Businesses object to new tax audits

The Athens Chamber of Commerce and Industry (EVEA) yesterday declared itself opposed to any government attempt to reintroduce so-called «objective criteria» in the taxation of professionals and businessmen. The reason for this criticism is the government’s decision to proceed with a comprehensive examination of the accounts of professionals and small businessmen who did not take advantage of the Economy and Finance Ministry’s offer to voluntarily settle pending taxation and value-added tax (VAT) cases from 1993 to 1998. The ministry’s offer had a single purpose: revenue enhancement. It was proposed to professionals and businessmen who had not paid taxes commensurate with their earnings or had not paid their VAT receipts to the State. They were invited to disclose their books for the specified period and tax authorities were ordered to settle those cases by charging a fraction of what these taxpayers owed. Relatively few of those concerned have taken advantage of the offer, which expires on December 31. But the tax authorities are already targeting recalcitrants by ordering them to bring their books in for a detailed inspection. Any VAT and corporate tax owed discovered through this coercive method will be paid in full, including any applicable fines. «Such methods, which have nothing to do with the taxation reform to which the government is committed, damage the very fabric of the economy in a period of growth slowdown,» EVEA President Drakoulis Fountoukakos declared yesterday. He added that taxation should help promote growth and not be a «mechanism to intimidate and put pressure upon» small and medium-size enterprises. Fountoukakos called on the government not to proceed with auditing the books but to modernize its agencies and institute a «fair taxation system.» The government has already abandoned the «objective criteria» system of taxation, according to which professionals and enterprises were obliged to pay a minimum amount of tax according to a set of criteria such as their professional activity and the size of their premises. The system, instituted by former Finance Minister Alekos Papadopoulos in 1994 had raised a storm of protest but had also helped to significantly increase state revenues and ended a state of affairs whereby the vast majority of businessmen perpetually declared losses and professionals, such as doctors and lawyers, declared incomes of just a fraction of those of salaried employees.