ECONOMY

Huge losses from VAT evasion

huge-losses-from-vat-evasion

Every five years the Greek state misses out on value-added tax takings equal to the amount it is eagerly anticipating from the Next Generation EU fund. VAT evasion in Greece is among the highest in the European Union, and this has not changed in recent years, although there has been some containment in years when VAT rates have been reduced.

In total, Greece missed out on 115 billion euros from VAT receipts between 2000 and 2018, according to figures the European Commission presented on Friday. In the last five years, it has lost revenues equal to the €32 billion it stands to get in the seven years of the coveted Next Generation EU program.

Had that cash been available to Greek governments of recent years, not only would it have allowed them to implement their policies more easily, but it would have also led to much lower taxes than those that salary workers and pensioners have to pay today. Furthermore, it would have drastically reduced the national debt.

The Commission’s “VAT Gap” report, showing the difference between collected revenues and those that states should have collected, reveals that, in 2018 (the year with the latest available data), Greece had the worst performance in the eurozone and the second worst in the EU after Romania.

Although in 2018 Greece’s VAT lost revenues were €1.1 billion less than in 2017, their amount, €6.57 billion, remains considerable, equal to more than 30% of potential VAT takings for the state. The EU average rate comes to just 9.2%.

Older data from the Greek Finance Ministry show that the VAT taxable value in Greece comes to €130 billion on an annual basis. Some €60 billion of that is from the high VAT rate of 24%, another €55 billion from the reduced rate of 13%, €10 billion from the minimum rate of 6% and the rest in other small rates. However, the value taxed (by the VAT) nowadays barely reaches €75 billion, which means there are no tax data for a huge sum of products and services that add up to €55 billion euros per annum, according to 2018 figures.