Greece Gears Up for Minimum Tax: New Framework Targets Multinationals and Large Domestic Groups

Next month, the Greek government will submit a new taxation framework to Parliament, including the establishment of a 15% minimum tax rate for both large multinational companies and sizable domestic groups.

This plan, to be presented to the cabinet by Minister of National Economy and Finance Kostis Hatzidakis on Wednesday, integrates a relevant European Union directive into Greek legislation.

Essentially, the bill aims to end the tax dodge tactics currently employed by many multinationals, who shift profits to countries with minimal or zero tax rates. The proposal, developed by the Organization for Economic Cooperation and Development (OECD), creates a set of international tax rules to ensure these businesses pay their fair share wherever they operate. According to ministry sources, by reducing the advantages of profit shifting, this global minimum tax reform will create a fairer tax environment for businesses worldwide.

In Greece, the measure affects 14 multinational companies and their subsidiaries operating within the country. The draft law mandates a minimum effective tax rate of 15% for entities belonging to multinational business groups or large domestic groups with annual revenues exceeding €750 million.

Since the mid-2010s, the OECD has spearheaded an international effort to address the tax avoidance practices of multinational business groups, specifically focusing on "base erosion and profit shifting" – the artificial transfer of profits to low-tax havens to escape corporate income tax. The OECD estimates this practice results in annual revenue losses of at least €150-200 billion for tax authorities worldwide, representing around 6% of global corporate income tax revenue.

Moreover, the OECD and its member states face the additional challenge of navigating a globalized economy where products and services are increasingly traded and delivered digitally.