Study: Greece Could Do Better to Make Taxation Competitive
Greece still has a long way to go in terms of tax competitiveness, ranking 29th among 36 countries, according to the Organization for Economic Cooperation and Development (OECD).
The annual OECD International Tax Competitiveness index evaluates its 36 member countries based on taxation of corporations and individuals, consumption taxes, property levies and tax on earnings abroad.
Far behind the majority of OECD members, Greece holds the same position as last year in the index hampering investment activity and consumption and growth. It has however improved its performance by 2.5 points.
Meanwhile, presenting the OECD findings this week, Athens-based independent think-tank, the Center for Liberal Studies – Markos Dragoumis (KEFiM), said Greece’s tax system was improving its performance.
Overall, Greece is ranked eighth – its highest standing – among 36 countries in terms of individual taxes despite the current 45 percent rate, as well as solidarity tax and social security contributions on top of that.
The country’s performance is lagging in terms of consumption tax, ranking 31st; property tax – 32nd; corporate tax – 22nd; and 24th in terms of international tax rules.
Commenting on the ranking, KEFiM President Alexandros Skouras said Greece’s position “underlines the huge gap our country must cover in order to become attractive for growth investments and new jobs, but also to ensure a substantially higher real income for Greek women and men”.
Taking into consideration the fact that Greece has never moved above the 27th spot since 2014, when the index was first presented, the findings reflect the need to examine taxation.
According to the Tax Foundation, Greece is performing well in terms of complexity of the labor tax, which is lower than the OECD average; regulations concerning audited foreign companies in Greece, which are moderate and apply only to passive income; and the 5 percent net tax rate of natural persons on dividends, below the OECD average (23.9 percent).
Weaknesses, meanwhile, include a high corporate tax rate of 24 percent, way above the OECD average (23.3 percent); companies face severe restrictions on offsetting net operating losses with future profits and cannot use losses to reduce previous taxable income; and lastly, Greece has one of the highest VAT rates in the OECD (24 percent) with one of the most limited tax bases.