EU Snoops Into Greek Shipping Tax System

According to Greek press as German shippers are loosing market share, a driven request of the European Commission is meddling with the Greek shipping tax system. The European Commission asked Greece to clarify the workings of the tax system for its key shipping industry which is run by some of the wealthiest people in the bailed-out country. “The commission is currently looking at the tonnage tax and has asked for details from Greece,” the office of European Competition Commissioner Joaquin Almunia said. Greece has until October 30 to reply.

The tax is levied on the tonnage a ship carries in place of a tax on the shippers’ profits, reportedly to the great advantage of Greece’s shippers and undercutting state income from one of the country’s prize economic assets. The system was set up in 1953 when the Greek shipping industry, one of the largest in the world, was rebuilding after World War II.

The Commission of course denied that the request was driven by specific German shippers’ “interests”, saying it was part of an investigation to ensure that competition rules on the shipping industry were being respected across Europe. As written above the shipping tax system is set since 1953, so better late than never for the EU, particularly now that Greece is totally unable to practice sufficient foreign policy due to the economic crisis.

This request of the EU at this point, taking into consideration the ongoing economic crisis at international level, will deliver the final blow on the country’s economy since shipping is the last “safe haven” in Greece. If shipping tax system is to change, most probably the management of the Greek shipping companies will just change their vessel’s flag registries and may even relocate to countries with lower shipping taxes leaving another big money black hole in Greek economy. Not to mention the thousands of people working in Greek shipping industry that will have either to relocate as well or to become unemployed.

Greek firms control 16.2 percent of the world’s “deadweight tonnage” shipping capacity, followed by Japan with 15.8 percent, with the industry accounting for around 6.0 percent of the country’s economic output.

Source: Hellenic Shipping News