Ernst & Young: Τax evasion reaches 9.0 pct of Gross Domestic Product in Greece

Tax evasion in Greece is estimated at around 9.0 pct of the country’s GDP, Ernst & Young said in a survey conducted for DiaNEOsis.

EY said that a continuing increase in taxes (the tax/GDP rate grew to 35.9 pct in 2014 from 34.4 pct) failed to raise public revenue, which fell in double digits compared with 2010, Stephanos Mitsios, head of EY’s Tax Department said on Monday, addressing the 8th Tax Forum, organized by the American-Hellenic Chamber of Commerce in Thessaloniki.

“Tax evasion in the country ranges between 6.0 pct and 9.0 pct of GDP, of which 1.9-4.7 pct of GDP from income taxes annually. Lost revenue from VAT accounted for 3.5 pct of GDP, while tax evasion and tax avoidance from enterprises were estimated at 0.06-0.15 pct of GDP, while tax losses from smuggling in alcohol, cigarettes and fuel accounted for 0.45 pct of GDP,” Mitsios said.

He added that state revenue are down 12 pct since 2010 despite an increase in most tax factors.
Revenue from direct taxes were almost stable because of the introduction of new taxes. The reduction in tax revenue reflects an economic recession and a shrinking of a tax base in the country. EY said there were eight factors fuelling tax evasion in Greece: over-legislation, complexity of the tax system, insecurity of both taxpayers and tax agency workers, a continuing increase in taxes, a timeless absense of political will to deal with this phenomenon, lack of technological means, bureaucracy, structural problems of the Greek economy and in particular an extremely high rate of self-employed people (double the European average) and a weak tax culture.

EY said a combat against tax evasion should be based on reducing tax factors, extensive use of plastic money, efficient tax controls, upgrading tax agencies services, training of tax agency workers, combatting corruption, creating a stable and simplified tax system, structural changes in the a development model and promoting a tax culture in the country.