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Skai TV: Greek State Biggest Obstacle to Business Development

In times of  blur economic future and desperate search for income, many Greeks try to set up their own business. However the biggest problem for the way to professional independence is the state! Not that we didn’t know that but to hear such a statement on Greek television it sure makes impression. I was watching this morning private Skai TV and the news magazine “Skai Now” where Yiorgos Kavvathas, General Secretary of the Panhellenic Federation of Restaurants & Related Trades was speaking. Kavvathas hit the head of the nail articulating very precisely the main problems of those willing to make an investment even on a small scale.

“The tax environment is not helpful to business development, it must be stable for at least five years” Kavvathas said, referring primarily to the confussion about the Value Added Tax to several sections of the Food and catering sector. 

“While the government realizes that the increased VAT is wrong, it maintains the mistake, it even makes it anew, it separates the catering categories and creates unfair competition”.

Kavvathas summarized the two main obstacles in the business development. “The biggest problem is the state. The bureaucracy and the tax system that changes every once in a while”. And added that only 4.5% of entrepreneurs want to make investment and that there can be no development with such low rates.

Agricultural production, the processing of agricultural products and tourism and thus through business clusters are the best options nowadays in setting up an own business in Greece.

Of course, there is a problem if you have no idea about agriculture and have no huge funds for tourism facilities. Then you will hardly find a bank to give you a loan…   

I personally know quite some cases of aspiring entrepreneurs who are scared to death by the high social insurance contributions – some 500 euro per month – independently from the revenues and income. With every passing month they get more and more confused about the tax system and how their business will be taxed. They hear the government announcements on fast track development  but see no financial start-up aid. They see the window of one-stop-shop and yet they need to cross every corridor of the bureaucratic labyrinth to get XX papers in order to set up a business.  They claim, they find no adequate information in state organisations.

And while they’re hiding in a depressive cocoon, they meet their daily obligations and survive their  extra tax constributions by spending their savings i.e. part of the capital they are/were supposed to invest…

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2 comments

  1. I know them too, who dare not start a business because of “the high social insurance contributions – some 500 euro per month – independently from the revenues and income.” To my mind this is the single most important obstacle the state throws in our way to become independent entrepeneurs. My wife and me are co-owners of our business. The first 2 year we have been paying around 500 euro per person every 2 months in TEBE. And in the next years that will rise to about 800 euros per person every 2 months. And, indeed, INDEPENDENTLY FROM THE REVENUES AND INCOME.
    That is a total killer for people we know at the moment. They started a few years ago and the State says that they are now rich fat cats and have to pay full TEBE. But hey guys! We’re in the deepest crisis in living memory here now. Most of us are hanging by our fingernails and using every cent we had just to eat, drink and pay the bills. Oh yes, a LOT of ‘one-off’ taxes to feed the State.
    Others who have great ideas and even are already producing stuff do not dare legalize it. NOT because they want to cheat the tax-man, but for the huge TEBE-bills around the corner.
    So, business that were running are folding and new investment is not done. It is a total dead-end where no business will survive. And who will pay the State then? I bet they hope it will be Brussels…

    • keeptalkinggreece

      exactly! TEBE contributions – and so little services in return – kill small businesses.