Ministry of Finance: In public consultation the bill for an additional tax of up to 15% on multinationals and large groups 2024-02-23 12:38:37

Specifically, it is the European Directive 2022/2523/EU (Pillar II), through which our country harmonizes with the rest of the EU countries. and the relevant OECD initiative. With this initiative, an additional important step is taken to tackle the problem of tax evasion. It also faces an unfair tax competition resulting from the understatement of profits of large companies operating both in our country and in the other member states.

The new system

In more detail, this new system applies a global minimum level of taxation, a minimum effective tax rate of 15% for multinational companies and large groups. The application of this rate can lead to an additional additional tax of up to 15% on profits, if these companies paid less than this in taxes. To date it has been adopted by 132 countries and has been applied compulsorily since 1/1/2024 by EU member states. Therefore, both multinational business groups and large-scale domestic groups with an annual turnover of over 750 million euros must be taxed with a minimum effective tax rate that cannot be less than 15%.

Thus, with these regulations, the so-called “competition to the bottom” is limited, i.e. the exploitation especially by multinational groups of the different tax treatment from state to state, in order to pay less taxes.

Pan-European, but also on a global level, the phenomenon of large multinational companies and their subsidiaries making use of a series of tools, such as provisions of a tax or investment nature, and in the end managing to pay less taxes, many times even below those would result if the minimum effective tax rate of 15% were applied to their earnings.

In Greece, with data from 2022, there are 19 Greek business groups and 900-950 subsidiaries of foreign groups that exceed a consolidated turnover of 750 million euros for at least 2 of the last 4 years before 2024. It is noted that, firstly, the tax rate for companies it remains 22%. It will continue to be affected by a series of other parameters (tax incentives, loss carryovers, etc.), which lead to its fluctuation. Secondly, there is no risk of business groups leaving our country, because the rest of the states have imposed or will impose additional tax where necessary. Based on the data of 2022, it is estimated that the additional tax revenues that will be collected will amount to up to 80 million euros and will come from those companies that are ultimately taxed at an effective tax rate of less than 15%, due to unfair tax competition.

Excluded from the new system are:

international organizations,

non-profit organizations,

pension funds.

Harmonization with EU legislation is an international obligation of the country. However, it is also part of the Government’s overall strategy to deal with both tax evasion and tax avoidance. It will be added to the 11 actions voted at the end of 2023 in the Parliament and to a series of other interventions, which are already implemented and generate significant additional tax revenues (such as the taxation framework of hosting platforms operating in Greece, etc. .).

The Minister of National Economy and Finance, Kostis Hatzidakis, stated: “Greece incorporates into its national law the European directive that introduces an additional tax of up to 15% on those multinational companies and large groups, which pay lower taxes for reasons of unfair tax competition. We do this not only for reasons of institutional obligation but also for reasons of tax justice as in this way unfair practices that may arise both at national and European level are dealt with to a significant extent. We have proven that attracting investment and generally supporting entrepreneurship is a stable policy of the government. And we will continue in this direction, favoring the rules of fair competition but also limiting any attempt at tax evasion”.

The Deputy Minister of National Economy and Finance, responsible for tax policy, Haris Theocharis, said: “With this bill, our country implements an international obligation by activating the minimum tax of 15% on multinational groups. Through our active participation in the OECD and the EU, our country has helped shape a framework of minimal taxation, reducing the possibilities of tax evasion that large groups may have been exploiting. With this bill, another step is taken in tax justice but also in support of society”.

Finally, the draft law includes some additional provisions for the optimization of customs and tax controls, such as the possibility of using a digitized handwritten signature during controls, the management (storage, sale, processing or disposal) of confiscated products by the customs authorities, as well and the development of interoperability for the mandatory electronic issuance and sending of AADE administrative documents.

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