Greek explores 18% VAT with credit card discounts
- 16 May 2015 | Richard Asquith
The Greek Ministry of Finance is continuing to review a potential new VAT rate regime as it seeks a settlement with its debt creditors.
Greece had proposed an 18% flat rate VAT scheme earlier.
The latest incarnation is based around an 18% rate, but with a 15% rate for non-cash purchases (credit or debit cards and bank transfers). This is aimed at incentivizing VAT-declared transactions. This incentive is used extensively in South American countries which have a similar ‘black market’ problem.
The new proposal under discussion also includes an 8% reduced rate for foodstuffs and medicines.
Greek creditors want 20% standard rate
The discussions with the debt Troika (European Central Bank; International Monetary Fund; and European Commission) are progressing slowly. It is understood that these groups want a 20% standard Greek VAT rate with a 7% lower rate for essentials.