The island has proved to be an ideal centre for the establishment of legal ^entities by foreign ship owners and other professionals for the conduct of maritime activities and for the rendering of shipping services worldwide. In the early 1980's Cyprus ranked thirty-second on the list of leading maritime nations. Today it ranks sixth with 2.673 ships totalling 26,9 million gross tonnage. The island's maritime policy aims to develop an integrated shipping infrastructure through the granting of appropriate incentives. REGISTRATION PROCEDURES Maritime activities are governed by the Merchant Shipping Laws which are largely based on corresponding British legislation. The island has also ratified the major international conventions on maritime safety, prevention of pollution of the sea, training, certification and watchkeeping of seafarers and limitation of ship owners' civil liability in case of oil pollution damage. Cyprus is a member of the Council of the International Maritime Organization which reflects the importance of the island in international shipping. A non-resident may register a ship under the Cypriot flag by forming a company with the permission of the Central Bank and by transferring the ownership of the ship to the Cypriot company. The procedure for registering a shipping company may generally be completed in a matter of days through an appropriate professional. Shipping companies owned by non-residents and deriving their income from sources outside Cyprus are exempt from exchange controls. The Department of Merchant Shipping of the Ministry of Communications and Works is the appropriate authority for the registration of ships. Its responsibilities include safety administration, training and certification, international relations and shipping legislation. Government policy provides for the registration of ships which do not exceed 17 years of age. Vessels of any type and tonnage between 18 and 23 years of age may also be registered subject to certain conditions. The provisional registration of a ship under the Cypriot flag may be effected in any country where Cyprus has a diplomatic mission or a consular post. The permanent registration of a provisionally registered vessel must be completed within 9 months, including a 3 month extension. For this purpose the vessel must be surveyed and measured by any one of the classification societies recognised by the Cypriot government. Cyprus recognises all the major classification societies. In accordance with the law on parallel registration, ships bareboat chartered to Cypriot companies may be registered under the flag of the Republic for the period of the charter provided that the legislation of the foreign flag state permits it and the owners and the mortgagees give their consent. Cypriot registered vessels may be registered in parallel in a foreign registry under the same conditions which must be satisfied for the parallel registration of foreign ships in Cyprus. All mortgages on Cypriot ships, except those of vessels registered in parallel, have to be registered in the Cyprus Register of Ships. Registered mortgagees are fully protected and no transaction affecting the registry status of a ship is effected without the written consent of the mortgagees. Furthermore, no certificate of deletion from the Cyprus Register is issued unless all registered encumbrances have been discharged. FISCAL INCENTIVES The major fiscal incentives enjoyed by IBCs are as follows: IBCs as well as international business branches managed and controlled from Cyprus are taxed at only 4,25 percent of their profits International business branches which are managed and controlled from abroad and international business partnerships are totally exempt from corporation or income tax The beneficial owners of international business companies, branches and partnerships are not liable to additional tax on dividends or profits over and above the amount paid or payable by the respective legal entities The expatriate employees of IBCs living and working in Cyprus are taxed at half the rates applicable to locals ie from 0 to 20 percent The expatriate employees of IBCs living and working outside the island are exempt from income tax if they get paid through any bank in Cyprus or are taxed at one tenth of the rates applicable to locals if they get paid directly abroad No capital gains tax is payable on the sale or transfer of IBC shares No estate duty is payable on the inheritance of IBC shares nder the Customs and Excise Law, IBCs and their expatriate employees may acquire duty free: Office equipment such as computers, fax machines, photocopiers, etc. Household equipment such as video recorders, hi-fi systems, washing machines, refrigerators, etc. Motor cars including sports cars, station wagons, as well as mini-busses with a seating capacity of up to 9 persons.Those eligible for relief from duty are: IBCs operating continuously from their fully fledged and fully staffed offices which must be open during normal working hours and separate from any private residence or another office. Full-time expatriate employees of the above enterprises who live and work in Cyprus during most of the year and whose remuneration exceeds CY£12.000 (US$24.000) per annum. An eligible expatriate may acquire a second duty free car for the use of his family if his salary, as declared to the Department of Inland Revenue, is more than CY£20.000 per annum. Transactions effected by IBCs are currently outside the scope of value added tax. As a result, IBCs are not required to register for VAT purposes and thus are not entitled to claim a refund of the VAT paid by them on their purchases. However, all duty free importations by IBCs are exempt from VAT. In addition, telecommunications services offered to IBCs which have fully fledged and fully staffed offices in Cyprus may be exempted from VAT with the approval of the Central Bank. IBCs are exempt from stamp duty on all documents relating to their business activities outside Cyprus. They and their expatriate employees are also exempt from the Special Contribution to the Defence Fund. Cyprus has concluded an impressive number of treaties for the avoidance of double taxation. There are currently 27 in force. The existence of these treaties, combined with the low tax paid by IBCs, offer significant possibilities for international tax planning through the island. In contrast to tax havens, Cyprus is a tax incentive country which offers benefits aimed at