TAXATION

Corporate tax slashed to 22%

Gov’t announces new set of taxation and social security breaks to help the economy recover

corporate-tax-slashed-to-22

The government announced fresh tax breaks on Thursday in a bid to bring fresh momentum to the economy as it prepares to emerge from lockdown. The cost of the measures Prime Minister Kyriakos Mitsotakis and Finance Minister Christos Staikouras announced is expected to be offset by their growth multiplier.

Corporate tax is to be slashed from 24% to 22% for this year’s incomes, which will be payable next year. The measure is permanent, applying also to the following years’ incomes.

As of this year and on a permanent basis, all self-employed professionals will have their income tax deposit reduced from 100% to 55%, while corporations will this year have their income tax advance reduced to 70% for this year and 80% (from the original 100%) as of 2022.

Two measures that came into force this year for the private sector will be extended into 2022, Mitsotakis announced, these being the suspension of the solidarity levy and the reduction of social security contributions by three percentage points.

Staikouras said that “the fiscal cost of the three first measures, which have been agreed with the [eurozone] institutions, totals around 900 million euros for 2021 and around €200 million annually for the following years, a sum which is expected to be offset by improving economic recovery prospects. The fiscal cost of the last two measures will be around €1.6 billion in 2022.”

The finance minister noted that the government has made one of its priorities concerning the economy cutting taxes and social insurance contributions for individuals and companies. He said that these reductions will help to boost productivity and the competitiveness of the Greek economy, raising available income for households and enterprises and strengthening social cohesion – a key factor in achieving high and sustainable economic growth rates, without exclusions.

He stressed that these five measures were a bridge to the post-pandemic era aimed at helping households and enterprises to regroup after the ordeal of the coronavirus pandemic and boost their liquidity, he said.