Gov’t ta­bles de­ferred tax law

Amend­ment pro­vides for ex­tend­ing the de­fer­ral pe­riod from 5 to 20 years, open­ing the way for 2016 re­ports

Kathimerini English - - Focus - BY YIANNIS PAPADOYIANNIS

The gov­ern­ment yes­ter­day tabled in Par­lia­ment the ea­gerly awaited amend­ment to the law on de­ferred tax as­sets and tack­ling bank losses by writ­ing off or sell­ing non­per­form­ing loans.

The ex­ten­sion of the de­ferred tax pe­riod for losses from NPLs to 20 years is one of the ma­jor pend­ing is­sues for the sec­tor that the head of the Sin­gle Su­per­vi­sory Mech­a­nism (SSM), Daniele Nouy, also re­ferred to dur­ing her visit to Athens this week.

It was due to this out­stand­ing mat­ter that fi­nan­cial re­port au­thors re­fused to al­low the pub­li­ca­tion of banks’ re­ports for last year, and none of the lenders has an­nounced yet when it will is­sue its 2016 re­sults, with the dead­line for that be­ing the end of this month.

In the pro­posed amend­ment, the Fi­nance Min­istry ex­plains that it con­cerns the im­proved han­dling of the de­ferred tax re­quire­ment al­ready ac­knowl­edged by the banks and other in­sti­tu­tions reg­u­lated by the Bank of Greece or the SSM. It al­lows a 20-year pe­riod for the amor­ti­za­tion of losses from debt write­offs in any way they may have taken place, but also stresses that the tax de­fer­ral con­cerns only those losses.

Bank of­fi­cials note that this amend­ment does not con­sti­tute a new tax ben­e­fit, but rather only ex­tends the pre­vi­ous pe­riod of five years (in­tro­duced af­ter the PSI hair­cut in 2012) to 20. They add that the is­sue of de­ferred tax as­sets as well as that re­gard­ing the ex­tra­ju­di­cial set­tle­ment of debts are nec­es­sary in­ter­ven­tions with­out which the banks can­not act to tackle the NPL prob­lem ef­fi­ciently. Banks have pledged to re­duce their NPL stock by about 40 per- 1.0726 cent within three years, from the cur­rent level of 108 bil­lion to 65 bil­lion eu­ros.

The set­tle­ment of the de­ferred tax is­sue opens the way for the pub­li­ca­tion of the banks’ fi­nan­cial re­ports. Bank sources say this might start at the end of next week and will likely take place in the last few days of March. The 2016 re­sults will show the banks’ return to prof­its af­ter many years in the red.

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