Extra levy for big enterprises
Thousands of Greek enterprises will be forced to pay more taxes to cover the budget shortfalls of this year and next, according to the proposal Athens has submitted to its creditors. The SYRIZA-led government is understood to have proposed a hike in the corporate tax rate from 26 to 29 percent for the 2015 financial year and a one-off levy amounting to 12 percent on the 2014 profits of companies with net earnings of more than 1 million euros.
Both the extraordinary levy, which will affect about 1,400 enterprises, and the corporate tax rate hike are expected to generate unrest in the business world, coming at a point when enterprises have already completed their financial planning for this year. All this will come on top of the new value-added tax rates, with many services and foods set for a VAT increase which will likely lead to a decline in consumption.
The extraordinary levy on 2014 profits will mean that enterprises which earned at least 1 million euros last year will have to pay tax at a rate of 35 percent: That is 26 percent for pretax profits and 12 percent for after-tax earnings. The calculations made by the Greek negotiating team showed that the extraordinary levy on companies, to be paid in two installments, will bring 1.2 billion euros into state coffers. The first tranche will be payable this year and the second in 2016.
The corporate tax hike will, as of this financial year, concern some 14,930 companies expected to have pretax earnings of at least 100,000 euros. The tax will concern this year’s earnings and will be payable next year. The government expects to collect some 410 million euros more from this measure.
The Greek text that the negotiators have forwarded to creditors saw enterprises earning no more than 100,000 euros per year continuing to pay a 26 percent corporate tax on their earnings. The proposal by the head of the European Commission, Jean-Claude Juncker, provided for an increase in the corporate tax rate and foresaw all companies paying 100 percent of their taxes in advance.
