Greek taxes strangle funds industry in name of austerity

Mon Jun 20, 2016 2:00am EDT
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* Tax hikes part of financial reforms approved by parliament

* Taxes on mutual fund assets will jump by as much as seven-fold

* One fund freezes investment plan, another reviews share issue

By George Georgiopoulos

ATHENS, June 17 (Reuters) - Greece's latest austerity measures are choking off one of its few sources of local private investment, the funds management industry, thanks to massive tax hikes buried in 7,500 pages of financial reforms approved by the parliament last month.

One listed Greek fund has frozen a 300 million euro ($340 million) investment plan, and another has put a share issue of at least 250 million euros under review, since the hikes were passed -- a footnote in a reform package that appeased the government's European creditors and avoided another cash crunch.

The country's 7 billion euro ($8 billion) funds industry, though small, is a potentially important vehicle for much-needed investment in the shattered economy, helping firms to raise money and buying up property from banks burdened with bad loans.

The new tax rates, applied to funds under management, underline how Athens is relying on a narrow, overstressed tax base to stay afloat, depressing economic activity, while the country's large black economy remains out of reach.

The finance ministry, which is also overseeing a hike in value-added tax as well as separate taxes on Internet usage and fuel, did not respond to requests for comment.   Continued...