Greece VAT

Posted on: 10/07/2015

On 9 July, the Greek government offered new, austerity VAT rate increases to its creditors in an attempt to win new, third bailout, and potentially a small debt write off. The VAT rises are accompanied with corporate tax increases - from 26% to 28% in 2016 - and the whole package is worth €12 billion compared to the last packaged offered by the Greeks of €8 billion.

The new rates will be retroactively introduced from 1 July 2015.  They will be reviewed at the end of 2016 with a view to reversing them if other measures related to reducing tax avoidance prove more successful.  The old plans had included retaining the standard 23% VAT rate, but extending it to range of other products. A 13% rate would be levied on electricity, hotel accommodation and restaurants and related catering services. A second, reduced rate of 6% would have been levied on books and medical supplies.  This proposal for 3 rates went against the IMF's preference of two rates to help simplify the administration of the regime.

 

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