ECONOMY

Gov?t to cut corporate tax to 15 percent

The government is planning to reduce corporate tax to 15 percent while abolishing tax exemptions for corporations and aiming to simplify the tax system.

The system for taxpayers is also set for some significant changes, as the number of tax exemptions is seen shrinking as of 2012. The use of revenue and property criteria will expand to apply to all tax exemptions from the new year. The current standard corporate tax in Greece is 24 percent.

The finance minister is hoping to cut the budget?s costs resulting from tax exemptions by 50 percent – i.e. to just 4 billion euros from 8 billion today – heeding the government?s commitment in the memorandum with its international creditors.

The cost of tax exemptions at present amounts to no less than 2.9 percent of the country?s gross domestic product. Exemptions for small and medium-sized enterprises reach up to 100 million euros per year, while those for various legal entities reach 292 million euros, in addition to the 168 million for the real estate they possess.

The ministry aims to send a message to companies that might be thinking about investing in Greece and those that are already active here that the tax system will be simplified.

?The aim of the new bill is the consolidation of trust between tax authorities and enterprises, which will diminish the scope for corruption and lead to a stable tax environment, while not upending their economic planning either through the old accounting tricks or extraordinary levies,? a top Finance Ministry official told Kathimerini.

The government is also considering the reduction of value-added tax rates, as it is now realizing that recently imposed higher rates have led to a rise in tax evasion rather than the foreseen increase in public revenues.