendments”).  These Amendments relate to the Standard A2.5 Repatriation (abandonment of seafarers) and Standard A4.2, Shipowners Liability (claims for compensation in the case of a seafarer´s death or long term disability due to occupational injury or illness). The implementation date for these amendments is the 18thJanuary 2017.

With regards to the Maritime Labour Certificates (MLC) and Declarations of Maritime Labour Compliance (DMLC) issued prior to the 18th January 2017, these will remain valid until the first renewal or intermediate inspection.

Similarly, any DMLC Part I issued before the implementation date (18 January 2017), will remain valid until next vessels MLC renewal or intermediate inspection whichever comes first.  The amended DMLC Part I will be issued to all vessels registered under Cyprus flag on or after the implementation date.

For existing vessels, even though DMLC Part I would remain valid, the shipowners shall update their DMLC II, firstly by way of an addendum, in order to reflect the new requirements, and, afterwards, this would be acknowledged in the inspection report produced at the next attendance of the Recognized Organization for MLC, 2006 inspection as will any other consequent changes to MLC documentation, manuals, etc.

Additionally, in respect of existing vessels, shipowners would have to submit a duly completed application for the issuance of the amended DMLC Part I to the DMS/Cyprus-MLC, 2006 Contact Point electronically, approximately 45 days prior next vessels renewal or intermediate inspection.

It is also noted that the abovementioned Amendments will also apply to foreign vessels calling at ports of the Republic of Cyprus

The Merchant Shipping (Compliance with Flag State Requirements) Order of 2016 (P.I 350/2016)

The issuance of P.I 350/2016 repealed and replaced the previous order 190/2012, in order to include in the definition of the relevant International Conventions the Maritime Labour Convention 2006 and the Nairobi International Convention on the Removal of Wrecks of 2007.

As per Circular No. 36/2016 the following relevant international Conventions are the Conventions coming under the Merchant Shipping (Compliance with Flag State Requirements) Law of 2012:

(a) the International Convention for the Safety of Life at Sea of 1974 (SOLAS 74);

(b) the International Load Lines Convention of 1966 (LL Convention 66);

(c) the International Convention for the Prevention of Pollution from Ships of 1973 and the 1978 Protocol thereto (MARPOL Convention 73/78);

(d) the International Convention on Tonnage Measurement of Ships of 1969 (ITC Convention 69);

(e) the Convention on International Regulations for Preventing Collisions at Sea of 1972 (COLREG Convention 72);

(f) the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers of 1978 (STCW Convention 78);

(g) the Special Trade Passenger Ships Agreement 1971 (STP 71), and the Protocol on Space Requirements for Special Trade Passenger Ships 1973 (SPACE STP 73);

(h) the International Convention on the Control of Harmful Anti-fouling Systems on Ships of 2001(ANTI-FOULING Convention);

(i) the International Convention on the Prevention of Marine Pollution by Dumping of Wastes and other Matter of 1972 (DUMPING Convention);

(j) the International Convention on Civil Liability for Oil Pollution Damage of 1992 (CLC Convention 92);

(k) the International Convention for the Establishment of an International Fund for Compensation for Oil Pollution Damage of 1971 and of its Protocols of 1976 and 1992 (FUND Convention);

(l) the International Convention on Civil Liability for Bunker Oil Pollution Damage of 2001 (BUNKERS Convention);

(m) the International Convention on Maritime Search and Rescue of 1979 (SAR Convention);

(n) the International Convention for Safe Containers of 1972 (CSC Convention);

(o) the Convention on Facilitation of International Maritime Traffic of 1965 and of its Amendments of 1969 to 1996 (FAL Convention);

(p) the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea of 1996 (HNS Convention);

(q) the Maritime Labour Convention of 2006 (MLC 2006); and

(r) the Nairobi International Convention on the Removal of Wrecks of 2007 (Wreck Removal Convention).

The term ‘International Conventions’ includes their relevant Protocols, Codes, Standards, Resolutions, Recommendations or Guidelines in their up-to-date version.

Cyprus Tonnage Tax System (Law 44(I)/2010): Calculation of the Global Share for the Owners of Foreign Ships, Charterers and Ship Managers – applied for the fiscal year 2017

As per Circular No 35/2016 issued by the Department of Merchant Shipping (DMS), on the 12th of December 2016, for the purpose of assessment of the Community-flagged Share of each company or group of companies, the Director shall carry out an assessment upon expiry of the third year (on 31st December) as from the date of opting to be taxed under the Tonnage Tax System (TTS)[1] and thereafter a further assessment every three years throughout the duration of validity of the Merchant Shipping (Fees and Taxing Provisions) Law of 2010 (Law 44(I)/2010) (“the Law”).

Moreover, it is provided that with regards to a company or group of companies whose Community-flagged Share at the time of assessment is less than its Reference Share (unless it is over 60%), no additional non-Community ships can enter the TTS until it raises its Community-flagged Share back to its Reference Share as minimum. Nonetheless, further to sections 15(3) (a), 25(3) (a) and 35(2) (a) of the Law and paragraphs 8 and 10 of The Tonnage Tax (Special Provisions for the Calculation of the Community Flagged Share) Notification of 2010 (P.I. 536/2010) (the “Notification”) those companies may benefit from the sectoral Global Share in order to include additional non-Community ships in the TTS. In such case, the owner, charterer or ship manager in question shall be subject to an increase of ten per cent (10%) on the total amount of tonnage tax payable for all the qualifying non-Community ships in his fleet, by virtue of the provisions of sections 15(4), 25(4) and 35(3) of the Law respectively.

It is noted that for 2015, as per the calculations of the Community-flagged Share of the relevant global tonnage eligible for tonnage tax in the Republic of Cyprus (Global Share) on a sectoral basis for 2015 conducted by the DMS:

  • The Global Share for Owners of foreign ships has decreased in comparison to 2014 (from 28.67% to 27.29%),
  • The Global Share for Charterers has decreased in comparison to 2014 (from 70.51% to 62.39%),
  • The Global Share for Ship Managers has decreased in comparison to 2014 (from 54.23% to 51.97%).

Overall, Owners of foreign ships. Charterers and Ship managers whose Community flagged Share is at the time of assessment (i.e. on 31st December 2016) below their Reference Share (unless this is over 60%) shall not include additional non-Community ships in the TTS until they raise their Community-flagged Share back to their Reference Share as minimum. Such ships cannot be considered as qualifying and therefore would be subject to corporate-income tax by the Department of Taxation while the company shall maintain separate books, records and accounts for those ships as provided by section 44 of the Law.