New Development Law Receives Positive Reactions
Tourism entrepreneurs were generally positive to the government’s new investment incentives bill, which supports small and medium-sized enterprises and contains a special chapter on tourism.
The novel features introduced by the bill are a broadening of the type of tourism enterprises that can benefit from the provisions of the bill and increases in the investment subsidies granted to certain categories of such enterprises.
The incentives concern: Construction or extension of hotels in the three-star category and above; Modernization of two-star hotels and better, including those that have been shut for a maximum of five years;
Modernization of hotels of lower categories housed in buildings listed for preservation, if the modernization brings them up to two-star level, including those that have been shut for a maximum of five years;
Construction of additional facilities, such as pools and sports installations, in at least two-star hotels; Conversion of buildings listed for preservation into hotels; Modernization of campsites of at least C category;
And construction, extension and modernization of conference centers, ski centers, spas, marinas, golf courses, thalassotherapy centers, health spas, sports tourism and training centers, theme parks that offer comprehensive tourism services, and auto race tracks.
Meanwhile, government hopes the new legislative proposal on investment incentives will succeed where most of its predecessors failed, that is, in boosting private-sector investment and encouraging direct foreign investment, an area where Greece is lagging way behind its EU partners.
The previous development law, submitted by the previous government in late 2003, fell afoul of the European Commission.
Its central provision, that businesses investing in projects worth over 30 million euros would enjoy a lower corporate tax rate – 25 instead of 35 percent – over 10 years, was rejected by the commission as discriminating against small and medium-sized enterprises.
The new law conforms to the commission’s wishes by providing extra incentives for small and medium-sized enterprises and spreading incentives more widely.
The law sets a floor of 100,000 to 500,000 euros, depending on the size of the enterprise, for subsidizing investment efforts.
And, like the previous law, it no longer insists on the creation of a certain number of jobs as a condition for subsidizing a project, but on the contrary, it subsidizes part of a company’s extra payroll expenses.
Furthermore, implementing the government’s promises that it would focus on Greece’s particular strengths, the bill offers extra incentives for tourism-related and transport projects.
As well, companies are no longer required to submit their investment projects for consideration by September 15 each year in order to be considered for state aid, but can do so year-round. The draft law also shortens the span for assessing the investment projects and reporting on their eligibility for aid from three to two months.
Another provision reduces an investor’s minimum required participation in a project to 25 percent, from 40 percent previously.
Separately, Tourism Development Minister Dimitris Avramopoulos announced that another 15 million euros (to regional authorities) would be added to the country’s tourism advertising and promotion program of 31 million euros, which got underway last month.
The minister announced the increase during a meeting with all the secretary generals of the country’s prefectures that was held at a central Athens hotel.