Three incentives for mergers
The government’s margin for providing tax breaks in 2022 is not known yet, given all the extra spending on pandemic and disaster relief, but it is preparing to soon submit two draft bills that will provide such breaks for two very different purposes: encouraging mergers and acquisitions and providing NGOs and other volunteer organizations with the ability to conduct their operations without an undue tax burden, as long as they maintain transparency.
The mergers and acquisitions bill has been making the rounds of the competent ministries for about a year, but the time for delay is shrinking fast. Voting the bill in the third quarter of the year – that is, by the end of September – is one of the prerequisites for Greece to receive the first installment of aid from the European Union’s Recovery and Resilience Fund.
What Brussels wants is a piece of legislation on providing tax and economic incentives, as well as licensing ones to encourage mergers and acquisitions. Voting this law through would allow Greece to receive the first recovery fund installment of €3.5 billion by the end of the year. The recovery fund has already made a down payment of €4 billion.
Besides the tax breaks, the three incentives for mergers and acquisitions include subsidies and loans on favorable terms. The recovery fund has set aside up to €12.7 billion for such loans.
Concerning tax breaks, the government’s draft bill is said to propose cutting the corporate tax rate by half, from 22% to 11%. Subsidies will be provided to cover the costs of the merger. Loans will be provided on the sole criterion of enlarging the size of the companies, which do not have to abide by other criteria such as green growth, digital transition export-oriented activities and research and development.
The government has entrusted accounting consultancy Grant Thornton to come up with the combination of the incentives, including the loans.
The gross domestic product figures on the second quarter of the year, to be published by independent statistical authority ELSTAT on September 7, along with the final cost of the disaster relief, will determine the kind of tax breaks that will be provided to NGOs and other volunteer organizations.
