Cyprus to cut annual tonnage tax for ships that reduce their environmental impact

The Cyprus Shipping Deputy Ministry (SDM) is launching a range of green incentives to reward vessels that demonstrate effective emission reductions.

The ministry offers tonnage tax reductions of up to 30% under the new Green Incentives programme with the aim to support ship owners in their efforts to decarbonization.

Within the framework of the continuous monitoring of environmental developments, both at international and European level, and contributing to the efforts towards the decarbonization of the shipping industry, the Shipping Deputy Ministry has announced the approval by the Council of Ministers of a new range of green incentives to reward vessels that demonstrate effective emissions reductions.

From January 2024, annual tonnage tax will be reduced by up to 30% for each vessel that demonstrates proactive measures, to reduce its environmental impact, ensuring shipowners are rewarded for sustainable shipping efforts.

The ‘discount’ on the tonnage tax is available to owners of Cyprus and community ships which comply with the requirements of the environmental incentives.

Any vessel detained due to any environmental deficiency(ies) during port state control inspection, or which violates any regulation / directive of the European Commission related to the environmental protection, or is in laid-up condition (warm or cold) during the calendar year, will not be eligible for the incentive.

The Cyprus ministry believes that the environmental incentives will strengthen the shift of the Cyprus flag, and of the Maritime cluster to the use of environmentally friendly ships and methods.

The requirements underlined by the ministry in order for shipowners of Cyprus and community ships to get the discount on the tonnage tax are the following:

EEXI – vessels that have achieved reduction of their Attained Energy Efficiency Existing Ship Index (EEΧI) compared to the required EEXI (regulations 19, 23 and 25 / amended Marpol Annex VI) by more than 10%, will obtain the respective annual tonnage tax reduction of between 5 – 25%.

IMO DCS – the environmental incentive relating to the IMO Data Collection System (DCS) applies to ships of 5.000 GT and above with reported hours underway of 4.380 and above for each year, that comply with Regulation 27 of amended Marpol Annex VI.

Ships which demonstrate reduction of the total fuel oil consumption to the total distance travelled, between two consecutive reference periods (year x vs year x-1) of more than 4%, will obtain an annual tonnage tax reduction of between 10 – 20%.

CII – the environmental Incentive relates to the Carbon Intensity Index (CII) of the IMO and applies to ships of 5,000 GT and above (regulation 28 / amended Marpol Annex VI). Ships which achieve an operational carbon intensity of Rating A or Rating B in a year, with declared hours underway of at least 4.380 per year, will obtain an annual tonnage tax reduction of 20 % for rating A or 10% for rating B.

Note: (Photo: 274490156 | Cyprus Ports©Anton Ramsky |