Greek Government Sheds Light On Proposed Business Tax Incentives

by Lorys Charalambous, Tax-News.com, Cyprus

29 August 2001

According to the Daily Kathimerini, the Greek Prime Minister, Costas Simitis, will be announcing a significant parcel of business tax incentives at his keynote economic speech next month, including a reduction of corporate tax rates for merging companies, and capital gains tax reforms.

Although the government did announce that incentives were in the pipeline earlier this month, no detail was given as to the content of the proposals. Last week, the Daily Kathimerini quoted senior officials at the National Economy Ministry as saying that the unveiling of the 2002 budget would be accompanied by a 'mini' taxation bill, lowering company tax rates from 35% to 25% for merging enterprises over a three year period. This measure will reportedly apply to all Greek enterprises undergoing this process, regardless of whether or not they are listed on the bourse.

According to the government sources, the plan is also said to include the possibility of accounting the capital gains arising from mergers in special tax free reserves, with the gains to remain tax free even if the new company decides to distribute or capitalize the reserves.

The measures are intended to promote mergers and foreign investment in order to foster the creation of larger, more internationally competitive Greek enterprises, and will be welcomed by companies listed on the Athens bourse, who have long been pushing for strong incentives.

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