Greece launches a new Super-Weapon, a powerful application against tax evasion. Audits will go back to 2002. The software will automatically trace tax evaders, crosschecking bank deposits and tax declarations. Within just two minutes.
Finance Minister Euclid Tsakalotos presented on Thursday the new tool that is activated in the hope to combat the widespread tax evasion.
The automated application will help tax office inspectors trace tax dodgers by crosschecking within two minutes their tax declarations of past years to bank deposits and other assets.
In cases of major divergence a more thorough investigation into the tax payer’s finances will allow the tax office inspectors to have a clearer picture within a week instead of the average 18 months needed so far.
Suspected tax evaders will be then called to provide explanations. Should they not be able to justify their increased wealth in line with their tax declarations, they will face fines.
“This work could have been concluded in the past if previous administrations had the political will and I am saying they did not,” Tsakalotos said, expressing the current government’s determination to effectively deal with tax evasion.
The official also appeared confident that more tax dodgers will now feel the pressure and will opt to voluntarily disclose their hidden wealth to avoid heavier penalties.
Tax Office inspectors will first use the application focusing on 1.27 million taxpayers who have been targeted by the tax authorities due to bank accounts deposits and thus for the period 2002-2014.
Majority of them were included in lists of major depositors to foreign banks, such as the famous so-called Lagarde list, general secretary for Public Revenue Yorgos Pitsilis said. Controls on suspected tax evaders whose names are on other lists will follow.
Inspections will go back to 2002.
Tsakalotos did not say when exactly the new application will go in operation, before or after Easter. However, there is a deadline until May 31, 2017, for those who want to declare ‘undeclared incomes and assets’
23,300 controls are planned for 2017, the ministry has already extended for 1-3 years its ‘write-off’ right to conduct controls
These controls will be possible after the banks sent coded data on deposits movements. Even banks that are meanwhile closed or have merged with other banks.
The application will automatically check the progress of deposits, compared with the state of declared income each year.
Where deposits amounts exceed the declared income, the taxpayer will be checked for unjustified wealth increment.
It has not been clarified which difference between deposited and declared amount will lead to checks. € 500? €1,000? €100,000? “There various risk criteria,” the Public Revenues authority said without elaborating.
Taxpayers will have to find excuses, apologies and proofs for the distant past.
Why 2002? According to Public Revenue authority reason for 2002 is the conversion of Drachmas to Euro. If someone had cash in Drachmas (example: he earned from Athens Stock Exchange in 1999) before 2002 and showed it [deposited in bank account, probably] will have to submit the official paper of Drachma-Euro exchange.
The new application will be able to distinguish between deposits and bank transfers. Ιt will check only “primary deposits”. Exempted are bank transfers from account to account of the same holder and loans.
The general idea is that whoever had cash 10-20 years ago and had not declared it to tax authorities and it was ‘black money.’
The application may set a trap for those the ministry hopes to grab their cash under the mattresses and bring it back to the banks. Will this money be considered ‘new deposit’ or ‘re-deposit?”
The ministry says “Bring the money and we will see.”
Greeks are believed to have withdrawn from the banks more than 60 to 80 billion euros since the crisis and the bailout agreements started in 2010. From 2010-2014, in the first and second phase of the crisis and fears of Grexit, Greeks withdrew €56.8 billion form the banks, 32 billion left for abroad. Another wave of bank-run occurred in the last months of 2014 and the first months 2015. The Greeks’ new hobby was halted after capital controls were imposed in June 2015. This did not hinder Greeks from withdrawing money, every time a crisis with lenders appears in the horizon.
In last month of 2016 and first of 2017, a new bank run under capital controls occurred, Greeks withdrew €2.5billion within 45 days due to the uncertainty caused by delays in Greece-lenders negotiations to conclude the second review. In February, they withdraw a total of 750 million euros.
Minister Tsakalotos said the new ‘super weapon’ against tax evasion sends a double message to those who still hide money form the tax offices. “The Carrot is if you declare un-taxed money, we will forget some penalties and fines. The Stick is that we now have all data collected and those unwilling to take advantage form the opportunity we offer, should think about two, three and four times.”
However, the planned controls going back to 2002 have a major legal problem. The Greek Supreme Court has yet to decide whether audits going back to 2002 until 2012 are legal or not. Normally, they are written off after a certain period of time backwards. For this case, the question is whether the audits can go back to 2002-2006. The Court is expected to rule in May.
Tax evasion in Greece is estimated to be €11billion to €16billion annually.
The target of the Greek finance ministry is clear. Whatever you discover, whatever you catch is good to pay interest and repay loans to the creditors, minister Euclid Tsakalotos said more or less at the press conference on Thursday.
At the end of the day this is not a super weapon to combat current tax evasion. This is a tool to for the Greek state to bring money into its cash registers.
If Greece considers 3-year-olds as potential taxpayers and charges them 12 euro per flight ticket, it can also demand euro exchange documents from the deceased or their inheritors.
PS #JustSaying, ok?
Yeah no chance. That would mean all of GR would be in jail.
Even if the computer system is efficient, there is simply not enough staff to investigate 10,000,000 Greeks.
I hope they only focus on the high net worth people, but most of them have connections so their investigations will probably ‘disappear’.
Yer right. They should concentrate on making the system they have simpler and make it work. Chasing people back to 2002 is a waste of resources and will yield bugger all.
Another Greek joke !
Syrizee, I know a number of very wealthy Greeks, but not one of them is resident in Greece. They might own houses, islands, yachts and all the rest of it, but resident they are not. And can you blame them ? So unless you are going to reform the tax laws to make citizenship the basis (like the USA) I doubt your strategy will yield much.