attracting non-residents who wish to conduct their business affairs from the island. CREWING REQUIREMENTS The Merchant Shipping Laws contain provisions concerning the composition of the crew and other matters related to seamen employed on Cypriot registered vessels such as apprenticeship, engagement and discharge of master and seamen, wages, accommodation, relief, repatriation, etc. Although there are provisions in the law that 15 percent of the crew must be Cypriot, due to the limited availability of local seamen, officers and crew may be of any nationality whose certificates of competency are recognised by the Cypriot government. In order to facilitate the safe manning of ships flying its flag, Cyprus has concluded a number of bilateral agreements containing provisions for the employment of properly qualified seamen from labour-supplying countries. The officers and seamen must be holders of Certificates of Competency issued by the government of Cyprus or one of the 56 countries whose certificates have so far been recognised by the government. The aim of these agreements is to promote friendly relations, explore areas of cooperation and facilitate seaborne trade as well as employment of seamen. Under these agreements, each contracting party renders to the vessels, crews and passengers of the other contracting party the same treatment as that rendered to the most favoured nation. The agreements set minimum standards, wages and other terms of employment protecting seafarers from possible exploitation. They also include provisions to protect ship owners against unwarranted stoppages and delays of their ships in port as well as regulating taxation of income and profits derived from operations in international shipping. Agreements with Bulgaria, China, Romania, Russia, Sri Lanka and Syria are currently in force. The agreements with Algeria and India have been signed and will enter into force soon, while those with Cuba, Egypt, Estonia, Hungary, Iran, Latvia, Lithuania and Thailand have been initialled and their signatures are pending. The existing agreements with the Philippines and Poland, have recently been amended. Most of these agreements contain provisions for the employment of qualified seamen from these countries on Cypriot ships. OTHER ACTIVITIES AND SERVICES Other legal entities owned by non-residents and engaged in shipping related activities or services from Cyprus, such as ship management, chartering, brokerage, crewing, underwriting, average adjusting, etc. operate as international business companies thus enjoying the incentives and advantages of this special category. A significant number of ship management companies of British, German, Greek, Russian and Scandinavian ownership have established fully fledged offices in Cyprus from where they manage a considerable number of vessels under the Cypriot and foreign flags. One of these companies has, with the active support and assistance of the authorities, established a marine training school for the purpose of offering training to local as well as foreign seamen. Many shipping related services are available locally from resident-owned firms. These include shipping, travel, clearing and forwarding agents, ship chandlers and a variety of other enterprises related to shipping, including bunkering and a large number of public warehouses. There are also representatives of all the main ship classification societies, ship surveyors and consultants, representatives of all P & I clubs, marine insurers, small ship repair units and salvage operators. A UNIQUE CHOICE Cyprus' maritime policy aims to provide attractive and competitive incentives, a continually upgraded infrastructure and appropriate legislation which seeks to respond to the needs of the international maritime community. The significant presence of ship owners, ship managers and related professionals from all around the globe is a testament to the success of Cyprus as a maritime centre and recognition of the island's unique package of advantages.
The island has proved to be an ideal centre for the establishment of legal ^entities by foreign ship owners and other professionals for the conduct of maritime activities and for the rendering of shipping services worldwide. In the early 1980's Cyprus ranked thirty-second on the list of leading maritime nations. Today it ranks sixth with 2.673 ships totalling 26,9 million gross tonnage. The island's maritime policy aims to develop an integrated shipping infrastructure through the granting of appropriate incentives.
REGISTRATION PROCEDURES
Maritime activities are governed by the Merchant Shipping Laws which are largely based on corresponding British legislation. The island has also ratified the major international conventions on maritime safety, prevention of pollution of the sea, training, certification and watchkeeping of seafarers and limitation of ship owners' civil liability in case of oil pollution damage. Cyprus is a member of the Council of the International Maritime Organization which reflects the importance of the island in international shipping.
A non-resident may register a ship under the Cypriot flag by forming a company with the permission of the Central Bank and by transferring the ownership of the ship to the Cypriot company. The procedure for registering a shipping company may generally be completed in a matter of days through an appropriate professional. Shipping companies owned by non-residents and deriving their income from sources outside Cyprus are exempt from exchange controls.
The Department of Merchant Shipping of the Ministry of Communications and Works is the appropriate authority for the registration of ships. Its responsibilities include safety administration, training and certification, international relations and shipping legislation. Government policy provides for the registration of ships which do not exceed 17 years of age. Vessels of any type and tonnage between 18 and 23 years of age may also be registered subject to certain conditions.
The provisional registration of a ship under the Cypriot flag may be effected in any country where Cyprus has a diplomatic mission or a consular post. The permanent registration of a provisionally registered vessel must be completed within 9 months, including a 3 month extension. For this purpose the vessel must be surveyed and measured by any one of the classification societies recognised by the Cypriot government. Cyprus recognises all the major classification societies.
