Incentives for larger firms
The government intends to introduce incentives for the enlargement of enterprises through mergers or in other ways, expecting some financing toward that end from the 32 billion euros that the country is slated to receive from the Next Generation EU recovery fund. The incentives will concern both taxation and credit for companies, while there will also be benefits on an institutional level.
That way the government intends to address one of the Greek economy’s structural problems, noted also by the experts committee led by Nobel Laureate Sir Christopher Pissarides: the small size of Greek enterprises.
According to the committee’s report, almost half of businesses in Greece (48.5%) employ up to nine people, while labor productivity among small enterprises in this country is the lowest in the European Union.
A government source explained to Kathimerini that the small size of Greek companies creates problems in their financing, makes it harder for them to export, and is often connected to greater tax evasion and difficulties in the enforcement of regulatory frameworks.
The government has set up a task force with the participation of the general secretaries for finance, Christos Triantopoulos, and development, Panos Stampoulidis, aimed at examining ways of encouraging the enlargement of enterprises.
One of the incentives under consideration regards improving legislation with the introduction of new forms of cooperation along the lines of cooperatives, without being binding as full mergers are. Another proposal concerns tax incentives, with lower tax rates for some time after a merger or other form of corporate enlargement. There is also the possibility of credit incentives, such as the creation of favorable loan programs to benefit only eligible companies that are merging.
The funding of those incentives should come from the Next Generation EU grants and loans, as this is clearly an economic reform that fulfills the European Commission’s criteria.
Government officials are making it clear that not all enterprises require enlargement; the incentives planned will be addressed only to those wishing to grow but which are having a hard time achieving it.