28.2.13

The 72-page IMF and EU report on the Greek tax-collecting and check system is anything but positive in its evaluation, as the government appears unable to collect outstanding debts or deal effectively with tax evasion. The troika report stresses that in order for checks to be effective, the charges and sentences must be consistent throughout.

Technical teams noted that reforms are fragmented and important sectors of the tax system are understaffed. They also note that the new investigators do not know their duties and the General Secretary of Public Revenue is not autonomous from the political leadership of the Ministry of Finances.

The situation is similar at SDOE, while most investigators at the Large Taxpayer Office do not have their own workspaces and portable computers. The report further notes that 1 in 2 investigators at the Ministry of Finances are over 50 years old and 1 in 4 are over 55 years old. Regarding audits, only 25% of regular audits were performed on large companies and only 38% of targeted audits were performed on wealthy tax payers and self-employed with high incomes.

The troika as also disappointed by the efforts in collecting outstanding debts. The memorandum mentions the obligation to collect 1.9 billion euros from outstanding debt, when the Ministry of Finances’ internally-circulated predictions estimated 1.176 billion could be collected. Most of these debts though are attributed to bankrupt companies, public utilities and huge fines that are disproportionate to the crimes committed.

The troika is also critical of the arbitration system for tax affairs, which has been voted since March 201 but has yet to be put into action. As a result, there are some 113,634 outstanding legal cases. A series of adjustments are suggested, in order to make audits and tax-collection more efficient, particularly in cases involving large debtors, such as

  • Increasing checks and criminal prosecution
  • Immediately writing off outstanding debts that are uncollectible
  • Hiring 200 investigators with experience from the private sector
  • Creating a new General Secretariat of Public Revenue, with SDOE and GSIS under its roof
  • To refuse further settlements of outstanding debts and tax amnesty

The technical teams also suggest the government established a law providing the creation of a more independent tax agency, which will also determine the degree of independence, the governing framework, accountability, legal duties of the agency heads and the agency’s initial staffing. This new agency should be ready for operation by March 2014.

The troika report also scrutinized the Greek state for its tax returns policy. About 1.7 billion euros in VAT returns are owed to thousands of businesses. Current legislation means that after 3,5 years of non-payment, the tax-return applications are voided, meaning that the tax-payer must demand a full audit or take legal action against the State.