ECONOMY

Main Law 89 perks to wrap up soon

Law 89 of 1967 – which waived custom duties and taxes for foreign commercial, industrial and shipping enterprises setting up coordinating and administrative offices in Greece – is to be amended as its provisions are incompatible with EU legislation, Economy and Finance Minister Giorgos Alogoskoufis said yesterday. Greece had committed itself to abolishing the favorable treatment of such companies by December 31, 2005. About 230 such enterprises have registered offices in Greece under Law 89, under which they could not carry out any productive or commercial activity in the country. They are required to employ a minimum number of native-born staff and bring in a minimum amount of foreign exchange annually. Their number grew considerably after the start of the Lebanese civil war in the late 1970s. Alogoskoufis said such existing enterprises as well as new ones will continue to be able to exclusively conduct coordinating and administrative activities under the amended law after they submit an application and receive ministerial approval. «The enterprises in question will be subject to the usual income tax rates for all firms, but taxable profits will be calculated by adding a predetermined rate to administrative and depreciation expenses,» he said. Alogoskoufis said that in order to ensure the credibility of the firms setting up office under the law, they will be required to employ at least five staff and their operating expenses will have to be a minimum of $100,000 annually. «The new arrangements are part of the attractive incentives for enterprises that wish to start activities not just in Greece but also in the broader area. We cannot compete with our neighbors on labor costs but we have many other comparative advantages,» he said.