High taxation not only siphons off the small profits of Greek enterprises, but also works against investment, employment and growth, a Grant Thornton survey has found.
The report on Greek entrepreneurship illustrated that 60 percent of the net profits at the companies sampled in 2017 went toward taxes, resulting in there not being enough earnings after taxation to finance any new investments.
Consequently business equipment is depreciating and corporations are using obsolete production methods, and despite the 4 percent annual growth in sales and the 16 percent expansion in profits in 2017, growth is mainly thanks to cost cutting, not exports.
Grant Thornton also found that only 4 percent of sales turnover is reinvested, mainly going toward the maintenance of existing production equipment. That trend is expected to persist for at least another 12 months, as 80 percent of Greek entrepreneurs responded that they do not intend to make any significant investment.
The survey, presented on Thursday at the Athens Concert Hall, not only recorded an increase in the share of profits going to taxes (60 percent in 2017, from 58 percent in 2016) but also a disproportionate distribution of tax demand: In 2017, 88 percent of corporate tax was imposed on just 10 percent of corporations – those which constitute the most dynamic section of entrepreneurship.
An improved momentum has been gradually emerging since the country exited the vicious cycle of recession and is reflected in the profits that six out of 10 enterprises achieved in 2017. Four out of those six companies managed to turn their sales growth into an improvement of operating profits, while six in every 10 Greek entrepreneurs expect to increase both revenues and earnings in the next 12 months.
However, despite expectations of further growth, the majority of Greek businesspeople express reservations about investing not only in production equipment but also in human resources.