New tax burdens for Greek shipping

“A carefully thought out decision which involves a big investment also has to be based on trust, and many in the shipping community do not trust Greek governments,” a senior executive of a company running some 22 handysize ships told this writer not so long ago. He added: “But present government seems to understand this.”

And so it seemed until the days leading up to the Christmas holiday break. Mid-December rumours were circulating of a new tax to be introduced on Greek-flag and Greek-controlled tonnage run out of Greece.

Over the 21-22 December weekend Greek shipping circles were stunned by an article passed into law making the contribution of a double tonnage tax “mandatory for the next three years”. The legal article was tacked onto a real estate taxation law tabled in parliament by the finance ministry, whose minister Ioannis Stouranas has repeatedly congratulated shipping on its support of the economy, though recently when addressing a working luncheon at the Piraeus Marine Club, hinted he thought more should be done. 

Just what the legislation hopes to gain, other then renew the mistrust of the ship owning community in politicians is difficult to fathom. It could ruin the carefully cultivated climate between the industry and the government and possibly lead to a flight of management companies from Greece to Singapore, Hong Kong and even Monaco.

Earlier in the year the Union of Greek Shipowners (UGS), under the leadership of its president Theodore Veniamis, had hammered out an agreement whereby owners agreed to voluntarily contribute double tax in order to help the struggling economy. Initially, the government had proposed a ‘mandatory tonnage tax for 2013/2016, but months long negotiations resulted in the tax being ‘a voluntary one’.

This agreement came after a number of meetings between UGS leaders and the prime minister, Antonis Samaras, when it was explained a mandatory tax on the Greek-flag interferes with the constitutionally protected status of shipping. Veniamis is said reportedly seeking a meeting with Samaras. 

Veniamis has also reiterated the most crucial aspect of this matter is the move interferes with the constitutionally protected status of shipping.

When the original tax deal was agreed it was estimated it would garner around Euro 140m ($185m) per annum for Greece's economy. The UGS was put in charge of collecting the tax and initially 441 companies with a total of 2,769 ships signed up, or close to 90% of Greek flag ships and some 65% of the ships under foreign flag managed out of Greece. Since then more companies and ships joined the scheme later, bringing about 90% of the total Greek-owned fleet under the programme.

Should the law destroy the atmosphere of trust on which Greek shipowners have based their presence in the country the economy will suffer dearly. Latest figures available from the UGS are for 2012, and they reveal that despite the financial crisis, Greece enjoyed foreign exchange earnings from shipping of Euro 13.29bn ($17.57bn) and the industry provided 192,000 jobs directly or indirectly.

In addition to the industry's formal contribution to the economy, the UGS has voluntarily set up a social welfare programme to help those affected by the country's ongoing economic crisis, while individual shipowners are recognized as being the most generous group who anonymously make substantial donations to charities and non-profit organisations.