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Greece Negotiating Tax Reforms In Brussels

by Lorys Charalambous,, Cyprus

10 March 2015

All eyes were on Brussels on March 9, 2015, as Eurozone ministers met to discuss Greece's latest package of proposed reforms.

It was the first time that Greece's new Syriza Government squared off on tax policy with the troika of international lenders – the International Monetary Fund, the European Commission, and the European Central Bank.

The reforms put forward by Greece, in the hopes of securing concessionary financial assistance terms from the troika, were disclosed in a letter from Greece's Finance Minister, Yanis Varoufakis, to the President of the European Commission, Jeroen Dijsselbloem, on March 5, 2015.

Salient tax measures include:

  • The employment of "casual onlookers" to assist in combatting VAT fraud, who would pose as customers on behalf of the tax authorities. It is proposed that these could include students, housekeepers, and tourists; and
  • Improvements to existing legislation regarding uncollected tax arrears. It is proposed that those who pay their principal debt "upfront" by the end of May 2015 (as opposed to paying in installments) may have all or part of their surcharges waived.

The letter confirms that those Greek taxpayers who wish to pay their back taxes in installments would be required to submit an application by May 26, 2015, and that repayment could be made in as many as 100 installments.

Speaking at a press conference after the meeting, Dijsselbloem indicated that further reforms are needed and made clear that there is "no further time to lose." Technical discussions on reforms will begin on March 11, 2015, he said.

Earlier, Greece's new Government proposed a tax on the wealthy to fund tax cuts for lower income earners and voiced support for lowering the headline value-added tax rate to as low as 15 percent from 23 percent, although it was acknowledged that such a drastic reform would not be possible in the short term. The troika has previously voiced support for substantial reform of Greece's VAT regime to broaden the tax base and remove the numerous reduced rates and exemptions.

TAGS: tax | European Commission | value added tax (VAT) | legislation | Greece | tax reform | individual income tax | Europe

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