Enterprises will pay 30 percent less tax on average based on the changes the government will bring to Parliament through the tax bill to be tabled in November.
The reduction of the down payment from 100 percent to 95 percent, and mainly the drop in the corporate income tax from 28 percent to 24 percent will lead to significant cuts whose combination could contribute toward the acceleration of economic growth.
The 5 percent reduction in the down payment for 2020 is a one-off, but Finance Minister Christos Staikouras has said that if at some point next year the government observes the fiscal leeway is greater than estimated, this will be used either for reducing the annual fee to practice a profession, or for the further increase of the minimum guaranteed income, or for another cut to the corporate tax down payment.
As most reports published in recent years show, Greek enterprises face one of the heaviest taxation burdens in Europe and among the member-states of the Organization for Economic Cooperation and Development (OECD).
Market insiders say it doesn’t make financial sense to invest in Greece given the current tax rates, as investors will find that more than 55 percent of their profits go to the state.
The changes that are on the way and the positive sentiment created will likely bolster investments considerably, while part of the benefits the enterprises will have from the tax cuts are expected to be reinvested.
Most companies today are unable to register profits: According to data compiled by the Independent Authority for Public Revenue, fewer than 36 percent of all enterprises posted a profit last year, as out of the 255,018 corporations just 91,745 were profit-making.
Another 100,018 companies recorded losses, while 62,255 had neither profits nor losses.
The analysis of the figures declared to the tax authorities showed that the gross revenues of enterprises in Greece added up to 254.5 billion euros last year.