Alarm bells are again ringing within the Greek shipping community following a call by the European Commission for a radical change in the way shipping firms are taxed.

Indeed, Greece, the home of the world’s largest fleet could well be sunk. Jean-Claude Juncker, President of the Commission, is an advocate for changing the shipping tax system in Greece and has personally piled on the pressure for larger tax on shipowners.

Brussels on 21 December sent a series of proposals to Athens that Greece is expected to adopt so the country’s law complies with European rules on equal taxation in maritime transport, or else face court action regarding illegal subsidies to shipping.

The demands will change Greece’s existing shipping tax system completely, without exempting oceangoing shipping companies currently taxed based on each ship’s tonnage.

The EC said it was concerned the Greek tonnage tax system was not well targeted and benefits the shareholders of both shipping companies and other related parties, beyond what is permitted.

The EC says companies, which manage merchant vessels such as dry bulk carriers, and tankers can only retain their privileged status if they do not reduce the share of their fleet under EU flags, in a bid to stop companies from resorting to registers of convenience.

The EC also maintains said preferential tax treatment should be removed for the Greek cluster’s all-important services sector like insurance intermediaries, maritime brokers and other maritime intermediaries as well as the shareholders in shipping companies, arguing they do not conduct genuine maritime transport activities.

Greek controlled ships presently fly some 45 flags from their sterns and out of the 4,238 Greek-owned oceangoing vessels, just 677 fly the home flag while another 633 are in the Maltese register and 244 fly the Cypriot flag.

There are 858 ships in the Liberian register, 848 ships bearing the flag of the Marshall Islands and 435 ships fly the Panamanian flag.

Tax has been an issue for the past year, but has become more heated as Greece struggled to negotiate with its European creditors. The Alexis Tsipras-led Syriza coaltion government has agreed to abolish tax benefits for shipowners but specific details have yet to emerge.

As it became evident the government’s hand was being forced by Brussels, concern within the ship owning community has mounted as an increasing number have being laying the foundations to relocate, especially as it began to emerge shareholder dividends could be taxed.

The Syriza-led government was said to be preparing to increase the tonnage tax by 4% a year between 2016 and 2020, something the industry considered moderate and not unexpected.

But it is clear, Brussels is not happy.