BUSINESS

Greek taxation still not competitive

PROKOPIS HATZINIKOLAOU

TAGS: Taxation

Greece remains a laggard in tax competitiveness, which is considered crucial for attracting investments and boosting consumption and growth. This country ranks 29th out of 36 countries in the chart of the Organization for Economic Cooperation and Development (OECD), maintaining the same position it held last year.

The OECD assessed the taxation of corporations and individuals, consumption taxes, property levies and the tax on earnings abroad to compile its list.

Greece lags most of its OECD peers in all categories except one: The taxing of individual taxpayers, where Greece stands eighth among 36 countries. This performance may come as something of a surprise given that the top tax rate comes to 45%, there is a solidarity levy imposed and social security contributions are punishing. However, the eighth spot does not only reflect taxes and contributions, but also the complexity of taxes on individuals and the level of taxation on corporate earnings and dividends, where Greece is doing very well.

According to the OECD’s International Tax Competitiveness Index, presented on Wednesday in Greece by the Center for Liberal Studies - Markos Dragoumis (KEFiM), the strong points of the local tax system are the 5% rate on dividends, which is far below the member states’ average of 23.8%, and the fact that the complexity of labor taxation is also below par, taking Greece up to sixth place.

Nevertheless, the Greeks are clearly overtaxed, enduring one of the highest tax and social security rates; in this category Greece ranks 31st among 36 countries. In corporate tax terms Greece ranks 22nd, thanks to the reduction of the current rate to 24%.

One of the biggest problems for the Greeks is the taxation of property. On the OECD chart for this category Greece stands 32nd among 36 countries. However, if the tax on real estate – excluding other assets owned – is isolated, Greece ranks rock bottom among OECD members. For years, since the introduction of the Extraordinary Tax on properties (EETIDE) in 2011 and its successor, the Single Property Tax (ENFIA), the state has cashed in on real estate ownership with annual takings often coming up to 3.5 billion euros. This has now been contained to €2.6 billion.

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