Families jetting off to Greece for a summer break now that school holidays have started will find VAT rates have been increased on a second tranche of Aegean islands, even though an earlier VAT increase has resulted in a revenue shortfall, according to local reports
Last year the Greek government said it planned to abolish the 30% discount on the standard VAT rate which applied to the islands in three stages.
The first group of islands to be affected were Mykonos, Naxos, Paros, Santorini, Skiathos and Rhodes, where the VAT rate increased from 17% to 23% (now 24% as the result of a new standard VAT rate), in October 2015.
Since June this year, the islands of Syros, Thassos, Andros, Tinos, Karpathos, Milos, Skyros, Alonissos, Kea, Antiparos, and Sifnos have also lost their reduced VAT privilege. A final group of islands are due to see the same withdrawal of the reduced rate next year.
However, according to Greek television station Mega, over the first quarter of 2016, there has been a major VAT revenue shortfall on the main Greek islands, with VAT receipts from Mykonos 62% lower than expected and those from the other destinations down by 35% to 40%. There are suggestions that local businesses are avoiding issuing invoices in order to evade the tax.
The VAT hikes on the island are part of the Greek government’s response to its ongoing budget deficit problems.
