Greek shipping reminded of its tax committment

It is conservatively estimated the agreement will to earn the country’s Finance ministry an extra Euro420m ($542m). The deal sees Greek shipowners pay tonnage tax on ships operating under all flags, Greek or otherwise, which are managed by companies based in Greece, or offshore companies which have a branch in Greece, operating under Law 89 of the Greek constitution. Law 89 is a similar structure to that of Panama and Liberia.

A new range of levies has also been imposed on companies providing services to shipping in Greece, from shipbrokers, insurance brokers, agents, average adjusters, charterers and others, irrespective of whether they provide services to ships under Greek or foreign flag, but exclude ships trading on purely domestic routes and some passenger ships.

This past week the UGS wrote to members and reminded them of “the voluntary agreement reached for an extraordinary voluntary contribution over the next three years”.

On a practical level this means the voluntary doubling of the tonnage tax for ships, as every Greek-owned shipping company will pay a double contribution for its vessels, whether they fly a Greek or a foreign flag.

Panos Laskaridis, UGS’ general secretary, and a member of the negotiating team said: "We need all owners to follow and apply. Otherwise, the state will set the rules in new legislature and our input will be inconsequential.”

Laskaridis says he is supporting the voluntary scheme in part to help owners avoid accusations of tax evasion. "Tax evaders are rightly labelled as crooks in our society and many say shipowners are tax evaders and therefore labelling us crooks,” he said.

Michael Kotsapas, of accountant Moore Stephens’ shipping team, notes the tonnage tax is just one source of income, noting a “new range of levies has also been introduced for companies providing services to the shipping sector in Greece”. These range from 3% to 5% on remittances of foreign currency, for a four-year period, retrospectively from 2012. In addition, service company profit distributions, either as dividends or as bonuses to directors and staff, are now taxed at a flat rate of 10%.

Kotsapas says: “In recognition of the need to maintain the attractiveness of Greece as a base for companies engaged in the shipping, these service-related charges have very recently been reduced to 50% of figures included in the original legislation.”

As the collections begin, one of the world's leading advisors on business strategy has called for the integration of shipping into Greece's long-term national development strategy so it can become a "key driver of the economic recovery" of the country.

In an assessment of the "impact of the shipping cluster on the Greek economy and society", the Boston Consulting Group (BCG) says shipping activities could impact on the Greek economy, but stipulates the need for a "stable institutional framework" so as to "maintain attractiveness in an increasingly competitive international ship registration environment" and thus "attract further shipping activities".

Commissioned by the UGS the study points out shipping already contributes Euro13.4bn ($17.29bn) to the Greek economy annually, about 6% of GDP, while employing 165,000 people, or 3.5% of the country's workforce. As the cluster’s contribution remains fairly stable, while Greek GDP is contracting, the 2012 contribution exceeds 7%.

"Beyond shipping, Greece ship owners support the Greek economy and society through their investments in other sectors and their philanthropic activities," says BCG.

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