OECD says Greece losing 3.2 bln per year from self-employed

Tens of thousands of self-employed professionals in Greece declare just half of the actual income they get each year to the tax authorities, according to data included in a report prepared by the Organization for Economic Cooperation and Development (OECD) and delivered to the Greek government on Wednesday.

A survey into the incomes and obligations of the self-employed from 2003 to 2010 showed that the monthly incomes they do declare to the tax authorities amount to about half of their monthly payments to banks for loans, credit card bills and so on. It appears that the self-employed use their undeclared income to cover their obligations rather than any savings they may have. Among the professionals whose monthly obligations are larger than their declared incomes are doctors, retail traders, restaurant owners and lawyers.

These conclusions match those of the Finance Ministry, but the latter appears unable to contain the huge tax evasion that the above categories of self-employed professionals get away with. The statistics of recent years show that many self-employed had been declaring incomes at precisely the level of the tax-free threshold in a bid to avoid any taxation.

Notably, the OECD report states that the tax revenues lost from the self-employed in Greece amount to 3.23 billion euros, or 1.75 percent of the country’s gross domestic product, on an annual basis.

Now, however, the Finance Ministry has access to bank data, while the obligation for the submission of lists of clients and suppliers every month should help contain tax evasion and result in the “necessary taxing of their incomes.” Tax rates for the self-employed have also grown, and the tax-free threshold that they enjoyed in previous years has been scrapped.

According to the OECD, if the efficiency of tax collection in Greece had matched the average of the organization’s member states, tax revenues would have grown by 6 percent of GDP according to 2011 figures. That means the state would have seen its annual revenues grow by some 11 billion euros.

The report further recommends that the government accelerate its efforts against tax evasion through abolishing tax amnesty, through identifying and punishing tax evaders and through improving the efficiency of inspections. The organization goes on to propose changes to the Greek justice system, with the reform and rationalization of the penal code and the increased use of the system for extrajudicial compromises.

Other recommendations include the publication of the income tax paid by all taxpayers, as is the case in many Northern European countries, and the cross-checking of bank accounts and property assets with the taxes that taxpayers pay.

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