ECONOMY

Corporate tax cut by €1.8 bln

corporate-tax-cut-by-e1-8-bln

Greek companies will this year pay 56.7% less tax, or 1.8 billion euros (in main income tax for their 2019 earnings and deposit for next year), according to figures published by the Independent Authority for Public Revenue.

The data showed that the 188,651 corporations asked to pay tax on their 2019 profits will have to hand over the sum of €2.39 billion this year, compared to taxes of €4.2 billion due last year.

That reduction is mainly attributed to the government decision to offer a discount on the tax deposit ranging from 30% to 100% and depending on the extent of each company’s drop in turnover due to the coronavirus pandemic. It is also thanks to the reduction in the corporate earnings tax rate from 28% to 24%. This means that the average rate of corporate taxation (income tax and dividend tax) has come down from 35.2% to 27.8%.

Figures reveal that the total tax deposit that corporations will have to pay this year has dropped to €1.8 billion euros, after amounting to €3.34 billion euros in 2019. Consequently corporations will pay a tax deposit reduced by about €1.5 billion, while the tax rate cut will also slash their dues for their 2019 earnings. The result of that is that the average dues each company must pay to the taxman this year come to €12,680, against €22,630 in 2019.

It is highly likely, depending also on market conditions, that the reduced corporate tax deposits will apply next year too for companies that record a reduced turnover. The announcements to that effect are expected next weekend by Prime Minister Kyriakos Mitsotakis in Thessaloniki, before being presented in detail by the Finance Ministry.

However, the general uncertainty made Finance Minister Christos Staikouras admit on Friday in a radio interview on Thema FM that “the 2021 budget will be the most difficult in several decades.” He said tax cuts are planned but only on a temporary basis, so as to assist households now that Covid-19 cases are on the rise again.