Back to drawing board after creditors reject Greek VAT proposals

ANA-MPA — The government is rethinking its proposals for revising Greece’s VAT charges to something closer to the existing system, after the idea of introducing a “two-speed” system, with a ‘discount rate’ for electronic rather than cash transactions, met with objections from the institutions representing Greece’s creditors.

The talks are focused on moving some products and services to the higher VAT rate while preserving a substantially lower rate for basic household goods.

Under the current system, there is a low rate of 13 pct and and high rate of 23 pct VAT, as well as a ‘super-low’ 6.5 pct rate. The government’s aim is to preserve the super-low rate and transfer certain basic goods to this category, along with books, pharmaceuticals and selected other products.

The talks will then focus on which products and services will remain at the 13 pct VAT rate, with the government’s proposals calling for retaining this category for food stuffs, restaurant and catering services and other basic categories of services to consumers. The Greek government’s aim is to include as many products and services as possible in the regular VAT rate and avoid their transfer to the high 23 pct VAT rate that is expected to remain unchanged.

The government has not ruled out the possibility of a change in the 13 pct rate, however.

Still on the table is the discussion on abolishing the lower VAT rate for the Aegean islands and other the tax exemptions. To offset this, the two sides are discussing various possible methods for tax rebates to businesses on the islands, based on the number of receipts issued. This is expected to encourage greater compliance with tax laws, among others.