House scrambles to keep ships under Cyprus flag

The House health committee in the Republic of Cyprus is scrambling to amend healthcare legislation in a race against the clock, following reports that ship owners are trying to take their business elsewhere to avoid having to pay GESY tax.

According to Reporter, the House health committee is rushing a bill before the end of this year that would exempt ship owners from paying into the state’s GESY healthcare system on behalf of their sailors.

Ruling party DYSI MP Efthimios Diplaros, who chairs the parliamentary committee, said current legislation requiring ship owners to pay their dues in public healthcare was an issue that needed to be fixed.

“This provision in the legislation allows other countries to gain footing, bugging ships under the Cypriot flag in order to entice them to go under their flag and avoid having this problem,” Diplaros said.

Reports said some ship owners whose vessels sail under the Cypriot flag have already decided not to renew their contracts after the end of this year, when parliament takes a winter break and the country gears up for presidential elections.

It was understood that ship owners have not been paying their GESY dues to state coffers despite receiving annual reminders from Social Security, with Diplaros saying this money was never calculated in the actual budget by the Health Insurance Organisation but those letter notifications were making ship owners nervous.

“We told them that they had every right to protest when the legislation was passed and we won’t ask them to pay this money,” the MP said.

Nicosia putting fires out one after another

The shipping registry in the Republic of Cyprus, a global player in ship management, is the third largest flag in Europe and the island is a global leader in ship management.

Nicosia has been making efforts to expand its influence over policy in the industry, including prompting the European Commission last week to issue new clarification guidance on sanctions against Moscow to explicitly allow the transfer of Russian coal and fertilizer to countries outside the bloc.

Cyprus had sought to clarify a previous guideline when Brussels implied that sanctions would not allow actors and companies within the EU to transfer coal and other services from Russia to third countries. Nicosia had argued that strict guidelines were a direct blow to its competitive advantage.

But as it is now the ship owners’ turn to clarify Cypriot policy on GESY taxes, the sponsors of the bill - Diplaros, fellow DYSI MPs deputy chair Savia Orphanidou and Charalambos Pazaros, as well as DIKO MP Chrysanthos Savvides – are also rushing to beat not only a winter holiday deadline but also get colleagues to vote before voting in parliament gets too close to the February presidential election.

It has been suggested that officials within the shipping industry are pushing for an amendment before the year is out, citing several nervous ship owners who want to see things cleared up before contracts are up for renewal at the end of the current year.

“We don’t want to lose our ships,” Diplaros said.