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Tax Evasion Crackdown on Greek Taxi Drivers

ATHENS – Greece’s taxi drivers, notorious for evading taxes and securing a monopoly after driving out Uber’s basic service, are now the target of inspectors seeking to rein them in.

While most drivers provide their services without complaint, the sector is infamous for cheating tourists through various tricks, including sleight of hand with euro bills. They fiercely guarded their territory when Uber first entered the market. Angry protests pressured governments to yield, forcing Uber to withdraw and limiting its service to taxis, excluding private operators.

Now, taxi drivers—along with other professionals who’ve successfully evaded taxes—are required to use Point-of-Service (POS) machines to issue receipts and enable the tax department to monitor their revenue.

“From now on, no electronic payment will go unaccounted for,” stated George Pitsilis, Governor of the Independent Authority for Public Revenue (AADE), to The Financial Times.

Despite attempts by the New Democracy government to compel reluctant taxpayers in the professional and service sectors to use POS systems that AADE can track, they have struggled to achieve widespread compliance.

Greece ranks third in the European Union for high Value Added Tax (VAT) gaps, the difference between potential and actual tax revenues. The government aims to cut this gap by half to reach the EU average of 9%. “Compared to the European average, we’re still high,” said Pitsilis. Finance Minister Kostis Hatzidakis emphasized that increasing digital transactions is crucial to reducing tax evasion.

“We are working hard to link POS systems with cash registers,” he said. “Everything needs to be interconnected.” However, some professionals falsely claim their POS systems are not working to evade taxes.

The challenge persists with tax rates ranging from 22% for incomes between €10,000-€19,999 ($10,787-$21,574) to 45% for incomes over €40,000 ($43,150). This encourages Greeks, including doctors and lawyers, to report incomes under €10,000 ($10,787) to avoid paying taxes, triggering cross-checks to justify how they afford luxury lifestyles.

“It’s insane for an employer to declare less income than an employee,” Hatzidakis remarked. For Greece’s 25,000 taxi drivers, accepting card payments marks a significant shift in how they report their income and pay taxes.

Timos Papadopoulos, General Director of Tax Operations, stated that his teams perform over 70,000 inspections annually. Compliance has improved, with tax evasion dropping to 28% in 2023 from 40% the previous year, though wealthy oligarchs and the rich continue hiding their fortunes.

“Connecting POS systems to cash registers will further reduce tax evasion,” Papadopoulos asserted. However, plumbers, electricians, doctors, lawyers, architects, and taxi drivers remain elusive targets.

From 2015 to 2019, one in eight card transactions went unrecorded by tax authorities, but that’s expected to change with POS, noted Georgios Gatopoulos of IOBE, an Athens-based think tank. Nearly 90% of the 350,000 targeted businesses now have POS systems. Hatzidakis warned of steep fines for non-compliance and the potential loss of billions of euros in COVID-19 recovery funds if the reforms falter.

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