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Tax Reform Bill Tabled In Greece

by Lorys Charalambous,, Cyprus

17 December 2012

A new tax bill has been submitted to Greece's Parliament, outlining a range of adjustments that will affect companies, employees and self-employed professionals.

The bill raises corporation tax by 6% to 26%, although the tax paid by companies on distributed dividends will be reduced from 25% to 10%. Capital gains from sales on the Athens stock exchange will be taxed at 20%. Other measures include a tax on rental income of 10% up to EUR12,000 and 33% above this figure. Tax breaks for farmers will be discontinued.

Meanwhile, income tax has been simplified into three brackets: those earning up to EUR25,000 will be taxed at 22%, those earning above this figure up to EUR42,000 will pay 32%, while those earning more than EUR42,000 will pay 42%. This means that there will be rises for those earning up to EUR16,000, between EUR25,001 and EUR26,000, or between EUR42,000 to EUR100,000, and reductions for those earning between EUR16,001 and EUR25,000, between EUR32,001 and EUR42,000, and above EUR100,001. The rate will remain the same for those earning between EUR26,001 and EUR32,000. However, lower earners will be eligible for tax credits, and current tax-free thresholds for families with children will be replaced by benefits.

Greece passed its 2013 budget in November, as part of a EUR13.5bn two-year austerity and reform package. The budget seeks to reduce the deficit from 6.6% of gross domestic product (GDP) this year to 4.2% of GDP in 2013, and contains plans to cut public sector wages, pensions, welfare benefits, and spending on defence, the health sector, education.

Earlier this month, Prime Minister Antonis Samaras spoke out to quash media rumours of a planned 45% income tax rate for middle-earners in a speech to the Hellenic-American Chamber of Commerce. He also promised technological innovations such as a real-time electronic VAT payment system, and severe punishment for non-compliance.

TAGS: capital gains tax (CGT) | tax | investment | real-estate investment | fiscal policy | real-estate | corporation tax | tax credits | legislation | tax rates | Greece | tax reform | individual income tax

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