Cross-party consensus secured, in principle, the draft law of the Ministry of Finance “Incorporation of Council Directive (EU) 2022/2523, of December 15, 2022, regarding ensuring a global minimum level of taxation of multinational enterprise groups and large-scale domestic groups in the European Union (Pillar II) and other customs and tax provisions». In the Economic Affairs Committee of the Parliament, ND, SYRIZA, PASOK and the New Left declared in favor of the principle of the bill. Greek Solution, “Victory”, “Spartiates” and Freedom Sailing declared reservation for their final position in the plenary session. He voted against the KKE.

The bill provides establishing a minimum tax rate for multinational enterprises and large-scale national groups, which can lead to additional tax up to 15%. The bill also includes provisions that enable the Minister of National Economy and Finance to suspend for up to 12 months the collection of overdue debts to the State, citizens affected by natural disasters, as well as provisions for tax and customs issues and for the operating status of the State Real Estate Company.

By incorporating the Directive, which must be applied from 1/1/2024 by the member states, Greece harmonizes with the rest of the EU countries and the relevant OECD initiative that has been adopted by many countries. The finance ministry has described the bill as an important step in tackling tax evasion and “competition to the bottom”, that is, the exploitation, especially by multinational groups, of different taxation from state to state in order to pay less tax.

The new system applies a global minimum level of taxation with an effective tax rate of 15% for multinational business groups and large-scale domestic groups with an annual turnover of more than 750 million euros for at least 2 of the last 4 years, before 2024. This system can lead to an additional additional tax of up to 15% on profits, if these companies paid less than this in taxes.

With data from 2022, in Greece there are 19 Greek business groups and 900-950 subsidiaries of foreign groups that belong to the above categories. It is estimated that the additional tax revenues that will be collected will amount to up to 80 million euros.

During the hearing of stakeholders, Michalis Mitsopoulos, on behalf of the Association of Businesses and Industries, said that it is important to quickly issue the ministerial decision implementing the new institutional framework, given that several local groups are required to make the necessary disclosures in their interim financial statements .

Konstantinos Kollias, on behalf of the Economic Chamber of Greece, said that this Directive is part of a multi-year effort to ensure that there are no differentiated taxation in the EU countries, with the aim of smoothing the unfair competition between partner states and establishing a minimum tax rate of 15%. “The objective of the European Directive and therefore of the bill under discussion is, on the one hand, to reduce the incentives of companies to use tax havens, through the transfer of profits to countries with lower tax rates, and on the other hand, to reduce the opportunities for some countries to operate as tax heavens”.

Giorgos Fakos, on behalf of AADE, said it essentially introduces an “anti-abusive rule” to the practice of shifting profits of multinational groups to zero- or very low-tax jurisdictions. Within the framework of the provisions, said Mr. Fakos, fall the parent or constituent entities established in Greece that are members of a multinational group or a large-scale domestic group, which are included in the consolidated financial statements of the final parent entity with an annual revenue of at least 750 million euros .

Vassilis Kampanis, on behalf of GSEVEE, said that the relevant regulations are moving in the right direction, in order to create the conditions for taxation of large multinational companies that systematically and with legitimate practices avoid taxation by paying minimal amounts. “I believe that this is a first positive step which, among other things, will contribute to the better functioning of the market and competition, to the increase of public revenues and to the feeling of justice,” said the representative of GSEVEE.

Antonis Megoulis, on behalf of ESEE, stated that no one could object to the incorporation of the Directive, but the question is the effectiveness of the legislation and the status of the phenomenon under control. “Until now, both the law 4972/22 and the law 4174/13 tried to control the intra-group triangular transactions, but until now the taxation of the income that is actually produced has not been possible. Triangular transactions for us are the most important weapon in the hands of multinational groups to reduce the taxation of their profits and it is harmful,” said Mr. Megoulis.

“The customs branch with honor, solidarity and cohesion with a very high level of training and with the minimum staffing it has, achieves the best in the context of the prosecution of smuggling and tax evasion. However, solving the serious issues it faces will contribute substantially to both public revenues and better working conditions in the customs sector,” said Sofia Katsika, president of the Customs Officials Federation.

The Deputy Minister of National Economy and Finance Haris Theocharis, pointed out that the new framework removes incentives to shift profits to another country. “From where they left with 22% of us to go to 5%, now they can’t go below 15% anymore. So, the incentive to shift the profits to be taxed very little is reduced and in this way the incentive for triangular transactions is removed,” said the Deputy Minister of Finance.