The War of the Open Registries - Panama v Cyprus

Under the War of Flags series we have compared the registries of Liberia, Bahamas and Malta with Panama. On this occasion, following a descending order in terms of tonnage, we will examine the sixth-ranked Cyprus registry versus the Panama registry.

The island of Cyprus lies northeast of the Mediterranean facing the Turkish coast. The strategically located geographical position of the island has played a fundamental role in the development of its shipping industry, international trade and tourism activities.

Cyprus has maritime legislation based on the British model (Shipping Act) and, as Bahamas (Mundo Maritimo, July 26, 2000), it has the aspiration of becoming a member of the European Union. It should be mentioned that in 1974, Turkey invaded 36 percent of the Cyprus territory and currently the island is partitioned between the Greek Cypriot south and the officially unrecognized Turkish Republic of Northern Cyprus.

The total population is below one million and the Greek-Cypriot section, called the Republic of Cyprus, concentrates 87.5 percent of the island’s population. The ship registry operates there.

The registry announces numerous attractive advantages just as the majority of open registries do. One of the attractive advantages is flexibility in providing service. As to fiscal matters, it offers the advantage of having signed treaties with 27 countries to avoid paying taxes twice in addition to having bilateral agreements with ports in other countries.

Foreigners must obtain permits to hold shares in a Cypriot company, although obtaining these permits is routine.

Basically, its tariff structure is based on the ship’s age and type of service. The type of service, however, is sub-divided into only two types of ships–passenger and general cargo. Unlike Cyprus, Panama applies a wider range and its cost structure distinguishes among passenger ships, tankers, drilling platforms, ships without propulsion, crew boats, unspecified types, etc.

Since January 1, 2000, and perhaps coinciding with the disaster of the “Erika,” prior to registering cargo ships that are more than 15 years old, the registry imposes inspection controls that are more strict than in the past. Ships that are already in the registry and are more than 20 years old must go through a special inspection annually.

Another restriction of the Cyprus registry is that cargo ships of less than 1,000 gross tons and more than 20 years old cannot be flagged in Cyprus. As to passenger ships, there is greater flexibility in the age area. Passenger ships between 15 and 25 years of age must go through a special annual inspection. After passing inspection, ships of more than 25 years may register as long as the service itinerary is fixed and includes calls at two Cypriot ports. Additionally, the crew must be integrated by a minimum 25 percent of Cyprus nationals. The latter requirement is waived if confirmation is presented that no labor is available.

If operations are based on the island, the law provides for a discount on annual taxes. If the ship has been laid up for more than three consecutive months, the shipowner receives a discount of 75 percent from annual taxes. The registry does not charge fees on mortgage payments or for removing a ship from the registry.
At the time of flagging, ships must pay flagging fees and six months of taxes. Payments covering the other six months are paid later.

The calculation of payments on flagging fees and annual taxes is complicated, since a table is used to determine a base payment and a multiplier applied on the basis of the ship’s age. There are three rates–up to 10 years, up to 20 years and above 20 years.

In 1997, while the country was host to Cyprus Maritime, a maritime conference held every two years alternating with Posidonia, an unexpected event occurred amidst 1,200 visitors. The Cypriot passenger ship, the “Romantica,” which was navigating by the conference site in Limassol, caught fire all over. It had aboard 482 passengers and 185 crews. Unfortunately for the registry and the country, a large number of users, media personalities, shipowners and the international press gathered there were witnesses to that painful accident, the evacuation and all incidents that followed. This accident notably damaged the fragile image and reputation of the Cypriot registry in the world.

© 2000 Maria Dixon - ISM Shipping Solutions Ltd.

Translated from the Edited version published in Mundo Maritimo section of El Universal, Grupo Editorial Universal, S.A. Panamá, with permission from the Author