ECONOMY

Tax penalties get more severe

Business owners caught cheating the tax office may see their operations shut down while facing a bout in prison, according to a tough set of rules detailed in a circular distributed to tax collection services by the Finance Ministry yesterday. The new penalties will be applicable as of June 1 and relate to all sectors where businesses are found to have declared false information to authorities or are caught providing goods or services without issuing invoices or receipts. Those found violating the law will lose their tax-free threshold, which effectively translates into a 1,200-euro fine, and be hit with penalties some 36 percent higher in new fast-track procedures currently being adopted. Taxpayers being disciplined may face prison sentences of up to three months and the shutting down of their businesses for up to six months in the event that the offender has not learned his lesson and repeatedly cheated the state out of revenues, the circular outlines. Even if a business owner sets up a new operation under a different corporate identity, any previous offenses will not be erased and will be taken into account if he is caught reoffending. Those who refuse to cooperate with authorities will be tracked down. Notices regarding fines and decisions made by tax collection services will be stuck on the door of their businesses. The changes are part of plans the government is putting into effect in a bid to stamp out tax evasion, estimated by some experts to be worth about a third of Greece’s annual 240-billion-euro gross domestic product. According to an agreement Greece signed last month with the International Monetary Fund, the European Central Bank and the European Commission in order to secure a 110-billion-euro rescue plan, the Greek government needs to collect revenues of 92.2 billion euros this year, up from 87.5 billion in 2009. This is a difficult task given the recessionary environment, in which the economy is expected to shrink by an annual pace of 4 percent this year.