Economy and Finance Minister Giorgos Alogoskoufis yesterday announced the setting up of two committees that will prepare draft legislation, reforming the country’s taxation system and investment incentives, respectively. Tax reform will aim at simplification, long-term stability of regulations, transparency in inspections, reduced rates for companies, incentives for businesses and a progressive scale, said a statement. Experts say that the previous government’s point system for tax inspections, which was supposed to come into effect this year, had to be scrapped as it discriminated between large and small firms and was contrary to EU legislation. The investment incentives bill, overhauling existing framework Law 2601 of 1998, will have to take into account EU directives on state subsidies, the need for full complementarity of incentives with EU investment subsidies, the effectiveness of previous incentives laws and the peculiarities of the Greek economy. Basic aims will be simplification, an improvement in the investment climate, attracting foreign investment, boosting competitiveness and the modernization of small and mid-sized firms through the introduction of tax-free reserves. According to sources, the ministry wants to abolish a provision introduced last year which envisaged a stable 25 percent tax rate for at least 10 years on the profits of large foreign firms setting up shop in Greece and no inspections of their books. Deputy Economy and Finance Minister Christos Folias said recently such provisions were contrary to EU directives and regulations regarding competition and have effectively frozen Law 2601. «Everything is at a standstill and we cannot accept any more investment applications. So we intend to annul the provisions introduced last year in order to unblock 2601 and use it as a vehicle for investment until October, when the new incentives law is expected to be ready,» he said.