Corporate capital flight grows in last two months
The phenomenon of the flight of corporate capital abroad in both legal and illegal ways has grown considerably in the last two months.
The main reasons for this are that companies are trying to save on taxes and to protect their funds from a possible Greek exit from the eurozone. Consequently, the practice has resulted in a loss of funds for the Greek economy, not to mention the loss of tax revenues.
Inspections of intra-group transactions, which the state has begun after overcoming a number of obstacles, could bring significant revenues into the public coffers. The United Kingdom, for instance, enjoys annual tax revenues of 2 billion euros from monitoring such transactions.
Greek government sources say there are three main ways in which local and foreign-owned companies take their money out of the country. One of the common practices followed in the last two to three years by major business groups is the return of share capital to shareholders. Instead of paying them a dividend, which is taxed, they return capital to shareholders that usually ends up outside Greece.
Recently the Coca-Cola Hellenic Bottling Company (CCHBC) attributed this practice to the fact that the Finance Ministry had not issued the necessary circulars clarifying the new way of taxing dividends. Other large business groups that have already gone ahead with capital return or have decided to do so include toy retailer Jumbo, Motor Oil, S