Tax bor­ders to close for Greeks

Gov’t seeks to con­tain ex­o­dus of com­pa­nies and tax­pay­ers, fo­cus­ing mainly on bo­gus busi­ness trans­fers

Kathimerini English - - Focus - BY PROKOPIS HATZINIKOLAOU

The Fi­nance Min­istry is at­tempt­ing to make the coun­try’s tax bor­ders less por­ous for Greeks through a leg­isla­tive in­ter­ven­tion and the ex­change of in­for­ma­tion with co­op­er­at­ing states, in a bid to put an end to the phe­nom­e­non of en­ter­prises and pro­fes­sion­als es­tab­lish­ing them­selves as residents of coun­tries with lower tax rates, as well as to put pres­sure on busi­nesses that have al­ready shifted their ac­tiv­i­ties abroad.

Over­tax­a­tion and high so­cial security costs are lead­ing in­creas­ing num­bers of tax­pay­ers and en­ter­prises to coun­tries such as Cyprus and Bul­garia, where tax rates come to 10 per­cent, against 29 per­cent in Greece, to say noth­ing of the ex­ces­sive obli­ga­tions to pen­sion funds. There is a back­log of thou­sands of ap­pli­ca­tions by tax­pay­ers at the Tax Author­ity for Residents Abroad, as they seek a more fa­vor­able tax en­vi­ron­ment.

Sources say the num­ber of ap­pli­ca­tions is un­prece­dented, while there are also quite a few en­ter­prises that have opened of­fices in neigh­bor­ing coun­tries de­spite not hav­ing any ac­tiv­i­ties or em­ploy­ees there. Most are ser­vice com­pa­nies aim­ing to re­duce their tax bill.

Fi­nance Min­is­ter Eu­clid Tsakalo­tos stated this week that in cases where a com­pany’s busi­ness ac­tiv­ity re­mains in Greece and there are no changes in its own­er­ship and man­age­ment, then the cor­po­rate em­i­grants would ap­pear to be in­volved in bo­gus trans­fers. This is ob­vi­ously an il­le­gal prac­tice that abuses the lib­er­ties pro­vided by Euro­pean Union law. Mon­i­tor­ing is ex­pected to in­crease in that re­gard, while a reg­u­la­tion is cur­rently be­ing drawn up.

Min­istry of­fi­cials say that Greece will soon sign state agree­ments with 1.0665 Bul­garia and Cyprus in or­der to probe all those en­ter­prises in depth. They add that hefty fines will be im­posed on any com­pa­nies iden­ti­fied as hav­ing set up en­ti­ties in Bul­garia while their busi­ness ac­tiv­ity re­mains in Greece. Mean­while, the Greek gov­ern­ment will for­ward data to Sofia con­cern­ing all Bul­gar­ian cit­i­zens work­ing in Greece so the Bul­gar­ian author­i­ties can es­tab­lish whether any are il­le­gally re­ceiv­ing ben­e­fits in that coun­try.

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