ECONOMY

Tax bill being prepared will cut rates for individuals and firms

tax-bill-being-prepared-will-cut-rates-for-individuals-and-firms

New tax legislation with provisions that will apply as of January 2020 will be among the first few bills Greece’s new government is expected to bring to Parliament. Some of the provisions, however, such as changes to the debt repayment plan in up to 120 tranches, will apply immediately and provide for a lower interest rate for debtors, as well as the inclusion of businesses in the settlement plan under more favorable terms.

The bulk of the bill, as Prime Minister-elect Kyriakos Mitsotakis has said, will concern measures to bolster the middle class and reduce tax rates for companies.

Sources say that the new finance minister, who will be announced soon, will have a series of contacts with the country’s creditors and the heads of the European institutions so as to present the new government’s program on taxation and the way it will be financed.

The new administration’s plan for individual taxpayers provides for the lowest rate to drop to 9 percent from 22 percent today and the highest to 40 percent from 45 percent today. The tax-free ceiling will remain at 8,636 euros per year.

In the next couple of years the annual fee to practice a profession will be abolished altogether, and the solidarity levy – which was supposed to be terminated from end-2014 – will also be gradually scrapped.

The plans also provide for the reduction of the Single Property Tax (ENFIA) by 30 percent for all property owners within the first couple of years, a move that will come at a cost of 850 million euros. The corporate earnings tax will drop from 28 percent today to 24 percent next year and to 20 percent in 2021. Taxes on dividends will fall from 10 percent to 5 percent next year.

The capital gains tax on properties will continue to be suspended and the value-added tax on construction activity will be suspended for three years. The general VAT rates will drop from 13 percent and 24 percent today to 11 and 22 percent, with the lowest rate of 6 percent remaining unchanged.

On the question of how the measures will be financed, New Democracy officials say the redistribution of expenditure will lead to savings of some 2 billion euros, while structural reforms lead to the expansion of the gross domestic product.