Preliminary recommendations have been issued in Greece in order to reduce additional tax and social security contribution amounts with the hopes of potentially attracting investments from foreign parties. These investments may come in the form of multinational investors, multinational corporate partnerships or traditional tourism.
These proposed reductions would not just be applicable for personal tax contributions, but would also be enacted for employers as the corporate income tax rates, solidarity contribution fees, annual business activity fees and tax advance payments could be changed based on recommendations from this proposed bill. These changes, if approved by government, would be processed in the summer and announced in the fall of 2020. Due to the measures taken to reduce the spread of COVID-19 the entire process has been stalled throughout the past three months.
With the sales tax rate presently at 24% in Greece, this poses a problem when trying to encourage the establishment of multinational corporations in the nation. The reduction in value added tax, down to 13%, will not only help tourism by making Greece a less expensive and more desirable place to travel, but the prospects for new corporate developments will also increase. This value added tax will be reduced specifically for non-alcoholic beverages and taxi fares, however this plan is still in the early stages of discussion and will not be thoroughly defined for many months yet. As we get closer to the implementation date, more details will become available about how this will affect currently operating businesses in the country, as well as how it will affect the prospects of multinational corporations investing in operations in Greece in the future.
With a presumed economic reduction of approximately 13% due to COVID-19, the country is taking large measures in order to stimulate their local economy. This proposed plan is the third phase of the different economic support measures that have been enacted in Greece in the recent past due to COVID-19. A total of 15 policies have been passed (from suspending employee contracts, reducing the VAT, all the way to creating pandemic subsidy programs for those hit the hardest financially by the pandemic). Overall, like most other countries, the COVID-19 pandemic has had dramatic effects on the Greek economy. After recently receiving a massive bailout in 2018, Greece has been very sensitive to economic downturns, and the implementation of these 15 policies will hopefully help to mitigate some of the financial devastation taking place within the nation.