SEV raps State for delays in refunding VAT rebates

Greek industrialists yesterday came down on the government for delays in returning value-added tax (VAT) rebates that exceed 3,000 euros, saying the move was hurting export businesses, while underlining the State’s inability to deal with a small number of tax-evading companies. Odysseas Kiriakopoulos, head of the Federation of Greek Industries (SEV), said the government’s decision to review VAT rebates of more than 3,000 euros, leading to lengthy delays in payment, has «created turmoil among export companies and affected investment programs.» The Finance Ministry adopted the controversial measure in August after uncovering a scam involving more than 50 export companies in northern Greece. Colluding with tax and customs offices, the firms had defrauded the State of 45 million euros by presenting fake export receipts for which they subsequently received VAT rebates. Deputy Finance Minister Apostolos Fotiadis said on Tuesday that the investigation has since extended to more than 100 companies with the amount of illegal rebates refunded rising close to 600 million euros over a two-year period. Kiriakopoulos said industrialists support the State’s fight against tax evasion but that the issue should not be confused with VAT returns. «The impression created is that the government has a cashflow problem,» he said. He said an estimated 25,000 companies have been affected by the VAT ruling. On average, rebates are believed to amount to about 1 million euros for each company. Indicating the size of the problem; 17 members of the federation said they are still owed 55 million euros in VAT rebates. On the 2003 draft budget unveiled early this month, Kiriakopoulos said fiscal targets should have been more ambitious, which could help to offset the impact of global uncertainties. Setting higher goals would also help to counterbalance greater-than-projected expenditures this year. «The 2002 budget sets out a 6.1 percent increase in primary spending, whereas the 2003 draft budget projects a 5.3 percent rise. This shows a slight cutback. It’s not enough,» Kiriakopoulos said. He said fiscal loosening was already evident in this year’s expenditure overruns, with primary spending up by 8.4 percent in the year to date against an original target of 6.1 percent. SEV also reiterated its concerns over the problems faced by independent power producers in getting their electricity generation plants off the ground, with vague legislative framework discouraging investments. Even imported electricity from the Balkans and Italy and the launch of three natural gas-powered stations in Greece are not expected to cover the energy shortage, estimated at 1,200 MW from 2005 onward. Regulatory watchdog RAE on Tuesday suggested that the State subsidize up to 70 percent of the capital costs of projects.