Greek Authorities Intensify Tax Evasion Crackdown

Thursday, 19 Aug 2010 03:29 PM

 

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Dodging the taxman could have been described as Greece's national sport for years. But with the state desperate for income, the head of the country's financial crimes squad says it's time to blow the final whistle on the practice.

Checks are intensifying on bars, clubs and restaurants, as well as for owners of yachts, luxury cars and expensive homes with swimming pools, Ioannis Kapeleris, head of the squad, known by its Greek acronym SDOE, told the AP Thursday.

"There really was laxity — I'd dare say nonexistence, of a system of inspections in recent years," Kapeleris said, and it "resulted in the creation of a climate of tax impunity."

Tax evasion is one factor behind the Greece's financial difficulties that have left the country suffering a massive budget deficit, leading it to seek rescue loans from the International Monetary Fund and European Union to avoid defaulting on its debts.

Kapeleris said it was impossible to give an accurate figure for the amount the Greek state loses each year through unreported income, unpaid value added tax and other forms of tax evasion.

"The honest truth is that you can't estimate it," he said. However, "the size of tax evasion and the gray economy is huge, and we see this every day."

The most common form is for businesses or professionals in the service industry — from doctors and lawyers to plumbers, mechanics and electricians — to not issue receipts, thereby allowing them to declare less income than they actually made.

So far, tens of thousands of inspections have revealed nearly half a million violations — most of them involving a failure to issue receipts.

From Jan. 1 until the end of July, the financial crimes unit carried out 22,043 inspections across the country, which revealed that 9,793 businesses or individuals had committed a whopping 496,306 violations in total, SDOE figures show.

Kapeleris says his unit has issued fines worth 2.5 billion euros ($3.21 billion) for tax violations across the country so far in 2010, compared to 1.7 billion euros worth of fines issued in the whole of last year. His aim is to issue up to 5 billion euros in fines by the end of this year.

But imposing fines isn't just a way of boosting revenue for state coffers. In theory, the zero tolerance approach, coupled with "name and shame" tactics which saw authorities publish the names of doctors accused of various financial violations recently, will frighten anyone else tempted to hide income from the taxman.

"We're also seeking to create a tax consciousness," Kapeleris said. "It doesn't happen from one day to the next, but gradually you build it, step by step."

His financial crimes unit is boosting its spot checks with five squads of 50 inspectors — dubbed the SDOE "Rambos" in the Greek press — who will be fanning out across the country, targeting restaurants, bars and clubs in tourist areas, as well as the owners of yachts, luxury cars and expensive homes who don't declare enough income to justify their expensive tastes.

Authorities have also turned to slightly more unusual methods, using satellite imagery to map out the location of swimming pools, which are taxed as a luxury item in Greece. In an investigation that is still ongoing, they are cross-checking their findings with documentation from pool manufacturers and maintenance companies to catch villa owners with undeclared pools.

Certain professions widely believed to be among those who under-declare their income by not issuing receipts or taking kickbacks, such as doctors and lawyers, will also come under scrutiny.

With Greece in full holiday season, the popular tourist islands in the Cyclades, such as Mykonos, Paros, Naxos and Santorini, have come in for increased spot checks, with 240 of the 370 businesses inspected in the first two weeks of August found to have committed 2,900 violations.

"The results of the checks are indeed spectacular," Kapeleris said.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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