EU Australia Online - News & information from the capital of Europe direct to Australian businesses

Taxation In Unfamiliar Territory

  • July 7th, 2012
  • Posted by EUEditor

eu-money-symbol-coins.jpgTax evasion has historically been a problem in Greece.

Jessica Sier

Terms such as a “grey economy” have been coined to describe great bundles of cash changing hands throughout the debt-ridden country.

Eyebrows raise at a journalist’s recording equipment when the topic is broached, but when the recorders are turned off, Greeks are relatively open about how undeclared money shifts between people and industries.

The payments have been described as ‘inbetweeners’ – money paid for services ‘above and beyond’ the described bill. An example put forward was a Doctor charging x amount, then receiving a cash envelope prompting him to deliver a wider range of service.

The Nea Demokratia party, sworn into government at the end of June, wants sweeping tax reforms, the primary proposition being its 15% flat tax rate.

It says this is designed to encourage foreign investment and allow the global community to see Greece as a stable place to invest.

The state-owned Chinese company Koskos has already shown interest in acquiring part of the port, as well as a share in the Greek railways.

“This is a very positive sign in the global economy that Greece can host foreign investment. This is why we are anxious to show to the global economy you can do business here easily and friendly”, said a spokesperson for the government party.

Going ahead with the tax plan and the chase for investment to Beijing and beyond, will depend on the agreement of a very skeptical interest group: the International Monetary Fund and the European Union, which are monitoring the country’s performance, and controlling the purse strings on special funds being used to assist it in coping with heavy public debt.

At a local level, however, there are signs of a return to confidence, with cash deposits up after a so-called ‘soft run’ on the banks – small depositors hitting the ATMs just before the June elections.

Instead of hoarding cash in homes and under mattresses, Greeks are showing faith again in banks; a small enough step but an important one, on any pathway to recovery.

Leave a Reply