Greece to implement VAT changes from Monday

ATHENS (Reuters) - Greece will implement changes to value added tax from Monday, the finance ministry said, fulfilling a key pledge in the bailout deal the cash-strapped country reached with international creditors.

Prime Minister Alexis Tsipras promised "the streamlining of the VAT system" in an agreement signed with European partners, with VAT hikes due on food served at restaurants and on public transport.

In a sign that Greece may be trying to win back trust from its European allies, many of whom doubted that Athens would come true on its promises, the finance ministry said it would begin working in earnest on the changes.

"We will go ahead with the necessary actions so that the implementation of the new provisions can begin from Monday July 20," the ministry said in a statement.

Changes to VAT have already sparked concerns from businesses worried that increases will drive away customers and cut sales in a country where a quarter of the workforce is jobless and incomes have been squeezed by years of austerity.

Plans to increase VAT on Greek islands, which currently enjoyed a reduced level, are not likely to be implemented until the autumn, having been resisted by the junior coalition party in government, the Independent Greeks.

(Reporting By Costas Pitas)