Costas Stamatiou November 22 2017 Tonnage tax: countries whose ships are subject to surcharge Elias Neocleous & Co LLC | Shipping & Transport - Cyprus Costas Stamatiou Shipping & Transport IntroductionCountries subject to surchargeIntroductionIn order to promote its aim of improving the quality of Cyprus shipping, the Merchant Shipping (Fees and Taxing Provisions) Law 2010(1) imposes a surcharge on the tonnage tax payable by qualifying vessels registered in countries which appear on the grey or black list of the Paris Memorandum of Understanding. Article 17(2) of the law provides for a surcharge of 30% payable by owners of ships registered in countries on the grey list and 60% for ships registered in countries on the black list. Articles 27(2) and 40(2) of the law provide that corresponding surcharges are payable by charterers and managers, respectively.Countries subject to surchargeOn the basis of the 2016 Paris Memorandum of Understanding annual report, the Department of Merchant 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 2017.Grey list (30% surcharge)Black list (60% surcharge)AlbaniaBelizeAlgeriaBoliviaAzerbaijanCambodiaBulgariaComorosCuracaoCongo, RepublicEgyptDominicaGeorgiaHondurasIndiaMoldovaJamaicaMontenegroKoreaSierra LeoneKuwaitSt Kitts and NevisLebanonTanzaniaLibyaTogoLithuaniaVanuatuMalaysia Mongolia Morocco Poland Slovakia Switzerland Saint Vincent and the Grenadines Syrian Arab Republic Thailand Tunisia Tuvalu Ukraine Vietnam Article 34(4) of the law provides that ships under management which fly a flag included on the Paris Memorandum of Understanding's black list will be deemed to comply with international and EU standards and thus qualify for the tonnage tax system only if the ship's technical and crew management is performed entirely from an EU member state. In the event of a breach of this requirement, Section 54 of the law empowers the Department of Merchant Shipping to impose penalties, including administrative fines and exclusion from the tonnage tax system.For further information on this topic please contact Costas Stamatiou at Elias Neocleous & Co LLC by telephone (+357 25 110 110) or email ([email protected]). The Elias Neocleous & Co LLC website can be accessed at www.neo.law.Endnotes(1) Law 44(I)/2010.