FINANCE

Annual VAT losses at €6 bln

Greeks would have been spared ENFIA had they paid their value-added tax dues normally

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The annual amount of value-added tax (VAT) evasion is more than twice the sum of state takings from the Single Property Tax (ENFIA), according to the latest report by the European Commission that showed lost revenues of some 6 billion euros per year for Greek state coffers, the third worst performance in the European Union.

Were the local tax authorities to reduce VAT evasion to the EU mean rate, the state would secure enough fiscal space to abolish ENFIA, which fetches just over €2.5 billion every year, as well as the solidarity levy that brings in some €1.2 billion.

The Brussels report revealed that the potential VAT takings for Greece last year amounted to €21 billion. However, the state received just €15 billion, meaning losses of 28.5%. Half of those revenues lost (i.e. €3 billion) concerned tax evasion at the country’s borders, as customs fraud has taken on enormous proportions. The report showed that about one in three euros due is not collected, with VAT compliance dropping to 68%, compared to 81% in 2001 when the VAT rates were significantly lower.

At the same time the Greek state is delaying its VAT rebates to enterprises: The Commission report revealed that Greece, Cyprus and Italy have the worst VAT rebate times, thereby creating huge liquidity problems for enterprises.

It added that an average corporation in the EU requires more than nine hours to implement the bureaucratic procedures for VAT rebates, and over 17 weeks to receive them.

Italy and Romania are the member-states with the most time required for VAT rebate applications (42 and 22 hours respectively), but Italy, Cyprus and Greece see the longest delays in the return of VAT dues: It takes an average of 62 weeks in Italy, 43 weeks in Cyprus and 31 in Greece.

In total VAT evasion in the EU exceeds €140 billion every year, but due to the pandemic that figure may have actually been even higher last year. The average rate of lost revenues in the bloc comes to 11%.