Greece is eurozone’s VAT leader

Greece is eurozone’s VAT leader

Greece is one of the top five countries in the Organization for Economic Cooperation and Development (OECD) in value-added tax charges and the first in the eurozone, together with Finland.

Indirect tax revenues currently make up about 56.4% of takings in Greece, while direct taxes account for 35.4% (the rest comes from various other sources).

According to recent data from the Tax Foundation, an employee in Greece who is subject to a 40.1% burden on earnings – which is the 14th highest among OECD countries – the total burden, if VAT expenditure is also taken into account, rises to 44.8%, when the average among OECD countries is 40.1%.

In countries where the economy is developed, direct taxes and especially income taxes prevail, while in countries where the economy is developing, indirect taxes are prevalent, as in Greece. This happens because in developed economies incomes are high, with the consequence that the tendency of tax-paying citizens to evade taxes is lower. Therefore, income taxation is more efficient. In contrast, in developing economies the yield of income taxation is small and relies mainly on indirect taxes.

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