Greek Gov’t Seeking Way to Put Island VAT Hike on Hold

© Maria Theofanopoulou

Α decision to eliminate a special tax status applicable on a number of Greek islands announced in 2015 may be put on the back burner, as the Greek government is looking into ways to ease the tax load on its citizens.

The reduced Value Added Tax (VAT) rates that apply on 32 Aegean islands was introduced to offset the high cost of transporting goods and to boost tourism development. Doing away with the islands’ special tax status – reduced by 30 percent against the current rate that applies in the rest of the country – is a requirement of Greece’s bailout program. 

In its negotiations with its international lenders, the government has cited low financial gains and the added burden on islanders from the tax hike. Should the request go through, legal amendments must follow.

In the meantime, Greek parliament had approved in December last year an amendment bill to suspend a planned VAT increase on islands of the northern and eastern Aegean – most of which bore the brunt of the refugee influx – for 2017.