Fast-track incentives could be illegal

The fast-track scheme for strategic investments is running the risk of turning into a fiasco as the special tax status it provides for potential investors may be considered as comprising state subsidies, which are banned under European legislation. With this in mind, the Development Ministry is examining the option of offering strategic investors only the tax exemptions that the investment incentives law provides for major investments and which comply with EU law.

According to the existing law on the fast-track procedure, special tax regulations may apply to strategic investments as incentives. These include the freezing of tax status for a specific period of time after the investment starts operating, the creation of tax-free stocks, the adjustment of the process or time of payment of any value-added tax rebates, and the reduction of or exemption from levies, special charges and third-party payments.

The government’s inability to provide a special tax status is evident from its intention to postpone the decision on this matter for a tourism investment, as it runs the risk of being taken to court for diluting competition and violating legislation on state subsidies.

Well-informed sources say that the application for entry into the fast-track process of a plan for the development of the Kilada Hills tourism resort in Argolida in the eastern Peloponnese included a request for a special tax status. The responsible ministerial committee has not yet convened and its members have avoided taking a stance on the issue. “They have neither rejected nor accepted it. A supplementary decision must be made,” a government official familiar with the matter told Kathimerini.

The solution being examined is for strategic investments to be classified as major projects, of over 50 million euros, for which the law allows for a tax exemption on the amount exceeding that threshold. Any decision made to offer tax incentives to investors will still have to clear Parliament before being implemented.

The clause for a special tax status for strategic investments had also met the resistance of the International Monetary Fund when the relevant bill was drafted.