No tax for 80% of companies
Deposit cut by up to 100% means most firms will not face any dues to the taxman in 2020
Almost four in five companies will be relieved of corporate tax payments this year, either because they reported losses in 2019, or because they will show a zero net result in this year’s tax declaration. A third reason is that they will receive no demand for payment after the government’s decision to slash by about 60% its expectations from this year’s tax deposit.
The reduction of the tax deposit rate by between 30% and 100% – only companies that closed the first half of the year with losses up to just 5% or a hike in profits will not enjoy a deposit cut – amounts to a cash injection of 1.5 billion euros for the country’s businesses, which instead of prepaying taxes of €2.4 billion euros for 2021 will pay less than €1 billion. This is money companies would have received next year through tax rebates anyway, so the government chose to pass the fiscal cost to this year’s budget instead.
The new tax deposit rates will be incorporated in legislation in the next few weeks. After end-July companies with profits last year (those without profits are exempted from the tax deposit anyway) will need to make an online declaration of their revenues for the January-June 2020 period. The Independent Authority for Public Revenue will then reprocess the income tax declarations of those companies, offset any discounts and form a new eight-tranche plan per corporation.
The number of enterprises in Greece comes to around 255,000, and about a third, or 85,000, are profitable and are due to pay a tax deposit. Besides the reduction of the corporate tax thanks to the tax rate dropping to 24%, most companies will pay between 30% and 100% less than they had planned for.
A further cash injection to companies will come from the third phase of the Deposit To Be Returned, which will distribute loans of €1 billion and bring the sum of the program to about €2.6 billion. In total, some 300,000 professionals are projected to make use of this form of state credit, which comes with particularly favorable terms.