Tax report due this week

The committee in charge of the dialogue on tax reforms is scheduled to present its report to the government this week, while Economy and Finance Minister Nikos Christodoulakis is expected to announce the new tax institutional framework by the end of the month. The most important changes to the tax system will be an increase in the tax-free threshold and a reduction in the corporate tax bracket. While considered imperative by both businesses and other bodies, the value-added tax relating to construction will only come into effect in 2004 together with higher objective values. On the adoption of a single real estate tax and the termination of the tax on large properties, the committee is expected to suggest applying the changes to urban areas in the first stage. This, however, could pose problems as the Finance Ministry has not updated its files since 1997. The authorities are due to ask property owners to fill out a special form stating the property they own and changes made after 1997 to enable the real estate tax to be put into effect in 2004. The committee has suggested that taxpayers submit their tax returns for both checking and administrative purposes in order to facilitate the introduction of the single tax. This will allow the authorities to have access to information regarding the taxpayer’s income and real estate assets as well. Presently a million taxpayers are subjected to the tax on large property but do not declare this to the authorities, a member of the committee claimed. Forthcoming changes to the property tax system next year concern real estate inheritances, endowments and parental gifts. According to Christodoulakis, the 62,000 euro tax-free ceiling on purchases of first homes for single taxpayers will also apply to inherited property and parental gifts in a move designed to do away with the current hassle. However, under the current tax system, the tax-free ceiling for first-time home purchases by single taxpayers is the same as that for first-time property inheritances, which means the proposed tax change brings no benefits to taxpayers. Families with two children will only see a small benefit of 700 euros from the proposed tax changes, while the gain to families with three children is only 1,050 euros and those with four children 1,450 euros. A family with one child and inheriting a piece of property valued at 118,000 euros will be taxed 700 euros for the inheritance. Under the proposed tax change, this will become a gain.

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