In the recent discussions with its creditors, the Greek government proposed that it is considering three measures which will aim to increase tax revenue. These measures are the provision of a form of tax amnesty, so that Greek funds may be repatriated; inspection of triangular transaction amongst businesses, to overcome EU loopholes in taxation; and introducing a lottery with VAT receipts, in order to tackle tax evasion.
Regarding the tax amnesty, the Ministry of Finances’ plan will allow those with undeclared funds in foreign accounts to declare them, with a small tax (possibly 15%). This means that they will not be under any obligation to repatriate their funds, provided they pay tax. Otherwise, they risk losing up to 80% of their capital via taxes, fines and surcharges.
Triangular transactions – which is currently allowed by EU legislation – involves three parties: the supplier of goods or services, the true recipient and a “straw man” company based in a tax haven. The supplier appears to sell the straw man company the goods at a favorable tax rate, which in turn “sells on” the goods or services to the true recipient. This transaction can dramatically reduce the tax cost for the implicated businesses, which depriving the State of revenue.
Finally, in the lottery proposal, citizens will enter a lottery with their VAT receipt numbers, with monthly prizes ranging from 500 to 10,000 euros, while an annual major prize may include an ever greater sum or a car.
The Ministry of Finances is also considering a series of other measures that may help increase tax revenue, such as taxing online gambling, recruiting tourists and students to carry out inspections to help tackle tax evasion, introducing a settlement for outstanding debts towards the State, streamlining bureaucracy and setting caps on State expenses.
