ECONOMY

Cut in corporate tax next year

The need to boost investment will lead the new government to cut corporate taxes earlier than it had anticipated. The corporate tax on non-distributed profits will be cut to 25 percent from 35 percent on income earned in 2004. For certain small companies, as well as for legal firms, the tax will be reduced to 20 percent. This will necessitate a revision of the law on investment incentives, approved two months ago by the previous government, and which provided for a reduced 25 percent corporate tax over a 10-year period for companies investing more than 30 million euros in a project. The new law will provide incentives in line with the new corporate taxes but also in line with EU regulations. The European Commission had said the distinction between small and large investors discriminated against small and medium-sized firms. A further reform of the tax code will be undertaken. A commission will be set up and a law will be submitted to Parliament by September, continuing the tradition of revising the tax code almost every year. The current government insists its tax reform will be long-lasting and will better reflect the needs of the market. The new government also plans to abolish the financial crimes squad (SDOE), despite its record of policing companies and going after tax evaders. While in opposition, conservative MPs had claimed that SDOE was full of Socialist appointees of dubious ethics determined to harass businesses. Deputy Economy Minister Adam Regouzas yesterday intervened to stop all auditing procedures done by SDOE and said that, from now on, until its final abolition, its role will be limited to monitoring the flow of goods for any illegal trade.