The first implementation phase of the Organization for Economic Cooperation and Development (OECD) recommendations has been completed, the Ministry of Administrative Reform & Electronic Governance announced on Tuesday.
According to the announcement, the most important intervention was the decision to exclude small businesses with gross revenues less than 10,000 euros per year from paying VAT or submitting a VAT statement, which was enacted recently into law (Law No 4281/2014).
The particular intervention, one among several, is included in the OECD report drawn up in cooperation with the Administrative Reform Ministry on the assessment of administrative burden in laws and regulations in Greece in 13 selected sectors of the economy. One being the exclusion of big companies from VAT.
The Ministry, in cooperation with related Ministries, legislated measures for the implementation of report recommendations mainly in the sectors of VAT, corporate law and public contracts, while it also introduced regulations simplifying procedures in the sectors of tourism, energy, telecommunications and medicine.
However, changes in the pharmaceutical sector are just a small part of the 329 reforms the OECD recommends in order to make Greek economy more competitive. The OECD estimates the combined revenues of all these measures at around €5.2 billion or 2.5% of GDP and stresses that Greece must follow all recommendations to gain all the benefits. The authors of the OECD report note that “partial lifting of restrictions will yield only partial results.” And this last tenet is fully espoused by the Troika who are putting tremendous pressure on the government in this direction.
In a report earlier this summer, the European Commission urged Greek Ministries for speedier privatizations, more effective tax-collection and anti-corruption measures, as well as the implementation of a series of structural reforms as prescribed in the OECD toolkit which, the report said, will help boost the country’s competitiveness.
The Commission said Greece should continue to implement its convergence program in a complete and timely manner, and that full compliance with fiscal targets and structural reforms were crucial. Additionally, it sought spending cuts in the labor, social security and health sectors of the troubled economy.
The recommendations also noted that authorities and banks must find a credible solution to deal with non-performing loans in order to strengthen the banks’ balance sheets and underlined that there are upside risks in the capital needs estimates in the bank recapitalization process.