ECONOMY

Tax change eases liquidity pressure

The Economy and Finance Ministry said yesterday it will change the way value-added tax (VAT) is paid by small and medium-sized businesses in a move aimed at helping to ease liquidity problems in the market. Companies will be obliged to pay 30 percent of the tax owed at the time of the obligatory declaration and the remainder in two monthly installments, according to the ministry. Current rules demand the full payment of VAT at the time the declaration is made. «With the changes, we are enabling businesses to meet their VAT obligations at a time when the market is suffering from liquidity problems,» the ministry said in a statement. «Businesses that suffer one-off economic problems will be helped, along with those that experience unusually large sales for only one month in comparison with average monthly revenues.» Those wishing to take advantage of the alternative VAT payment system will be burdened with an additional charge but will not face any legal action from the tax office. The amendment will be submitted to Parliament, added the ministry, without providing any further details. Small and medium-sized businesses have been reporting lingering liquidity problems despite claims by banks that they have boosted lending to the sector. A recent survey by the Athens Chamber of Commerce and Industry found that some 250,000 of its members were unable or finding it difficult to meet their cash flow needs. This has resulted in a sharp increase in the use of checks to help cover the liquidity shortfall. The value of checks not being honored in Greece’s financial system hit almost 2 billion euros in the first seven months of the year, rising more than threefold over last year’s levels. The ministry added that the increased use of postdated checks means many businesses have not collected revenue by the time they are required to pay VAT tax on it.