Greece May Follow French Example To Make VAT Cut In Food Sector Permanent

Photo showing French restaurant menu indicating price reduction due to VAT cut. Source: www.bordbia.ie

In an attempt to persuade eateries to lower their prices and issue receipts to customers, the Greek Government is considering to adopt the model implemented by France when the country’s value-added tax (VAT) rate in the food service sector was reduced, reports said recently.

France’s VAT rate in the food service sector was reduced from 19.6 percent to 5.5 percent in 2009 and businesses that dropped their prices were provided with a special seal of certification. The seal acted as free advertising for the businesses involved as customers would look for the seal when choosing a restaurant to dine at.

Reports said that Greek catering establishments (restaurants, etc.) would also be obliged to indicate their price reductions (due to VAT cut) on their menus (see photo).

The VAT imposed on Greek restaurants, hotel restaurants, cafeterias and bars will temporarily be reduced next month from 23 percent to 13 percent, in an attempt to increase consumer spending and create jobs. The government said the VAT would remain at 13 percent only if the reduction assisted in conquering tax evasion, which means that businesses must issue receipts to their customers.

Penalties

The government is also considering to inflict penalties on businesses that do not issue receipts as suggested by the Association of Greek Tourism Enterprises (SETE).

SETE recently suggested for businesses that avoid issuing receipts to be closed down for three days as a warning. The association also suggested for enterprises that were officially convicted for tax evasion, to be scrapped from the associations or unions they belong to.

Final decisions on the matter are expected to be announced soon.