Gov?t fudge over VAT on catering

Confusion reigns concerning the imposition of the high value-added tax rate of 23 percent on food catering services from September 1 and on the use of objective criteria for taxation following a press conference by Finance Minister Evangelos Venizelos on Monday.

With the tourism sector putting pressure on the government not to increase the VAT rate on catering from 13 to 23 percent, Venizelos announced two ?beneficial? measures that create a fudge in the market, less than 10 days before the rate is due to be increased.

Venizelos announced that the VAT hike in the sector will not affect the all-inclusive package holidays booked abroad, or the half-board holiday deals in hotels obtained from outside Greece, while those booking the same services from within Greece will have to pay the full 23 percent VAT rate as of September.

This effectively creates a two-tier rate that does little to boost domestic tourism and imposes a kind of discrimination against Greek tourists.

What?s more, the minister said there would be a revision of the 137 different categories of activities in the food catering sector to determine which will go into the 23 percent bracket for VAT and which will remain at 13 percent. The market is still awaiting the relevant circular that should make it clear to everyone.

Venizelos further suggested that there will be no objective criteria to determine taxpayers? incomes in the way they were previously, but noted that there would be certain ?combined criteria? based on an ?algorithm,? ?so as to reveal the real turnover and the actual income.? However, he refrained from offering more details about how this system will operate; it will affect about 1 million self-employed professionals.

The finance minister also confirmed that the government aims at stopping the recession, but estimated it could end the year between 4.5 percent and 5.3 percent of the gross domestic product – the first time he has cited such a high rate, although he did say that he does ?not adopt the forecasts for the 5.3 percent rate.?

Venizelos added that the loan requirements of September will be covered without problems and that the disbursement of the sixth tranche of Greece?s first bailout package is not affected by developments about the second package.