Can Athens be a financial hub?

The government is planning to bolster the country’s potential of becoming an international financial center in the eastern Mediterranean, sources say. Economy Minister Giorgos Alogoskoufis is said to intend to include various provisions regarding taxation, institutional and structural issues in a new tax bill that will be submitted by the end of the year. The target is to create a favorable environment to attract companies from Southeastern European to be listed on the Athens bourse, and bolster the business of domestic investment funds and companies to prevent them from migrating to other eurozone countries with more favorable tax rates. The Economy and Finance Ministry has set up a special committee comprising representatives of the Bank of Greece, the Capital Market Commission, the Federation of Greek Industries and stockbrokers’ and investors’ organizations, with a view to recording the basic problems that need tackling to reach the goal. The proposals submitted so far include following the relevant legal frameworks of Luxembourg or Ireland, where the setting up of a mutual fund requires an initial share capital of 125,000 euros, as opposed to Greece’s 1.2 million, in addition to 9 million required of the parent company. Another proposal is to examine tax incentives offered elsewhere in the eurozone. It has also been brought to the attention of the committee that the tax rate on incomes originating abroad is zero in the UK, giving rise to monetary inflows that bolster not just the financial sector but also tourism, property and other services. Another matter of consideration is the tax on state bonds, interest income from which is subject to a 15 percent rate. When the issuer is a company, the tax burden is at least 20 percent.