Greece’s financial team and creditors’ representatives are reportedly discussing the possibility to extend the reduced Value Added Tax rates on the islands for one more year.
According to news website in.gr, the new round of consultations between Greece and the creditors is expected to definitively clarify whether the special reduced VAT scheme will be abolished for more than 30 islands where it still applies or whether its application will be extended for at least one further year.
In order to persuade the creditors to not proceed with the VAT increases on the islands, the economic staff of the government will focus on the problems faced by the islands due to the refugees but also to the extremely limited fiscal performance of the measure.
It is recalled that one of the measures adopted in 2015 and expected to be implemented as of 2018, is scrapping the reduced V.A.T. scheme. The Value Added Tax is reduced by 30% on 32 islands in the North-East Aegean Sea and the Dodecanese islands group.
If the reduced VAT is scrapped, the current rates of 5%, 9% and 17% will increase to 6%, 13% and 24%.