In order to promote its objective of improving the quality of Cyprus shipping, the Merchant Shipping (Fees and Taxing Provisions) Law of 2010 imposes a surcharge on the tonnage tax payable on qualifying vessels registered in countries which appear on the 'grey list' or 'black list' of the Paris Memorandum of Understanding (MOU). Article 17(2) provides for a surcharge payable by owners of 30% for ships registered in countries appearing on the grey list and 60% for ships registered in countries appearing on the black list. Articles 27(2) and 40(2) provide that corresponding surcharges are payable by charterers and managers, respectively.

On the basis of the annual report of the Paris MOU for 2017, the Deputy Ministry of Shipping has determined that the flags listed below are included in the relevant grey or black list for the purposes of calculating tonnage tax for 2018.

Grey list (30% surcharge) Black list (60% surcharge)
Albania
Algeria
Azerbaijan
Bulgaria
Curacao
Egypt
Georgia
India
Islamic Republic of Iran
Jamaica
Kazakhstan
Kuwait
Lebanon
Libya
Lithuania
Malaysia
Mongolia
Morocco
Russian Federation
Saint Vincent and the Grenadines
Slovakia
Switzerland
Syrian Arab Republic
Thailand
Tunisia
Tuvalu
United States of America
Vietnam
Belize
Bolivia
Cambodia
Comoros
Republic of the Congo
Dominica
Honduras
Moldova
Montenegro
Saint Kitts and Nevis
Sierra Leone
Tanzania
Togo
Ukraine
Vanuatu

Article 34(4) provides that ships under management flying a flag on the black list of the Paris MOU will be deemed to comply with international and EU standards and consequently qualify for the tonnage tax system only if the technical and crew management of every such ship is performed entirely from the territory of an EU member state. In the event of breach of this requirement, Section 54 empowers the Department of Merchant Shipping to impose sanctions, including administrative fines and exclusion from the tonnage tax system.

Originally published by International Law Office.

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