ECONOMY

Better scheme ahead for venture capital

The State’s goal of fostering early stage, innovative technology projects took a step closer to reality yesterday as Economy and Finance Minister Nikos Christodoulakis announced the setting up of a favorable tax structure for venture capital mutual fund schemes. In order to mobilize private capital for the financing of innovation, the minister said that the new funds would be taxed only on the revenues earned by investors in the venture capital, in line with the existing practice in other European Union countries and in OECD member-states. There is a pool of private capital looking to participate in such schemes, he told a press conference. The same tax treatment will also apply to TANEO, the new technology fund launched by the State three months back, with the intention of investing in venture capital funds focusing on high-growth, new economy-oriented businesses. Christodoulakis said that TANEO will be restructured into a venture capital mutual fund which should help it attract more private capital and improve its function. Furthermore, he said that the State will provide incentives to investors in order to boost TANEO’s capital to 100 billion drachmas. It will offer a substantial part of the vehicle’s capital to the private sector via a private placement, while keeping a minimum stake. Christodoulakis’s announcement represented a significant retreat from his predecessor, Yiannos Papantoniou’s more ambitious plans. The former minister had said the State would confer 150 billion drachmas, with private funds expected to come up with 1.5 trillion drachmas. The State plans to take on a financial adviser for TANEO in January 2002. The bill is not just about companies, but also deals with other taxation matters. Income tax brackets for salaried employees and pensioners are reduced to four, from the current six, and to five for other taxpayers.