Government unveils a new taxation inspection method

The government yesterday unveiled details of a plan to abolish fines for tax offenses and violations and institute a point system which makes tax inspection and calculation procedures in firms and personal businesses more objective. Economy and Finance Minister Nikos Christodoulakis said that according to the new system, contained in a bill to be tabled in Parliament in the next six months, enterprises will be automatically selected for tax inspection on the basis of a number of factors, particularly their tax record and financial data. This new system will radically change the current inspection system, whereby tax inspectors decided that a company’s, or professional’s, books were not in order and then calculated the «real» results themselves on the basis of net profit alone. This has often given rise to allegations of corruption and extortion; in several cases, tax inspectors have been found to have either accepted bribes in order not to report violations or, finding minor infractions, pressured companies into providing money so as not to have their books declared not in order. Based on crosschecks through the electronic TAXIS system, enterprises will be awarded punitive points for offenses or violations; the seriousness of the case will determine the number of points to be accumulated. A low number will mean a firm is placed on a list for possible fuller probing, but a high number will lead to a reassessment of results and increments on the tax rates applicable. The number of points for violations will also differ by sector of economic activity to reflect a higher or lower incidence of tax violations in this sector. In the construction industry, for example, there will be more points slapped on firms because there are more violations than elsewhere. The selection of companies for a thorough tax inspection will depend on the following factors: tax and customs violations; financial and other data; company size; sector of activity; geographical distribution; the results of crosschecking through TAXIS; and, finally, random sampling. If a company has been guilty of violation(s), its gross revenue, expenditure and results will be reassessed on the basis of a weighted scale based on the accumulated points. The new, reassessed results will also determine how much more in taxes a company will pay. If violations took place in the current financial year, the company will be given the opportunity to redo its books, through an internal audit. In this case, it will pay the pertinent tax, without extra fines. The government hopes that this new method will allow it to find tax violations easily, and get the resulting revenue, without resorting to periodic negotiations with companies to settle their accounts from previous years.

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