New Investment Bill Introduced

The Greek finance ministry recently introduced a draft bill on investment incentives. The bill contains five points that are significant for the tourism sector. First, investment subsidies for comprehensive plans for refurbishing hotels are revised from 4.5 million euros to 10 million. Second, hotel enterprises are given the option of forming a tax-free reserve for future investment instead of tax breaks. Third, the subsidization of leasing costs per employee goes up from 45,000 euros to 50,000.

The fourth point includes abolition of the subsidization of loan interest payments, a measure that is considered unfavorable since approximately 70 percent of tourism investments are loan-financed; in Crete, such loans have been estimated as equal to 85 percent of investment subsidies. Fifth, the system for rating tourism investments is to be rationalized, but details are not yet available. There is also a provision in the bill for a 15% subsidy against the purchase of new tour coaches.

The draft bill, however, appears to treat tourism enterprises less favorably than industrial concerns, particularly in the least developed areas, say tourism professionals. The Association of Greek Tourism Enterprises (SETE) says the new legislation does not go far enough. To entice tourism investment, it says the bill must include all tourism enterprises no matter their specialty or size, and no matter whether they are new enterprises or old ones. It also believes the proposed legislation should not have incentives that depend on the creation of new jobs as in many cases this can not apply to tourism enterprises.

The association would also like to see the banks play a more significant role, especially in deciding which companies are capable of carrying out specific tourism investments. Along with the above, the association says that the government’s “overdeveloped” areas for tourism projects should be either revised, discarded or at the very least be reconsidered every two years.