Greece’s high tax rates are eating into corporate profits and depriving local businesses of vital liquidity that could have been used for funding investments to support their corporate activity, a survey by Grant Thornton has shown.
The taxes Greek corporations paid last year came to 2 billion euros, putting a big dent in the 2.9-billion-euro profits they achieved over the course of 2015. The benefit to the state is quite limited as the increase in corporate tax rates has not had a proportionate impact on public revenues: Corporate tax takings fell from 3 billion euros in 2009 to 2 billion in 2015, during a period when total profits dropped from 5.4 billion to 2.9 billion euros.
Grant Thornton examined 8,000 companies from 92 sectors in the Greek economy, 92 percent of which have an annual turnover of below 50 million euros and qualify as small or medium-sized. They are the firms that account for most of the country’s jobs as they employ 66 percent of workers.
That means their performance is particularly important to the Greek economy, although their contribution in terms of figures regarding sales, operating profits, borrowing etc appears small.
The objective of the survey was to highlight the companies that are showing momentum as regards growth in sales, jobs and profits in the context of the prolonged crisis. Grant Thornton found that this concerns 2,000 enterprises (one in four), which, despite the recession and the general liquidity problems, are financially healthy with low borrowing and are what the survey calls “illuminators,” due to their being models for growth.
This quarter of the sample accounts for 36 percent of the sales volume of all 8,000 firms, 16 percent of loans and 8 percent of pretax profit margin.
The survey also brackets another 1,200 companies, described as “spotlighters,” as having 27 percent of total sales and 2 percent pretax profit margins (i.e. clear features for growing further), while also accounting for 34 percent of total borrowing.