In accordance with the law on parallel registration, ships bareboat chartered to Cypriot companies may be registered under the flag of the Republic for the period of the charter provided that the legislation of the foreign flag state permits it and the owners and the mortgagees give their consent. Cypriot registered vessels may be registered in parallel in a foreign registry under the same conditions which must be satisfied for the parallel registration of foreign ships in Cyprus.
All mortgages on Cypriot ships, except those of vessels registered in parallel, have to be registered in the Cyprus Register of Ships. Registered mortgagees are fully protected and no transaction affecting the registry status of a ship is effected without the written consent of the mortgagees. Furthermore, no certificate of deletion from the Cyprus Register is issued unless all registered encumbrances have been discharged.
FISCAL INCENTIVES
The major fiscal incentives enjoyed by IBCs are as follows:
An eligible expatriate may acquire a second duty free car for the use of his family if his salary, as declared to the Department of Inland Revenue, is more than CY£20.000 per annum.
Transactions effected by IBCs are currently outside the scope of value added tax. As a result, IBCs are not required to register for VAT purposes and thus are not entitled to claim a refund of the VAT paid by them on their purchases. However, all duty free importations by IBCs are exempt from VAT. In addition, telecommunications services offered to IBCs which have fully fledged and fully staffed offices in Cyprus may be exempted from VAT with the approval of the Central Bank.
IBCs are exempt from stamp duty on all documents relating to their business activities outside Cyprus. They and their expatriate employees are also exempt from the Special Contribution to the Defence Fund.
Cyprus has concluded an impressive number of treaties for the avoidance of double taxation. There are currently 27 in force. The existence of these treaties, combined with the low tax paid by IBCs, offer significant possibilities for international tax planning through the island. In contrast to tax havens, Cyprus is a tax incentive country which offers benefits aimed at attracting non-residents who wish to conduct their business affairs from the island.
CREWING REQUIREMENTS
The Merchant Shipping Laws contain provisions concerning the composition of the crew and other matters related to seamen employed on Cypriot registered vessels such as apprenticeship, engagement and discharge of master and seamen, wages, accommodation, relief, repatriation, etc. Although there are provisions in the law that 15 percent of the crew must be Cypriot, due to the limited availability of local seamen, officers and crew may be of any nationality whose certificates of competency are recognised by the Cypriot government.
In order to facilitate the safe manning of ships flying its flag, Cyprus has concluded a number of bilateral agreements containing provisions for the employment of properly qualified seamen from labour-supplying countries. The officers and seamen must be holders of Certificates of Competency issued by the government of Cyprus or one of the 56 countries whose certificates have so far been recognised by the government.
The aim of these agreements is to promote friendly relations, explore areas of cooperation and facilitate seaborne trade as well as employment of seamen. Under these agreements, each contracting party renders to the vessels, crews and passengers of the other contracting party the same treatment as that rendered to the most favoured nation. The agreements set minimum standards, wages and other terms of employment protecting seafarers from possible exploitation. They also include provisions to protect ship owners against unwarranted stoppages and delays of their ships in port as well as regulating taxation of income and profits derived from operations in international shipping.
Agreements with Bulgaria, China, Romania, Russia, Sri Lanka and Syria are currently in force. The agreements with Algeria and India have been signed and will enter into force soon, while those with Cuba, Egypt, Estonia, Hungary, Iran, Latvia, Lithuania and Thailand have been initialled and their signatures are pending. The existing agreements with the Philippines and Poland, have recently been amended. Most of these agreements contain provisions for the employment of qualified seamen from these countries on Cypriot ships.
OTHER ACTIVITIES AND SERVICES
Other legal entities owned by non-residents and engaged in shipping related activities or services from Cyprus, such as ship management, chartering, brokerage, crewing, underwriting, average adjusting, etc. operate as international business companies thus enjoying the incentives and advantages of this special category. A significant number of ship management companies of British, German, Greek, Russian and Scandinavian ownership have established fully fledged offices in Cyprus from where they manage a considerable number of vessels under the Cypriot and foreign flags. One of these companies has, with the active support and assistance of the authorities, established a marine training school for the purpose of offering training to local as well as foreign seamen.
Many shipping related services are available locally from resident-owned firms. These include shipping, travel, clearing and forwarding agents, ship chandlers and a variety of other enterprises related to shipping, including bunkering and a large number of public warehouses.
There are also representatives of all the main ship classification societies, ship surveyors and consultants, representatives of all P & I clubs, marine insurers, small ship repair units and salvage operators.
A UNIQUE CHOICE
Cyprus' maritime policy aims to provide attractive and competitive incentives, a continually upgraded infrastructure and appropriate legislation which seeks to respond to the needs of the international maritime community. The significant presence of ship owners, ship managers and related professionals from all around the globe is a testament to the success of Cyprus as a maritime centre and recognition of the island's unique package of advantages.