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Economy

Digital Transactions Cutting Down Greece’s Untaxed Shadow Economy

February 22, 2024

ATHENS – The growing use of Point-of-Service (POS) machines tying businesses directly to the tax department when transactions are made has helped cut deep into Greece’s shadow economy of using cash to avoid paying taxes.

Successive governments have struggled to make businesses use the POS machines – some claim they aren’t working or their Internet is down – and getting a receipt from professionals like doctors and lawyers is a rarity, as it is from blue collar services such as electricians and plumbers or open air market vendors.

A report by researchers at the International Monetary Fund showed the unlawful economy declined markedly from 2013-2021, apart from the height of the COVID-19 pandemic although more consumers switched to shopping online.

The findings were that the shadow economy was at its height during the 2010-18 economic and austerity crisis, reaching 30 percent of the Gross Domestic Product in 2013, putting the burden on salaried workers who have taxes withheld.

Greece also has some of the highest tax rates in the world, including 45 percent for those making more than 40,000 euros ($43,271) while tax breaks are extended to businesses and the shipping sector essentially tax-free.

The report said the shadow economy fell to 16 percent by 2021 although it varies wildly from region to region, with 18 percent on Crete, notorious for its rebelliousness and anti-law stance.

The IMF report also said that there’s been an increase in tax revenues reaching 4 percent of GDP as Greece has come back from the brink of almost being forced out of the Eurozone to have its economy accelerate.

The Washington, D.C.-based group – which was one of Greece’s creditors in providing 326 billion euros ($352.66 billion) in three international bailouts, also said the Value Added Tax (VAT) gap decreased 16 percent from 2013-21.

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