Companies systematically evading taxes will soon see a padlock on their doors for 30 days. This new kind of fine to Greece’s tax evaders was announced today by the General Secretary of Public Revenues. The same fine will be imposed to company owners who prohibit tax inspectors from conducting inspections and controls. However, the GSPR explained also that “tax inspectors will give a second chance to tax evading businesses to comply with the law.”
If business owners are caught to not issue receipts for a second time, the padlock on the door will be for 48 hours, to start with.
A further measure is that companies that show revenue increases during tax inspectors presence in the area, when compared to periods before and after will be put on a so-called “black list”.
The relevant circular with instructions to tax inspectors is expected to be issued in the coming days.
This is of the latest efforts of the Greek Finance Ministry to address the plague of tax evasion but also to send a message to the market that despite the fact that fines for tax evasion have been reduced, this does not mean that the state does not have interest to collect taxes.”
Reports of “large scale tax evasion” especially in touristic areas and the islands have alarmed the financial authorities.
According to Greek media, the latest Value Added Tax hikes on islands that used to enjoy 3o% reduction in V.A.T. not only has public revenues plunge but also tax evasion skyrocketed.
In the time period January-April 2015, V.A.T. revenues from islands like Mykonos lag behind the target by 62%. On other touristic islands like Santorini, Paros, Rhodes, Kos and Zakynthos the targets were behind by a range between 35% and 40%.
By 24% Value Added Tax it is clear that the customer would prefer to refrain from receiving a receipt and thus have a reduction of even 50 euro for a purchase of 100 euro.
Another measure, the Finance Ministry will put into effect as of August is that “taxpayers will enjoy tax-breaks only if they cover a percentage of their income through payments with cards.” Otherwise they will even get a fine for failing to do so.
According to Ministry, the percentage of payment via cards will be 10%-30% for annual incomes 10,000 – 40,000+ euro. This means that those with annual income €10,000 will have to have spent €1,000 for payments/purchases via credit cards/debit card. But he who earn 40,001 euro per year will have to spend 12,000 via cards.
This measure will force business owners to have POS devices and the customer will have incentives to make the payment via the card.
But these sneaky modern Odysseuses already think to make purchases up to the necessary percentage/annual income via card and once they have met their target to pay cash and without receipt thus receiving a juicy reduction of 24% from the retail price.
The point is that with such taxes for small businesses and self-employed the whole society tolerates tax evasion. If the state taxes from the first €uro, wants 100% tax in advance, and social security contributions can be 300-900 euro per month all small businesses and self-employed can either close thier businesses or tax evade.
An example: According to the new taxation system, if someone is hired as minimum wage employee (580 gross per month/€495 net, taxation for employees – this could have a tax-break of 2,000 euro) and in addition he earns some extra bucks as free-lancer (say €200 per month, taxation 26%) the revenues from the two different sources come together and are taxed with 29 percent!
Monthly income €780
€326 taxes 29% + social security contribution €90 = €416
How fair is that?