Tax inspection changes are open to legal challenge

The «point system» of tax inspections, recently voted by Parliament and much-trumpeted by Economy and Finance Minister Nikos Christodoulakis, may prove unenforceable in the beginning, senior ministry officials believe. The new inspection system provides companies and self-employed professionals with the opportunity to provide their own auditing, with tax authorities doing sample checks and retaining the right to inspect any company or individual at a later time. It also abolishes penalty fees and replaces them with a point system reflecting law-abiding behavior. This last measure was expressly made to minimize corruption on the part of tax inspectors. Ministry officials express concern that the new provisions cannot be applied before the end of 2004, when the ministry’s new information system will be in place. This system must be connected with the TAXIS system connecting the tax inspection offices across the country, the central ministry system and all regional offices of the financial crimes squad (SDOE). This is just a small part of the problem. SDOE and ministry officials claim that many companies will take their case to the court after spot inspections. They also claim that there will be delays in processing the material taken from inspections. For example, if SDOE inspects a company in September 2004, the final inspection report will be published about a year later. If a company wishes to close its 2004 books and submit its tax statement for that year in the spring of 2005 using self-auditing, what will happen in case the inspection report has not been made yet? Will any irregularities found by SDOE be taken into account, or will the State have to wait for the publication of the report? These questions emerge out of the everyday experience of officials and by no means reflect the more difficult cases, where inspection reports are not published for more than two years. A ministry committee, set up for the purpose of clarifying the situation, said that an internal report card filed by SDOE after inspection would suffice as proof that a certain company has violated the tax code. This is expected to cause a flood of legal challenges that, given the present state of the Greek courts, may take years to be heard in court, never mind resolved. The ministry must also train tax officers to apply the new regulations and to use the new automated system, when it is finally in place.

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