Greek Islands To Be Stripped of Special VAT Status Beginning October 1st

greek islandsThe third Greek bailout is in effect and Greek islands are about to feel the implications.

Beginning October 1st, Greek islands will begin losing the value added tax privileges that they have enjoyed for years.

Among the bailout’s prescribed measures are the increase of VAT rates on Greek islands to the same levels as the rest of the country. The central VAT rate in Greece is 23% though certain kinds of products and services have lower VAT rates. Current VAT rates on Greek islands are 5%, 9% and 16%. These rates will soon increase to continental Greece’s 6%, 13% and 23% rates, respectively.

According to bailout’s timeline, October 1 will only include one group of Greek islands. A second group will lose their special VAT rates beginning June, 1 2016 while the spike will be implemented on the remaining islands from January 1, 2017 onwards.

The first islands that will feel these taxation spikes are the islands of Milos, Mykonos, Naxos, Paros, Syros, Tinos in the Cyclades as well as the Dodecanese island of Santorini, Greek media outlets report.

A ministerial decision that will name the islands included in the first phase is expected to be issued soon, according to Greek media reports.